July 2014

Climate Change Impact Valuation Models Revisited

Valuing diverse climate impacts in integrated assessment models.

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Image courtesy of Master Sgt. Mark C. Olsen, U.S. Air Force

Predicting the economic costs of damage from natural forces is difficult. By exploring the interactions of human and natural systems in the context of climate change, integrated assessment models can help inform dialogue on adaptation and mitigation strategies.

The Science

Some studies on the impacts of climate change use a “damage” function that assigns a dollar value to the physical effects of climate change. Department of Energy researchers in the Massachusetts Institute of Technology (MIT) Joint Program on the Science and Policy of Global Change believe that this approach is limited because of the large uncertainty surrounding climate change.

The Impact

A mixed approach of valuing impacts, evaluating physical and biological effects, and working to better describe uncertainties in the Earth system can contribute to understanding the options and implications for various climate change mitigation and adaptation strategies.


The MIT Integrated Global Systems Model (IGSM), described in a special edition of Climatic Change, integrates the Earth system with an economic model allowing researchers to describe human activities that contribute to environmental change or are affected by it. The MIT approach also provides an opportunity to understand the complex dynamics of systems interactions. For example, the possible effects of tropospheric ozone on crop productivity and yields can be explored individually as part of a process representation rather than a blended, generalized economic assumption. One challenge is the ability to describe specific physical relationships in the Earth system that aren’t known because the climate system has not yet experienced those changes (e.g., connecting climate change to pest outbreaks). In IGSM, researchers confront this and other challenges by focusing on physical impacts that can be described and quantified and by conducting uncertainty analyses to better understand the full range of potential future effects.


John Reilly
The MIT Joint Program on the Science and Policy of Global Change, Massachusetts Institute of Technology, Cambridge, MA 02139


Funding was provided by the Integrated Assessment Research program within the DOE Office of Science Office of Biological and Environmental Research.


Reilly, J., et al. “Valuing climate impacts in integrated assessment models: the MIT IGSM.” Climatic Change 117 (3), 561–573 (2013). [DOI: 10.1007/s 10584-012-0635-x].

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Last modified: 8/1/2014 1:20:07 PM