Researchers have also assessed the costs of climate protection by considering both the economic and biophysical systems, and the interactions between them. IAMs do this by combining key elements of biophysical and economic systems into one integrated system. They provide convenient frameworks to combine knowledge from a wide range of disciplines. These models strip down the laws of nature and human behaviour to their essentials to depict how increased GHGs in the atmosphere affect temperature, and how temperature change causes quantifiable economic losses. The models also contain enough detail about the drivers of energy use and energy–economy interactions to determine the economic costs of different constraints on CO₂ emissions (see, e.g., Shogren and Toman, 2000).

IAMs fall into two broad classes: policy optimization and policy evaluation models. Policy optimization models can be divided into three principal types:

• cost–benefit models, which try to balance the costs and benefits of climate policies;
  
• target-based models, which optimize responses, given targets for emission or climate change impacts; and
  
• uncertainty-based models, which deal with decision making under conditions of uncertainty.

Policy evaluation models include:

• deterministic projection models, in which each input and output takes on a single value; and
  
• stochastic projection models, in which at least some inputs and outputs take on a range of values.

Current integrated assessment research uses one or more of the following methods (Rotmans and Dowlatabadi, 1998):

• computer-aided IAMs to analyze the behaviour of complex systems;
  
• simulation gaming in which complex systems are represented by simpler ones with relevant behavioural similarity;
  
• scenarios as tools to explore a variety of possible images of the future; and
  
• qualitative integrated assessments based on a limited, heterogeneous data set, without using any models.

A review by Parson and Fisher-Vanden (1997) shows that IAMs have contributed to the establishment of important new insights to the policy debate, in particular regarding the evaluation of policies and responses, structuring knowledge, and prioritizing uncertainties. They have also contributed to the basic knowledge about the climate system as a whole. The review concludes that IAMs face two challenges, namely managing their relationship to research and disciplinary knowledge, and managing their relationship to other assessment processes and to policymaking.

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