E7 economies under climate duress: A new framework for assessing socioeconomic impacts

Abstract

The Emerging Seven (E7) countries, marked by high emissions and rapid economic transformation, hold a decisive role in the global response to climate change. However, most existing integrated assessment models rely on global averages and exogenous growth assumptions, making them less suitable for capturing the dynamics of emerging economies. This study introduces a new model specifically designed for the E7 context, combining a semi-endogenous growth framework with updated climate and carbon cycle modules drawn from recent advances in the literature. Calibrated using aggregated data from the E7 economies, the model simulates future growth paths, identifies optimal emission reduction strategies, and estimates the social cost of carbon (SCC). By focusing on regionally calibrated economic dynamics under global carbon and temperature feedbacks, the model offers policy-relevant insights specific to the E7 context. The findings reveal an SCC of $123.25 per ton of CO2, which is significantly higher than conventional estimates due to demographic trends and structural constraints in technological development. The optimal average annual emission reduction rate is 3.54 percent, with a corresponding abatement cost of $122.84 per ton. These results demonstrate the importance of designing climate policy tools that account for region-specific economic conditions while remaining consistent with global physical systems. They underscore the need for tailored carbon pricing mechanisms and provide a policy-relevant framework for balancing near-term economic development with long-term environmental objectives.