NGFS Scenarios Phase III

This project directly links IAM data with the expanded version of NiGEM which deals with climate channels in a macro model to provide the impacts of various NGFS scenarios.

In order to match IAM starting points, a forecast base is created within NiGEM for each IAM, referred to as a climate neutral base as no transition or physical effects from climate are used in this forecast.

The transition shock consists of both a carbon price shock and a recycling shock.  The IAM scenario data is imported exogenously into NiGEM for the carbon pricing scenarion which then executes under standard rational expectations to provide final macro economic impacts.  The revenue generated from the carbon price is then used to provide the effects of the government use of this revenue, for example through tax relief etc.

Finally, the GDP damage for each temperature profile in the various scenarios is considered. In NiGEM, physical damages are modelled as both demand and supply (where the productive capacity of an economy is affected) shocks. The combination of these shocks must mimic the GDP effects supplied by the damage functions.

Related projects:

• Integration of NiGEM into Phase II of the NGFS scenarios
• Macroeconomic Effects of the Move to Net Zero
• Economic Impacts of Climate Change