Economic modeling of climate change impacts and adaptation: a reviewof global Integrated Assessment Models
Xuanming Su, Kiyoshi Takahashi, Toshihiko Masui, Naota Hanasaki, Yasuaki Hijioka,
Shinichiro Fujimori, Tomoko Hasegawa and Akemi Tanaka

Abstract
IAM is a quite useful tool for understanding the issue of climate change and providing possible
climatic policy suggestions, since the climate change problem not only relates to energy emissions,but also socio-economic development and natural climate science. The IAM helps to find all possible
solutions with respect to climate change mitigation in last two decades, however, the climate change
adaptation is paid attention to until recent years because people learn that climate change is most likely
unavoidable due to the energy consumption and economy development around the world currently.
Hence, this study makes a review of the impact assessment and adaptation modeling with respect tothe global IAM. 19 influential or in active development IAMs are elected and evaluated in this review,in terms of specific modeling approaches and related results. The objective optimization IAM usuallyuses C-D or CES production function to integrate different factor inputs such as capital stock, labor,energy/energy services, knowledge, etc., with different nested structures in economic modeling. RecentIAMs use aggregated monetary economic losses or biophysical damages to represent the impacts fromclimate change. The monetized impacts are ready to be used in current economy based IAM and thebiophysical damages, if considered in IAMs, are also usually converted to the monetary measurement
units according to some assumed principles. The impact assessment focuses on agriculture, forestry,water resources, etc. As to the regional disparity, developing countries are more vulnerable to climatechange than developed countries. The reactive adaptation is expressed as a flow expenditure while theproactive adaptation is treated as a capital stock formed by the investment periodically. Recent IAMs
usually assess the relationship between mitigation and adaptation, the efficiency to reduce climatechange costs or the impacts on GHGs emission path and atmospheric carbon concentration.
Several issues are highlighted according to the review of climate change impacts and adaptation
modeling about IAM. First of all, for the objective optimization IAM, it is expected to provide detailed
regional and sectoral information; however, it is often not the case actually. The compromise solution
is to use global IAM with sectoral details or build regional IAM with similar climate change impacts
and adaptation description for each region. Secondly, with respect to the long-term effects of proactive
adaptation, an improvement for current modeling technique or new modeling technique is needed
to describe the proactive adaptation appropriately. Thirdly, efforts should be made to distinguishthe climate change adaptation from economic, population-related and technological “adaptation” tomeet the needs of investment decision-makers. Fourthly, with respect to climate change impacts,
a distinguish between sectors or impact endpoints would be helpful for model developers to provide
additional detailed information about climate change mitigation and adaptation. Finally, in addition toclimate change uncertainty, efficiency and equity among the regions, and the sub-optimal decision underuncertainty, the climate engineering including carbon dioxide removal and solar radiation management
is expected to be involved in the IAMs, and fortunately, some tentative exploration about this climate
engineering is in progress. The challenge IAM faces is also the challenge of the science of climatechange. More communication is needed among economists, climatologists, environmentalists and model
researchers and developers. Modeling of climate change with IAM is an interdisciplinary issue that it
requires both empirical estimation from social science, and carbon cycle and atmospheric concentration
principles from natural science. Current IAMs should integrate all the necessary information to findthe solutions of climate change mitigation and adaptation, or even climatic geoengineering.

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