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Dynamic Integrated Climate Economy model (DICE)
To estimate the costs and benefits associated with the mitigation of GHG emissions.
The DICE model is an Integrated Assessment model of climate change impacts and costs, which “integrate[s] in an end-to-end fashion the economics, carbon cycle, climate science, and impacts in a highly aggregated model that allow[s] a weighing of the costs and benefits of taking steps to slow greenhouse warming” (Nordhaus and Boyer 2000 p 5). DICE is a modified Ramsey-style optimal economic growth model with a form of “natural capital” added: the atmospheric concentration of CO2 has a negative effect on economic output through its influence on the global average surface temperature. By devoting some portion of economic output to emissions reductions, future temperature increases and associated climate damages can be avoided at the expense of current consumption. DICE is an optimal control model designed to balance the near term costs of emissions reductions with the future benefits of avoided climate damages at the global scale. The DICE model is a global model that aggregates different countries into a single level of output, capital stock, technology, and emissions. The estimates for the global aggregates are built up from data that include all major countries, and the specification allows for differentiated responses and technological growth. http://www.econ.yale.edu/~nordhaus/homepage/dicemodels.htm