Climate Policy

Climate Policy 4 (2004) 205–216

Research Article

The use of PPP or MER in the construction of emission scenarios is more than a question of ‘metrics’

Bjart J Holtsmark and Knut H Alfsen

Received 21 April 2004 ; received in revised form 11 September 2004 ; accepted 28 October 2004

The Intergovernmental Panel on Climate Change (IPCC)’s Special Report on Emissions Scenarios (SRES, IPCC, 2000) has been a matter of debate since Ian Castles and David Henderson claimed that the scenarios were based on unsound economics, giving rise to improbably high emission growth. A main point in their critique was that the scenario-makers converted national gross domestic product (GDP) data to a common measure using market exchange rates (MER) rather than purchasing power parity (PPP) rates. The IPCC responded to the critique by claiming that the use of PPP- or MER-based measures is just a question of ‘metrics’, as important as the ‘switch from degrees Celsius to Fahrenheit’. This paper addresses both the critique from Castles and Henderson and the response from the IPCC. It builds on our earlier argument that the use of MER-based measures, although misleading in some respects, probably has not given rise to seriously exaggerated emission forecasts because comparing regional income levels by the use of MER has two types of implications that draw in different directions and effectively neutralize one another. Nevertheless, we argue that the choice between MER and PPP in the construction of emission scenarios is far more than just a question of metrics. Finally, we discuss whether the SRES scenario with the lowest cumulative emissions is a reasonable lower limit with respect to global emission growth.

Keywords: Emission scenarios; IPCC; Purchasing Power Parity; SRES

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