Skip to main content

Thank you for visiting nature.com. You are using a browser version with limited support for CSS. To obtain the best experience, we recommend you use a more up to date browser (or turn off compatibility mode in Internet Explorer). In the meantime, to ensure continued support, we are displaying the site without styles and JavaScript.

  • Perspective
  • Published:

Improving poverty and inequality modelling in climate research

Abstract

As climate change progresses, the risk of adverse impacts on vulnerable populations is growing. As governments seek increased and drastic action, policymakers are likely to seek quantification of climate-change impacts and the consequences of mitigation policies on these populations. Current models used in climate research have a limited ability to represent the poor and vulnerable, or the different dimensions along which they face these risks. Best practices need to be adopted more widely, and new model features that incorporate social heterogeneity and different policy mechanisms need to be developed. Increased collaboration between modellers, economists, and other social scientists could aid these developments.

This is a preview of subscription content, access via your institution

Access options

Buy this article

Prices may be subject to local taxes which are calculated during checkout

Fig. 1: State-of-the-art and future research directions in representing poverty and inequality in models for climate research.

Similar content being viewed by others

References

  1. De Cian, E., Hof, A. F., Marangoni, G., Tavoni, M. & van Vuuren, D. P. Alleviating inequality in climate policy costs: an integrated perspective on mitigation, damage and adaptation. Environ. Res. Lett. 11, 74015 (2016).

    Article  Google Scholar 

  2. Mendelsohn, R., Dinar, A. & Williams, L. The distributional impact of climate change on rich and poor countries. Environ. Dev. Econ. 11, 159 (2006).

    Article  Google Scholar 

  3. Tol, R. S. J., Downing, T. E., Kuik, O. J. & Smith, J. B. Distributional aspects of climate change impacts. Glob. Environ. Change 14, 259–272 (2004).

    Article  Google Scholar 

  4. Edenhofer, O. et al. in Climate Change 2014: Mitigation of Climate Change (eds Edenhofer, O. et al.) (IPCC, Cambridge University Press, 2014).

  5. Field, C. B. et al. in Climate Change 2014: Impacts, Adaptation, and Vulnerability (eds Field, C. B. et al.) 35–94 (IPCC, Cambridge Univ. Press, 2014).

  6. Hallegatte, S. et al. Shock Waves: Managing the Impacts of Climate Change on Poverty (World Bank Publications, 2015).

  7. O’Neill, B. C. et al. A new scenario framework for climate change research: the concept of shared socioeconomic pathways. Clim. Change 122, 387–400 (2014).

    Article  Google Scholar 

  8. Cameron, C. et al. Policy trade-offs between climate mitigation and clean cook-stove access in South Asia. Nat. Energy 1, 15010 (2016).

    Article  Google Scholar 

  9. Kline, K. L. et al. Reconciling food security and bioenergy: priorities for action. GCB Bioenergy 9, 557–576 (2017).

    Article  Google Scholar 

  10. Hasegawa, T. et al. Consequence of climate mitigation on the risk of hunger. Environ. Sci. Technol. 49, 7245–7253 (2015).

    Article  CAS  Google Scholar 

  11. Rogelj, J. et al. Paris Agreement climate proposals need a boost to keep warming well below 2 °C. Nature 534, 631–639 (2016).

    Article  CAS  Google Scholar 

  12. Poverty: Overview (World Bank, accessed 5 November 2016); http://www.worldbank.org/en/topic/poverty/overview.

  13. Reddy, S. G. & Lahoti, R. $1.90 Per Day: What Does it Say? http://dx.doi.org/10.2139/ssrn.2685096 (27 October 2015).

  14. Alkire, S. & Santos, M. E. Measuring acute poverty in the developing world: robustness and scope of the multidimensional poverty index. World Dev. 59, 251–274 (2014).

    Article  Google Scholar 

  15. Milanovic, B. Worlds Apart: Measuring International and Global Inequality (Princeton Univ. Press, 2005).

  16. IPCC Climate Change 1995: Economic and Social Dimensions of Climate Change (eds Bruce, J. P., Lee, H. & Haites, E. F.) (Cambridge Univ. Press, 1996).

  17. Schelling, T. C. Some economics of global warming. Am. Econ. Rev. 82, 1–14 (1992).

    Google Scholar 

  18. Dennig, F., Budolfson, M. B., Fleurbaey, M., Siebert, A. & Socolow, R. H. Inequality, climate impacts on the future poor, and carbon prices. Proc. Natl Acad. Sci. USA 112, 15827–15832 (2015).

    Article  CAS  Google Scholar 

  19. Olsson, L. et al. in Climate Change 2014: Impacts, Adaptation, and Vulnerability (eds Field, C. B. et al.) 793–832 (IPCC, Cambridge Univ. Press, 2014).

  20. Krey, V. Global energy-climate scenarios and models: a review. Wiley Interdiscip. Rev. Energy Environ. 3, 363–383 (2014).

    Article  Google Scholar 

  21. Anthoff, D., Hepburn, C. & Tol, R. S. J. Equity weighting and the marginal damage costs of climate change. Ecol. Econ. 68, 836–849 (2009).

    Article  Google Scholar 

  22. Anthoff, D. & Tol, R. S. J. On international equity weights and national decision making on climate change. J. Environ. Econ. Manage. 60, 14–20 (2010).

    Article  Google Scholar 

  23. Adler, M. D. et al. Priority for the worse off and the social cost of carbon. Nat. Clim. Change 7, 443–449 (2017).

    Article  Google Scholar 

  24. Anthoff, D. & Emmerling, J. Inequality and the Social Cost of Carbon. Working paper 2016.054 (FEEM, 2016).

  25. Stanton, E. A. Negishi welfare weights in integrated assessment models: The mathematics of global inequality. Clim. Change 107, 417–432 (2011).

    Article  Google Scholar 

  26. Stanton, E. A., Ackerman, F. & Kartha, S. Inside the integrated assessment models: Four issues in climate economics. Clim. Dev. 1, 166 (2009).

    Article  Google Scholar 

  27. Anthoff, D. Optimal Global Dynamic Carbon Abatement (Univ. California, Berkeley, 2011).

    Google Scholar 

  28. Budolfson, M., Siebert, A. & Spears, D. Optimal Climate Policy and the Future of World Economic Development (World Bank, 2017).

  29. Budolfson, M., Dennig, F., Fleurbaey, M. et al. The comparative importance for optimal climate policy of discounting, inequalities and catastrophes. Clim. Change https://doi.org/10.1007/s1058 (2017).

  30. Chambwera, M. et al. in Climate Change 2014: Impacts, Adaptation, and Vulnerability (eds Field, C. B. et al.) 945–977 (IPCC, Cambridge Univ. Press, 2014).

  31. Rausch, S., Metcalf, G. E. & Reilly, J. M. Distributional impacts of carbon pricing: A general equilibrium approach with micro-data for households. Energy Econ. 33 (Suppl.), S20–S33 (2011).

    Article  Google Scholar 

  32. Liang, Q. M. & Wei, Y. M. Distributional impacts of taxing carbon in China: Results from the CEEPA model. Appl. Energy 92, 545–551 (2012).

    Article  Google Scholar 

  33. Callan, T., Lyons, S., Scott, S., Tol, R. S. J. & Verde, S. The distributional implications of a carbon tax in Ireland. Energy Policy 37, 407–412 (2009).

    Article  Google Scholar 

  34. Siriwardana, M., Meng, S. & McNeill, J. The Impact of a Carbon Tax on the Australian Economy : Results from a CGE Model (UNE, 2011).

  35. Bureau, B. Distributional effects of a carbon tax on car fuels in France. Energy Econ. 33, 121–130 (2011).

    Article  Google Scholar 

  36. Rausch, S. & Schwarz, G. A. Household heterogeneity, aggregation, and the distributional impacts of environmental taxes. J. Public Econ. 138, 43–57 (2016).

    Google Scholar 

  37. Williams, R. C., Gordon, H., Burtraw, D., Carbone, J. C. & Morgenstern, R. D. The Initial Incidence of a Carbon Tax across Income Groups (Resources for the Future, 2014).

  38. Mathur, A. & Morris, A. C. Distributional effects of a carbon tax in broader US fiscal reform. Energy Policy 66, 326–334 (2014).

    Article  Google Scholar 

  39. Combet, E., Ghersi, F. F., Hourcade, J.-C. & Théry, D. in Critical Issues in Environmental Taxation (eds Dias Soares, C., Milne, J., Ashiabor, H., Dekete-Laere, K. & Kreiser, L.) 277–295 (Oxford Univ. Press, 2010).

  40. Buddelmeyer, H., Hérault, N., Kalb, G. & van Zijll de Jong, M. Linking a microsimulation model to a dynamic CGE model: climate change mitigation policies and income distribution in Australia. Int. J. Microsimulation 5, 40–58 (2012).

    Google Scholar 

  41. Sterner, T. Distributional effects of taxing transport fuel. Energy Policy 41, 75–83 (2012).

    Article  Google Scholar 

  42. Cullenward, D., Wilkerson, J. T., Wara, M. & Weyant, J. P. Dynamically estimating the distributional impacts of US climate policy with NEMS: A case study of the Climate Protection Act of 2013. Energy Econ. 55, 303–318 (2016).

    Article  Google Scholar 

  43. Durand-Lasserve, O., Campagnolo, L., Chateau, J. & Dellink, R. Modelling of Distributional Impacts of Energy Subsidy Reforms: an Illustration with Indonesia (OECD, 2015).

  44. Naranpanawa, A. & Bandara, J. S. Poverty and growth impacts of high oil prices: Evidence from Sri Lanka. Energy Policy 45, 102–111 (2012).

    Article  Google Scholar 

  45. Yusuf, A. A. & Resosudarmo, B. P. On the distributional impact of a carbon tax in developing countries: the case of Indonesia. Environ. Econ. Policy Stud. 17, 131–156 (2015).

    Article  Google Scholar 

  46. Coxhead, I., Wattanakuljarus, A. & Nguyen, C. V. Are carbon taxes good for the poor? A general equilibrium analysis for Vietnam. World Dev. 51, 119–131 (2013).

    Article  Google Scholar 

  47. Dartanto, T. Reducing fuel subsidies and the implication on fiscal balance and poverty in Indonesia: A simulation analysis. Energy Policy 58, 117–134 (2013).

    Article  Google Scholar 

  48. Essama-Nssah, B. et al. Economy-Wide and Distributional Impacts of an Oil Price Shock on the South African Economy (World Bank, 2007).

  49. Van der Mensbrugghe, D. Shared socio-economic pathways and global income distribution. In 18th Annual Conference on Global Economic Analysis (GTAP, 2015).

  50. SĂ¡nchez, M. V. & Cicowiez, M. Trade-offs and payoffs of investing in human development. World Dev. 62, 14–29 (2014).

    Article  Google Scholar 

  51. Hertel, T. W., Burke, M. B. & Lobell, D. B. The poverty implications of climate-induced crop yield changes by 2030. Glob. Environ. Change 20, 577–585 (2010).

    Article  Google Scholar 

  52. Bussolo, M., De Hoyos, R. E. & Medvedev, D. Economic growth and income distribution: linking macro-economic models with household survey data at the global level. Int. J. Microsimulation 3, 91–103 (2010).

    Google Scholar 

  53. Bouet, A., Estrades, C. & Laborde, D. Households Heterogeneity in a Global CGE Model: an Illustration with the MIRAGE-HH (MIRAGE-HouseHolds) Model (University Montesquieu-Bordeaux IV, 2013).

  54. van Ruijven, B. J. & O’Neill, B. C. & Chateau, J. Methods for including income distribution in global CGE models for long-term climate change research. Energy Econ. 51, 530–543 (2015).

    Article  Google Scholar 

  55. Melnikov, N. B., O’Neill, B. C., Dalton, M. G. & Van Ruijven, B. J. Downscaling heterogeneous household outcomes in dynamic CGE models for energy-economic analysis. Energy Econ. 65, 87–97 (2017).

    Article  Google Scholar 

  56. O’Neill, B. C. et al. Global demographic trends and future carbon emissions. Proc. Natl Acad. Sci. USA 107, 17521–17526 (2010).

    Article  Google Scholar 

  57. Burke, M. et al. Opportunities for advances in climate change economics. Science 352, 292–293 (2016).

    Article  CAS  Google Scholar 

  58. Somanathan, E. et al. in Climate Change 2014: Mitigation of Climate Change (eds Edenhofer, O. et al.) Ch. 15 (IPCC, Cambridge Univ. Press, 2014).

  59. Feng, K. et al. Distributional effects of climate change taxation: the case of the UK. Environ. Sci. Technol. 44, 3670–3676 (2010).

    Article  CAS  Google Scholar 

  60. Chingcuanco, F. & Miller, E. J. A microsimulation model of urban energy use: modelling residential space heating demand in ILUTE. Comput. Environ. Urban Syst. 36, 186–194 (2012).

    Article  Google Scholar 

  61. Jiang, Z. & Shao, S. Distributional effects of a carbon tax on Chinese households: A case of Shanghai. Energy Policy 73, 269–277 (2014).

    Article  Google Scholar 

  62. Ekholm, T., Krey, V., Pachauri, S. & Riahi, K. Determinants of household energy consumption in India. Energy Policy 38, 5696–5707 (2010).

    Article  Google Scholar 

  63. Rao, N. D. Distributional impacts of climate change mitigation in Indian electricity: The influence of governance. Energy Policy 61, 1344–1356 (2013).

    Article  Google Scholar 

  64. Howells, M. I., Alfstad, T., Victor, D. G., Goldstein, G. & Remme, U. A model of household energy services in a low-income rural African village. Energy Policy 33, 1833–1851 (2005).

    Article  Google Scholar 

  65. Hussein, Z., Hertel, T. & Golub, A. Climate change mitigation policies and poverty in developing countries. Environ. Res. Lett. 8, 35009 (2013).

    Article  Google Scholar 

  66. Daioglou, V., van Ruijven, B. J. & van Vuuren, D. P. Model projections for household energy use in developing countries. Energy 37, 601–615 (2012).

    Article  Google Scholar 

  67. van Ruijven, B. J. et al. Model projections for household energy use in India. Energy Policy 39, 7747–7761 (2011).

    Article  Google Scholar 

  68. Pachauri, S. et al. Pathways to achieve universal household access to modern energy by 2030. Environ. Res. Lett. 8, 24015 (2013).

    Article  Google Scholar 

  69. Hallegatte, S. & Rozenberg, J. Climate change through a poverty lens. Nat. Clim. Change 7, 250–256 (2017).

    Article  Google Scholar 

  70. Preston, B. L., Yuen, E. J. & Westaway, R. M. Putting vulnerability to climate change on the map: a review of approaches, benefits, and risks. Sustain. Sci. 6, 177–202 (2011).

    Article  Google Scholar 

  71. van Ruijven, B. J. et al. Enhancing the relevance of Shared Socioeconomic Pathways for climate change impacts, adaptation and vulnerability research. Clim. Change 122, 481–494 (2014).

    Article  Google Scholar 

  72. Ahmed, S. A. et al. Climate volatility and poverty vulnerability in Tanzania. Glob. Environ. Change 21, 46–55 (2011).

    Article  Google Scholar 

  73. Mideksa, T. K. Economic and distributional impacts of climate change: The case of Ethiopia. Glob. Environ. Change 20, 278–286 (2010).

    Article  Google Scholar 

  74. Brooks, N., Adger, W. N. & Kelly, P. M. The determinants of vulnerability and adaptive capacity at the national level and the implications for adaptation. Glob. Environ. Change 15, 151–163 (2005).

    Article  Google Scholar 

  75. Stiglitz, J. E. The origins of inequality, and policies to contain it. Natl Tax J. 68, 425–448 (2015).

    Article  Google Scholar 

  76. Atkinson, A. B. Inequality: What can be Done (Harvard Univ. Press, 2015).

  77. Bourguignon, F. The Globalization of Inequality (Princeton Univ. Press, 2015).

  78. Piketty, T. Capitalism in the 21st Century (Harvard Univ. Press, 2014).

  79. Robinson, J. A., Acemoglu, D. & Robinson, J. A. Democracy, Redistribution and Inequality. Working paper no. 19746 (NBER, 2013).

  80. Atkinson, A. B. & Bourguignon, F. in Handbook of Income Distribution (eds Atkinson, A. B. & Bourguignon, F.) 1–58 (2000).

  81. Rao, N. D. & Min, J. Decent living standards: material requirements for human well-being. Soc. Indic. Res. http://doi.org/cf42 (2017).

  82. Dellink, R., Chateau, J., Lanzi, E. & Magné, B. Long-term economic growth projections in the Shared Socioeconomic Pathways. Glob. Environ. Change 42, 200–214 (2015).

  83. Oladokun, M. G. & Odesola, I. A. Household energy consumption and carbon emissions for sustainable cities — A critical review of modelling approaches. Int. J. Sustain. Built Environ. 4, 231–247 (2015).

    Article  Google Scholar 

  84. Jacoby, H., Rabassa, M. & Skoufias, E. Distributional implications of climate change in India. Am. J. Agric. Econ. 97, 1–22 (2014).

    Google Scholar 

  85. Melnikov, N. B., O’Neill, B. C. & Dalton, M. G. Accounting for household heterogeneity in general equilibrium economic growth models. Energy Econ. 34, 1475–1483 (2012).

    Article  Google Scholar 

Download references

Acknowledgements

N.R. was supported by the European Research Council Starting Grant agreement no. 637462 (‘DecentLivingEnergy’), K.R. and V.B. were supported by European Union’s Horizon 2020 research and innovation programme under grant agreement no. 642147 (CD-LINKS), and B.v.R. was supported by the National Science Foundation under grant no. 1243095.

Author information

Authors and Affiliations

Authors

Contributions

N.R. and B.v.R. conceptualized, researched and wrote the paper. V.B. and K.R. provided conceptual inputs.

Corresponding author

Correspondence to Narasimha D. Rao.

Additional information

Publisher’s note: Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Rao, N.D., van Ruijven, B.J., Riahi, K. et al. Improving poverty and inequality modelling in climate research. Nature Clim Change 7, 857–862 (2017). https://doi.org/10.1038/s41558-017-0004-x

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1038/s41558-017-0004-x

This article is cited by

Search

Quick links

Nature Briefing

Sign up for the Nature Briefing newsletter — what matters in science, free to your inbox daily.

Get the most important science stories of the day, free in your inbox. Sign up for Nature Briefing