Confronting Deep and Persistent Climate Uncertainty

15 Pages Posted: 8 Aug 2016  

Gernot Wagner

Harvard University - Harvard School of Engineering and Applied Sciences; Environmental Defense Fund

Richard J. Zeckhauser

Harvard University - Harvard Kennedy School (HKS); National Bureau of Economic Research (NBER)

Date Written: June 22, 2016

Abstract

Deep-seated, persistent uncertainty is a pernicious feature of climate change. One key parameter, equilibrium climate sensitivity, has eluded almost all attempts at pinning it down more precisely than a ‘likely’ range that has stalled at 1.5–4.5°C for over thirty-five years.

The marginal damages due to temperature increase rise rapidly. Thus, uncertainty in climate sensitivity significantly raises the expected costs of climate change above what they would be if the temperature increases were known to be close to a mean value 3.0°C. The costs of this uncertainty are compounded given that the distribution of possible temperature changes is strongly skewed toward higher values.

Keywords: Climate sensitivity, uncertainty, risk, fat tails, mitigation, adaptation

JEL Classification: Q54, D81

Suggested Citation

Wagner, Gernot and Zeckhauser, Richard J., Confronting Deep and Persistent Climate Uncertainty (June 22, 2016). HKS Working Paper No. 16-025. Available at SSRN: https://ssrn.com/abstract=2818035 or http://dx.doi.org/10.2139/ssrn.2818035

Gernot Wagner (Contact Author)

Harvard University - Harvard School of Engineering and Applied Sciences ( email )

29 Oxford Street
Cambridge, MA 02138
United States

Environmental Defense Fund ( email )

257 Park Avenue S
New York, NY 10023
United States

HOME PAGE: http://www.gwagner.com

Richard J. Zeckhauser

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
617-495-1174 (Phone)
617-496-3783 (Fax)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-1174 (Phone)
617-384-9340 (Fax)

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