Abstract
The DICE model is one of the most influential Integrated Assessment
Models available. Its founder Professor William Nordhaus was recently
awarded Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred
Nobel due to his pioneering work on the economics of climate change. In
a recent paper in American Economic Journal: Economic Policy
Nordhaus uses the model to conclude that a 2.5°C target is almost out of
reach. In this paper we update DICE 2016 R2 with state-of-the art models
of the carbon cycle, heat uptake into the oceans and the role of
non-CO2 forcers. We find that the allowable remaining
carbon budget (over the period 2015-2100) to meet a 2.5°C target to be
2360 GtCO2 whereas the estimate obtained using DICE 2016
R2 is about 460 GtCO2. Nordhaus’s estimate of the
remaining carbon budget for this target is hence five times lower than
estimates made by our recalibrated version of DICE. We also compare our
results with estimates by the Intergovernmental Panel on Climate Change
(IPCC) and find our results to be in line with the carbon budgets
presented in IPCC SR 1.5. We explain the reasons behind the difference
between our result and that of Nordhaus and propose that an updated
climate module in DICE is warranted.