An Integrated Assessment Model of Economy-Energy-Climate – The Model Wiagem

Abstract

This paper presents an integrated economy-energy-climate model WIAGEM (World Integrated Assessment General Equilibrium Model) incorporating economic, energy and climatic modules in an integrated assessment approach. To evaluate market and nonmarket costs and benefits of climate change, WIAGEM combines an economic approach with a special focus on the international energy market, and integrates climate interrelations with temperature changes and sea level variations. WIAGEM is based on 25 world regions aggregated to 11 trading regions, each with 14 sectors. The representation of the economic relations is based on an intertemporal general equilibrium approach and contains the international markets for oil, coal and gas. The model incorporates all greenhouse gases (GHG) influencing potential global temperature, sea level variation and the assessed probable impacts in terms of climate change costs and benefits. Market and non-market damages are evaluated according to the impact assessment approaches of Tol [1]. Additionally, this model includes net changes in GHG-source emissions as well as removals by sinks resulting from land use change and de-foresting activities. This paper describes the model structure in detail and outlines general results with emphasis on the impacts of climate change. As a result, climate change impacts are significant within the next 50 years; developing regions face high economic losses in terms of welfare and GDP losses resulting from sinks and other GHG changes.