Equity in Integrated Assessment Modelling

Abstract

IAMs are increasingly being used to evaluate progress towards sustainable development goals. While the representation of SDG-relevant sociotechnical systems in IAMs has improved over the years, relatively little attention has been given to equity considerations. Accounting for unequal consequences of policies and climate change could well mean that the consequences of climate change are underrepresented in current IAMs. One element is that losses and gains are valued equally in IAMs, while there is ample evidence that the modelled representative agent’s aversion to climate damages should be valued more strongly. If this would be accounted for even at aggregate global or regional scales, IAMs would call for faster and deeper emissions cuts, corresponding with overall fairer outcomes. Climate policies in IAMs can lead to increased inequalities within regions through their unequal impact on residential energy expenditures. At the same time, the resulting reduction in global emissions can lead to progressive distributional outcomes in the long term from avoided climate damages. Corrective distributional policies beyond revenue recycling schemes remain underexplored in IAMs. Yet, we show that IAMs are well equipped to explore policy combinations that reduce regressive mitigation impacts and reinforce SDG co-benefits without sacrificing ambitious climate targets. Enabling the financial means to achieve SDGs is crucial for reducing inequality both between and within countries and also enables more ambitious climate action. In this context, equity considerations in IAMs on fairer burden sharing between rich and poor countries are incomplete without also accounting for concurrent disparities in development needs.