My dissertation was a critique and reconstruction of William Nordhaus’ DICE model for climate-economy policy. I discovered a lot of issues, for example that having a carbon cycle that didn’t conserve carbon led to a low bias in CO2 projections, especially in high-emissions scenarios.
There was one sector I didn’t critique: the climate itself. That’s because Nordhaus used an established model, from climatologists Schneider & Thompson (1981). It turns out that I missed something important: Nordhaus reestimated the parameters of the model from time series temperature and forcing data.
Nordhaus’ estimation focused on a parameter representing the thermal inertia of the atmosphere/surface ocean system. The resulting value was about 3x higher than Schneider & Thompson’s physically-based parameter choice. That delays the effects of GHG emissions by about 15 years. Since the interest rate in the model is about 5%, that lag substantially diminishes the social cost of carbon and the incentive for mitigation.
So … should an economist’s measurement of a property of the climate, from statistical methods, overrule a climatologist’s parameter choice, based on physics and direct observations of structure at other scales?
I think the answer could be yes, IF the statistics are strong and reconcilable with physics or the physics is weak and irreconcilable with observations. So, was that the case?