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Risk management and climate change

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Abstract

The selection of climate policies should be an exercise in risk management reflecting the many relevant sources of uncertainty. Studies of climate change and its impacts rarely yield consensus on the distribution of exposure, vulnerability or possible outcomes. Hence policy analysis cannot effectively evaluate alternatives using standard approaches, such as expected utility theory and benefit-cost analysis. This Perspective highlights the value of robust decision-making tools designed for situations such as evaluating climate policies, where consensus on probability distributions is not available and stakeholders differ in their degree of risk tolerance. A broader risk-management approach enables a range of possible outcomes to be examined, as well as the uncertainty surrounding their likelihoods.

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Figure 1: Estimated probability distributions for ECS (bottom axis) from various published studies collated by ref. 20, and corresponding concentrations of CO2 (top axis) consistent with a long-term CO2-induced warming Tmax of 2 °C (ref. 30), given by the expression C2k = Cpreindustrial exp(ln(2)Tmax/ECS).

Change history

  • 28 March 2013

    In the version of this Perspective originally published online, in the equation in the caption of Figure 1, '–ln(2)' should have read 'ln(2)'. This error has now been corrected in all versions of the Perspective.

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Acknowledgements

Thanks to Linus Mattauch for research assistance and to Malte Meinshausen for the data used in Fig. 1. Simon Dietz, Kristie Ebi, Christian Gollier, Robin Gregory, Benjamin Horton, Elmar Kriegler, Katharine Mach, Michael Mastrandrea, Anthony Millner, Michael Oppenheimer and Christian Träger provided comments on earlier versions of the paper. Partial support for this research came from the Wharton Risk Management and Decision Processes Center's Extreme Events project, the National Science Foundation (SES-1062039 and 1048716), the Travelers Foundation, the Center for Climate and Energy Decision Making (NSF Cooperative Agreement SES-0949710 with Carnegie Mellon University), the Center for Research on Environmental Decisions (CRED; NSF Cooperative Agreement SES-0345840 to Columbia University) and CREATE at the University of Southern California.

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H.K. and G.H. provided the conceptual framework for this Perspective. After sharing a preliminary draft with M.A., O.E. C.F. and G.Y., all authors contributed equally.

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Correspondence to Howard Kunreuther.

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The authors declare no competing financial interests.

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Kunreuther, H., Heal, G., Allen, M. et al. Risk management and climate change. Nature Clim Change 3, 447–450 (2013). https://doi.org/10.1038/nclimate1740

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