Question

What role does the “damage function” play in Integrated Assessment Models (IAMs) and why is it so difficult to measure?

Answer 1

In the integrated assessment model (IAM) the “damage function” most controversial aspects that relates change in climate to economic impacts; and is applied to quantify the economic loss caused due to the change in climate. It is significant for coupling the natural system and economic system in a model. However the most important limitation is that in the damage function the only climatic factor is the global annual mean temperature increase, which can cause a deviation from reality in the estimation. The assessment of the climate sensitivity can be performed on the underlying physical science that can be coherently argued on the relevant probability distributions. However in the damage function, there is no data and no theory on which assessment can be drawn; and IAMs developers of draws the arbitrary functional forms with the corresponding parameter values