# Dynamic Integrated Climate Change Model (DICE)

#### Summary

The Dynamic Integrated Climate Change (DICE) model assumes a single world producer must chose levels for three simultaneously determined variables: current consumption, investment, and greenhouse gases reduction. The model is freely available in both a GAMS and Excel version. DICE allows both science and economics instructors to integrate a sophisticated economic model of climate change into their courses. The simulation is for upper-division courses where students have some background in microeconomics. The principle developer is William Nordhaus at Yale University.

## Learning Goals

The availability of the DICE model for classroom use opens up a new curriculum area previously inaccessible to undergraduates. The heavy reliance on sophisticated modeling in climate change science has generated general materials appropriate across the undergraduate curriculum, but students have had to treat the models themselves as "black boxes" in all but a handful of advanced courses. The economic effects of climate change have also been treated in a very general or intuitive manner.

- The DICE model allows climate change and economic outcomes to be tied together using a model that is compact enough to be explain to undergraduates.

- The DICE model allows students to resolve the model for parameter changes, gaining some sense of how existing models are used to predict future changes and motivate policy discussions.
- The DICE model has a professional history, which can be used to discuss problems with modeling climate change and economic outcomes.

## Context for Use

Using the DICE model in class is not a casual commitment on the part of an instructor. The model is only appropriate for upper-division courses where a two to three week segment, perhaps more, can be allocated to teaching and using the model. An intermediate microeconomics course and a semester of calculus are minimal prerequisites. While the instructor preparation time is large, the rewards are also large.

## Description and Teaching Materials

All materials related to the DICE model are availabe on the DICE Homepage.

The first thing to look at on the DICE page is the prepublication version of*A*

*Question of Balance: Economic Modeling of Global Warming.*The prepublication version will give instructors a very detailed overview of how to include the model in their courses. The structure of class readings and assignments can follow that of the book or be rearranged to stress either the assumptions of the model or the estimation process.Instructors proficient in GAMS can jump right in. The Excel versions require more care, due to both the Solver routine and the layout of the Excel file itself.

TIME COMMITMENT: Dependent on the instructional use of the model.

## Teaching Notes and Tips

Most of the difficulties simulating the Excel version of DICE are related to the solution algorithm. Tutorials for using Excel Solver can be found at the developers web site: Frontline Systems. An instructor who is not familiar with Solver, or who has not used Solver in the new Excel version, should look at the tutorials. Students will need to be given some guidance on what parameter variation is allowed to ensure a solution.

Because DICE has a professional history, instructors can introduce an EconLit search into their discussion of DICE. Most of the generated abstracts are accessible to undergraduates in terms of their content. The EconLit search is a very direct way to show students the current state of the art in linking economic outcomes to climate change arguments. The EconLit search also gives students an excellent introduction to how economists actually do reasearch with simulation models.

Some instructors may find it useful ignore actually simulating the model. The text can be assigned and the solutions in the Excel file discussed without reestimating the model with different parameters.

Because DICE has a professional history, instructors can introduce an EconLit search into their discussion of DICE. Most of the generated abstracts are accessible to undergraduates in terms of their content. The EconLit search is a very direct way to show students the current state of the art in linking economic outcomes to climate change arguments. The EconLit search also gives students an excellent introduction to how economists actually do reasearch with simulation models.

Some instructors may find it useful ignore actually simulating the model. The text can be assigned and the solutions in the Excel file discussed without reestimating the model with different parameters.

## Assessment

All traditional forms of assessment can be used to evaluate learning goals. For more information about assessment, see the SERC assessment module.

## References and Resources

Nordhouse, W. (2008)

*A Question of Balance: Economic Modeling of Global Warming*. Yale University Press.