Ocean Economy - Implementing damages to marine sectors and ecosystems into the DICE model

Sammanfattning: The oceans are a key element in our society, economy and environmental system.They cover over 70% of the worlds surface and contribute substantially to ecosystemservices such as climate management as well as to economic sectors such as foodproduction and tourism. While the importance of the oceans for climate changeand the society is generally acknowledged in science and literature, it is often notreflected in policy. Integrated Assessment Models (IAMs) which are used to advicepolicy on carbon prices often systematically omit process and damages related tothe ocean such as ocean acidification, loss of biodiversity and changes in oceancurrents.The aim of this study is to give a more detailed perspective on ocean related processesand their role and importance for the economy under climate change and to testassumptions made in the development of IAMs - and more precisely the DynamicIntegrated Climate-Economy model also referred to as the DICE model. The initialresults of the DICE model resulted in a optimal temperature trajectory with amaximum of 4 ◦C contradicting the goals set with the Paris Agreement.This thesis is the first of its kind attempt in reviewing the most recentbiophysical evidence on climate change impacts with a focus on marine systemsand incorporating these damages to market and non-market sectors into the DICEmodel. The impacts from climate change are implemented into the DICE modelthrough economic valuation of the damages and an update of the damage function.The analysis is based on the damage function used in the original DICE2016R2model as well as the suggested update presented by Hänsel et al. (2020)The results show, that incorporating marine damages into the model yields in amajor increase in economic damages particularly in the temperature range up to 2◦C.These increased damages influence the results of the optimal temperature trajectoryand give a clear indication for a more stringent climate policy, drastically limitingthe maximum temperature increase compared to the original DICE model.