Today the world stands at a critical juncture where the next big wave of economic crises and civil unrest will be triggered not due to socio-political issues but due to  climate catastrophe and insecurity. Integrated Assessment models and a prototype of IAM- DICE, helps us understand the interconnection between carbon emissions, global temperatures, economic policy framework, productivity and welfare. Economy, welfare and the climate systems continuously interact with each other and produce some sterling outcomes.
The Nobel laureate in Economics –William D. Nordhaus with his accomplice J. Boyer tries to explain the link between climate change and economics; the science of climate change and the effect of economies of policies addressing CHG emissions. His research tries to establish the fact that a policy measure that affects climate also affects the productivity and welfare. He also analyzes how over time these aspects develop an influence on each other .
The model helps to answer the ‘What If’s’. What if the world takes no action to limit change? What if global temperatures continue to rise? What if carbon concentration increases manifold by the next century?
IAM is designed in a way that helps to understand the modelling of human society along with parts of the Earth System. The simplest of IAM is DICE that is used to calculate the social cost of carbon. On the other hand, the complex IAMs look at the energy technologies, energy use choices, land use changes and societal trends that cause-or prevent- greenhouse gas emissions.
The basic structure of an IAM starts with model inputs- essentially a long list of assumptions about how the world works and how the population and the societies will change. The centre of the model typically includes separate modules representing the economy, energy system, land use, agriculture and climate. On the right are outputs from the model, including economic outcomes, land-use changes, greenhouse gas emissions, pathways of energy use and future human development. Gross Domestic Product and the population are the key assumptions driving the model. A large economy tends to use more energy in the cheapest possible way. Demand for food and fossil fuels affects land use and releases greenhouse gases. In turn economic outcomes, emissions, energy pathways and the land use affect prices as well as future energy mix, levels of deforestation and level of warming. For example, rising energy demand in the economy model might cause fuel prices to rise in the energy system module. This might be fed back into the economy and further depress demand. Similarly, a rise in food demand might increase the need for land in the agriculture module, leading to deforestation, rising prices and increased greenhouse gas emissions.
An integrated CC assessment outlines the population, technology, production and consumption which lead to emissions (as cycle continues mitigation policies would meddle).These emissions affect atmospheric concentrations leading to radio-active forcing. This results in rising temperatures and global climate changes which have a direct impact on crops, forest ecosystems resulting in socio-economic impacts which re-generate the cycle by affecting the population, technology, production and consumption.
A few impacts with a broad base can be identified and understood using the DICE model.
Firstly, Agriculture-if the temperatures rise and climate changes, this sector must keep evolving and adapting to the changes else this would result in a reduction in the crop yield. This will have consequential impacts on the livestock systems associated with the primary production of feed resources. The model also states that the form and magnitude of crop responses to climate change will not be determined by altered climate and carbon dioxide concentrations but by localised biophysical conditions as managed by individual farmers. Erstwhile mitigation will be dependent on the capacity to adapt with the limited resources available to them.This builds the crucial inter-relationship between a farm system, climate changes, welfare and the economy.
Secondly, the potential extinction of species-a gradual shift in extinction rate of 0 to 1% in the last 500 years and the predicted extinction rate of 10-50% in the next century can have cascading effects leading to distressed economies.
Thirdly, the tipping point and abrupt climate changes that come with catastrophic risks of ocean decarbonisation and melting of ice caps.
The final aspect of the model portrays climate change as a cause of  classic market failure. The burden of CO2 emissions lies on the society at large, at the same time leveraging the ones who burn fossil fuels. IAM predicts that  a Carbon Tax could help this market failure.
 
For Further reading on the subject refer to Nordhaus, W. D. & J. Boyer (2000), Warming the World, MIT Press. Stern, N. (2007), The Economics of Climate Change, Cambridge University Press. Nordhaus, W.D. (2008), A Question of Balance ‐ Weighing the Options on Globaniversity l Warming Policies, Yale University Press.