Unlike a level risk function (f`left), the function of climate impact φ (t) is part of the GDP growth rate and thus entangles the level effects and the reaction to investment that leads to effects on growth. Direct use of the growth rate φ (t) with Eq. (3) in DICE would lead to an exogenous growth model, i.e. a model in which investments are predetermined and cannot be optimally adapted. To maintain growth model functionality, we are looking for a damage function like in Eq. (5), that is, at the same time as the effects of investment on growth, which correspond to the estimated effects of growth. The calibration of these parameters is controversial in climate economics because they reflect either how decisions should be made on the basis of ethical concerns or how decisions are actually made. Ethical considerations are reflected, for example, in a near-zero IRSTP, as it attributes the consumption of future generations to a relevance similar to that of the current generation24,62. On the other hand, the choice of a higher rate reflects the fact that people generally consume today rather than discourage them.
Similarly, the parameter of consumption elasticity can be determined either on the basis of empirical studies63 or by answering the normative question of the importance that supplemental consumption must have for social well-being64. The Paris Agreement on Combating Climate Change is universal in that it applies to all countries. It creates a new international climate regime that moves away from the Kyoto Protocol, which was aimed only at historical emitters and applied a top-down approach. Even most countries have not contributed to the great threat to human life posed by climate change, but now all countries – not just the largest historical emitters – must do their part. The space remaining in the atmosphere for greenhouse gases (also known as the CARBONE budget) is now too little to pursue emissions if we are to avoid the dangerous effects of climate and irreversible consequences. The need for action is so great and urgent that no one on this planet can continue or wish to live fossil fuels and a Western consumer lifestyle. And developing countries must avoid repeating the ecological mistakes of historical emitters. To date, BHM estimates have been shown to be consistent with the relatively high social cost of carbon9, indicating that emission reductions should be severe. However, the impact on optimal policies was assessed only on the basis of pre-defined scenarios of warming and economic growth6,8,9,10. While such estimates are not without criticism, it is natural and necessary to compare them with climate change mitigation costs (mitigation costs, below) using an Integrated Assessment Model (IAM). IAm are the different dynamic interactions between the economy and the climate12,13.
It is in the national interest of all countries of the world to ensure that the Paris Agreement on climate change is implemented and that countries meet their commitments. After all, we owe our children and grandchildren the prospect of a safe place to live unscathed from the damage caused by climate change. This agreement benefits the Americans. It is in our interest to stick to the agreement and ensure that all countries live up to their commitments. A strong internal political motivation for countries to meet their new commitments under the Paris Agreement is based on the nature of these commitments – these objectives are based on the implementation of measures that are in their own interest. The political leaders of these countries will have to live up to their commitments, as their citizens demand the necessary measures to comply with the Paris Agreement, as these measures meet urgent domestic policy needs, such as air pollution, job creation, poverty reduction and climate impact.