Under the Kyoto Protocol, the world's wealthier countries assumed binding commitments to reduce greenhouse gas emissions. The agreement requires these countries to consider ways to minimize adverse effects on developing countries of these actions, transmitted through trade. Using a general equilibrium model of the world economy, we find that adverse effects fall mainly on energy-exporting countries, for some even greater than on countries that are assuming commitments. Removing existing fuel taxes and subsidies and using international permit trading would greatly reduce the adverse impacts and also reduce economic impacts on the countries taking on commitments. Another approach, preferential tariff reduction for developing countries, would benefit many developing countries, but would not target those most adversely affected. If instead, OECD countries directly compensated developing countries for losses, the required annual financial transfer would be on the order of $25 billion (1995 $US) in 2010.

The establishment of consensus by the IPCC is no longer as critical to governments as a full exploration of uncertainty. The emphasis on consensus in IPCC reports has put the spotlight on expected outcomes, which then become anchored via numerical estimates in the minds of policy-makers. With the general credibility of the science of climate change established, it is now equally important that policy-makers understand the more extreme possibilities that consensus may exclude or downplay.

© 2007 American Association for the Advancement of Science

The Emissions Prediction and Policy Analysis (EPPA) model is a component of the MIT Integrated Earth Systems Model (IGSM). Here, we provide an overview of the model accessible to a broad audience and present the detailed structure, data, and parameterization of the model for specialists in economic modeling. EPPA projects emissions of most of the climatically important substances emitted as a result of human activities including carbon dioxide (CO2), carbon monoxide (CO), methane (CH4), nitrous oxide (N2O), nitrogen oxides (NOx), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), sulfate aerosols (SOx), non-methane volatile organic compounds (NMVOCs), black carbon, organic carbon, and ammonia (NH3). We present an updated and consistent inventory for 1995 of all of these emissions disaggregated to the regional and sectoral levels we use in EPPA. This more complete inventory of climatically important substances shows non-energy sources (e.g. agriculture, biomass burning) and developing countries to be important current sources of many of these emissions. A major use of EPPA, a computable general equilibrium model of the world economy with regional and sectoral detail, is to estimate the cost of greenhouse gas emissions control over the 100-year horizon of the model. Reference projections show rates of improvement in energy use per unit of output (Gross Domestic Product) consistent with historical rates although in EPPA we do not attempt to model short-term business cycle behavior so that our projections do not show the same variability as the historical data. Emissions of climatically important substances mostly grow over time in our reference projection (although rates differ substantially among them) despite considerable improvements in energy efficiency and reductions in emissions coefficients for other substances. Developing countries as group become larger sources of all greenhouse gas emissions than developed or transition economies by the middle of the century as their economies and populations are projected to grow more rapidly. There remain many uncertainties in projections of this type. The projections presented in this report are a starting point (i.e. reference) for evaluating alternative scenarios and climate policies.

The MIT Integrated Global System Model (IGSM) is designed for analyzing the global environmental changes that may result from anthropogenic causes, quantifying the uncertainties associated with the projected changes, and assessing the costs and environmental effectiveness of proposed policies to mitigate climate risk. This report documents Version 2 of the IGSM, which like the previous version, includes an economic model for analysis of greenhouse gas and aerosol precursor emissions and mitigation proposals, a coupled atmosphere-ocean-land surface model with interactive chemistry, and models of natural ecosystems. In this global framework the outputs of the combined anthropogenic and natural emissions models provide the driving forces for the coupled atmospheric chemistry and climate models. Climate model outputs then drive a terrestrial model predicting water and energy budgets, CO2, CH4, and N2O fluxes, and soil composition, which feed back to the coupled climate/chemistry model.

The first version of the integrated framework (which we will term IGSM1) is described in Prinn et al. (1999; Climatic Change, 41: 469) and in publications and Joint Program Reports and Technical Notes provided on the Program's website. Subsequently, upgrades of component model capabilities have been achieved, allowing more comprehensive and realistic studies of global change. Highlights of these improvements include: a substantially improved economics model, needed to provide emissions projections and to assess an increasingly complex policy environment; a new global terrestrial model comprised of state-of-the-art biogeophysical, ecological and natural biogeochemical flux components, which provides an improved capacity to study consequences of hydrologic and ecologic change; the addition of a three-dimensional ocean representation, replacing the previous two-dimensional model, which allows examination of the global thermohaline circulation and its associated climate change impacts; the addition of an explicit oceanic carbon cycle including the impact of the biological pump; the addition of a new urban air pollution model enabling better treatments of human health and climate impacts; and the addition of greater flexibility for study of terrestrial ecosystem and urban pollution effects. This report documents the essential features of the new IGSM structure.