Dynamic Integrated Climate-Economy model (DICE)

Definition 

The Dynamic Integrated Climate-Economy model (DICE), developed by Nordhaus (1992), is an integrated assessment model, modelling economic growth, the resulting CO2 emissions, the climatic response (e.g., temperature impact of these CO2 emissions), and finally the damage of increased global temperature on economic consumption. Its output is a calculation of the resulting current economic welfare, which is the sum of the discounted values of the consumption-based utilities between now and the long-term horizon. By maximizing welfare over the control variables (the savings rate and the abatement function), the DICE model determines the optimal CO2 abatement pathway that maximizes current welfare.

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