## Climate Damages in the FUND Model: A Disaggregated Analysis

We examine the treatment of climate damages in the FUND model. By inserting software switches to turn individual features on and off, we obtain FUND’s estimates for 15 categories of damages, and for components of the agricultural category. FUND, as used by the U.S. government to estimate the social cost of carbon, projects a net benefit of climate change in agriculture, offset by a slightly larger estimate of all other damages. Within agriculture there is a large benefit from CO2 fertilization, a moderate cost from the effect of temperature on yields, and a much smaller impact of the rate of change. In FUND’s agricultural modeling, the temperature-yield equation comes close to dividing by zero for high-probability values of a Monte Carlo parameter. The range of variation of the optimal temperature exceeds physically plausible limits, with 95% confidence intervals extending to 17 °C above and below current temperatures. Moreover, FUND’s agricultural estimates are calibrated to research published in 1996 or earlier. Use of estimates from such models is arguably inappropriate for setting public policy. But as long as such models are being used in the policy making process, an update to reflect newer research and correct modeling errors is needed before FUND’s damage estimates can be relied on.

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