CRED: A New Model of Climate and Development

CRED is an integrated assessment model focused on the global distribution of climate damages and climate policy costs. It is designed to estimate both the best pace of investment in mitigation and the best distribution of the cost of that investment to regions of the world.

This tool is included in the Development Impacts Assessment (DIA) Toolkit from the LEDS Global Partnership.

Approach

CRED is a simple model designed for ease of use and to facilitate presenting results in a coherent, comprehensible framework. The model takes into consideration that many developing countries are more exposed to climate impacts, and that poverty and inadequate infrastructure and services are major factors in vulnerability to climate change. CRED models utility maximization in an unequal, climate-constrained world. The goal of the model is to inform global climate negotiations and help break the stalemate between developed and developing countries. There are nine regions of the world in CRED, three high-income and six developing ones.

When to Use This Tool

This tool is most useful for development impacts assessments focused on:

Social

Economic

Environmental

Learn more about the topics for assessing the impacts of low-emission development strategies (LEDS).

Key Outputs

CRED could be viewed as setting priorities among three competing uses: high-income consumption, developing-country consumption, and abatement. All non-BAU scenarios show that the optimal path includes fairly rapid elimination emissions in high-income countries. Reductions in these emissions produce worldwide benefits, which can be bought with resources that were yielding little utility.

How to Use This Tool

Training Available
N/A

Not available to the public

Level of Expertise
Moderate

Key Inputs

Energy intensity, discount rates, level of investment flowing from high-income countries to developing countries.

Case Studies

Examples of how CRED: A New Model of Climate and Development has helped people assessing the impacts of low-emission development strategies in countries and regions:

CRED's website contains links to related publications.

---

Abstract

SEI's Climate and Regional Economics of Development (CRED) is an integrated assessment model, with a central focus on the global distribution of climate damages and climate policy costs. It is designed to estimate both the best pace of investment in mitigation, and the best distribution of the cost of that investment to regions of the world. Our goal is to inform global climate negotiations and help break the stalemate between developed and developing countries.

The unconstrained, optimal climate policy in CRED involves very large capital flows from high-income to developing countries, to an extent that might be considered politically unrealistic. Under more realistic constraints, climate outcomes are generally worse; climate stabilization requires either moderate capital flows to developing countries, or a very low discount rate. In CRED, more equitable scenarios have better climate outcomes; the challenge of climate policy is to persuade high-income countries to accept the need for both international equity and climate protection.

The paper ends with an agenda for further model development. A technical appendix describes the model relationships and parameters in greater detail.