dice

DICE-99 Climate Policy Model

GAMS Code for DICE-99. Adapted from: Nordhaus and Boyer, Warming the World (1999), Appendix E.

Overview

Utility ($U$) is maximized subject to constraints a sample of which is shown below. Utility increases as consumption ($C$) rises, which in turn is constrained by economic production ($Y$), which in turn is constrained by both abatements costs ($f$($\mu$)) and temperature increases ($T$).

$$\max U=\sum_t {r}_t L_t \log(\frac{C_t}{L_t})$$

$$C_t=Y_t-I_t$$

$$Y_t=\alpha_t L_t^{1-\gamma} K_t^{\gamma} \frac{1-f(\mu_t)}{1+a_1{T}_t+a_2{T}_t^2}$$

Where $L_t$ and $I_t$ are model variables representing labour and investment respectively. While $r_t$ and $\alpha_t$ are input parameters representing the discount rate and total factor productivity respectively.