Pardee Institute's IFs Model Featured in The Economist
The Pardee Institute's International Futures (IFs) model was featured in an article by The Economist that examines the costs of transitioning to clean energy. The article, “Carbon Bargain: The Energy Transition Will Be Much Cheaper Than You Think,” argues that existing cost estimates for “greening the economy” are exaggerated and based on unlikely assumptions and scenarios. The outcome, the article warns, gives climate activists and energy executives alike an unreliable price tag of the energy transition, complicating all stakeholders’ collective ability to plan for climate change.
The article references research by Matthew G. Burgess and others, published in the journal Communications Earth & Environment, which argues that prevailing forecasting methods overestimate key assumptions, namely economic growth. Their research uses two methods to forecast long-term global economic growth.
The first method, a differential-equation model, relies on historical trends, examining past relationships between gross domestic product (GDP) levels and growth rates to project future patterns. The second approach involves IFs, which integrate data on economics, population, and technology using an array of quantitative techniques to create detailed global scenarios. IFs’ systems-wide approach to modeling potential futures offers a holistic view of how various inputs of the energy transition will interact over time.
In their research, Burgess et al. find their differential-equation model and the IFs model better predicted GDP per capita growth rates observed relative to the International Monetary Fund’s near-term forecast predictions. This approach, the article argues, offers more reliable foresight into future pathways. A key takeaway from Burgess et al.’s research is their long-term forecasts for GDP per capita are closer to Shared Socioeconomic Pathway (SSP) 4, “Inequality”, than SSP 2, the “Middle of the Road” scenario often treated by climate researchers as a business-as-usual projection. While an SSP4 world bodes ill for humanity’s ability to adapt to climate change, it also implies a world of lower challenges to climate change mitigation given slower economic growth, slower convergence in GDP per capita between low- and high-income countries, and, consequently, lower demand for fossil fuels than in an SSP2 world.
The citing of the IFs-related work in the Economist article highlights its value as a reliable tool for climate change stakeholders in understanding global challenges and for cost-effective climate planning. Read the entirety of Burgess et al.’s research here.
