A model which combines scientific and socio-economic aspects of climate change primarily for the purpose of assessing policy options for climate change control Simulates macroeconomic impacts of climate policies designed to achieve particular emissions trajectories

Issue 2: Predicting the unpredictable and pricing the priceless 1.Uncertainty in climate change 2.Benefit assessment: i.Income bias ii.Incomplete picture associated with benefit from global warming iii.Subjectivity in damage assessment- Stern using monte carlo draws

Limitations of IAMS Assuming predictable technology improvements Assuming on the production possibility frontier

Recommendation Use insurance concept to treat climate change issue – Unknown probability distribution – Potentially disastrous outcomes Economists should focus on the cost-effective global strategy for achieving those targets