International Review of Environmental and Resource Economics > Vol 16 > Issue 3-4

Accounting for Biodiversity Costs from Climate Change in Integrated Assessment Models

Kevin R. Kaushal, Research Department, Statistics Norway, and School of Economics and Business, Norwegian University of Life Sciences, Norway, kevin.kaushal@ssb.no , Ståle Navrud, School of Economics and Business, Norwegian University of Life Sciences, Norway, stale.navrud@nmbu.no
 
Suggested Citation
Kevin R. Kaushal and Ståle Navrud (2023), "Accounting for Biodiversity Costs from Climate Change in Integrated Assessment Models", International Review of Environmental and Resource Economics: Vol. 16: No. 3-4, pp 467-504. http://dx.doi.org/10.1561/101.00000149

Publication Date: 16 Jan 2023
© 2023 K. Kaushal and S. Navrud
 
Subjects
Environmental Economics: Endangered Species,  Contingent Valuation,  Climate Change
 
Keywords
JEL Codes: Q54
Social costs of carbonintegrated assessment modelsDelphi methodcontingent valuationclimate changebenefit transferbiodiversity
 

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In this article:
Introduction 
Biodiversity and Ecosystem Damage in IAMs 
Updating the Ecosystem Damages in FUND 3.9 
Model Simulation 
Conclusion, Limitations, and Future Research 
Acknowledgments 
References 

Abstract

Climate change will have a major negative impact on global biodiversity. Our review of integrated assessment models (IAMs) show that biodiversity damage costs are not included or incompletely captured. We provide improved damage cost estimates of species loss based on (i) a recent global biophysical assessment of impacts on species, (ii) transfer of economic values from a global Delphi contingent valuation study of households' willingness-to-pay, and (iii) benefit transfer techniques. The new damage cost estimates are implemented in FUND 3.9. The numerical simulations suggest that both the expected physical global species loss and the associated damage costs are higher than initially predicted. Hence, IAMs with incomplete assessment and valuation of species loss could greatly underestimate the social cost of carbon, and lead to underinvestment in greenhouse gas mitigation measures. Even if the knowledge is incomplete, IAMs should include nonmarket environmental damage costs scenarios to better inform climate policy designs.

DOI:10.1561/101.00000149