Energy balance climate models and the economics of climate change. Beijer discussion paper 226, The Beijer Institute of Ecological Economics, Royal Swedish Academy of Sciences http://www. beijer.kva.se

Spatial energy balance models are used by climate scientists to help understand climate dynamics and to assist in construction of more complex general circulation models. In this paper we present the first, to our knowledge, coupled spatial energy balance and economic growth model. This leads to new insights regarding: (i) The contentious is-sue of whether a gradualist approach to mitigation, is preferable to an initially more aggressive approach, (ii) The effect of polar ice melting on optimal policy, (iii) Robustness of optimal climate policy to spatial damage uncertainty, and (iv) Economic justice considerations raised by variation in latitude specific damages. (JEL D62, Q54) This paper presents the first, to our knowledge, coupled spatial energy balance climate model (EBCM) integrated with an economic growth model. It introduces solution methods for spatial climate models that may be new to economics and it integrates these methods with the standard methods of solving economic models. Before we proceed further we believe that it is useful to point out why this is worth doing by providing an important example a