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Selection of climate policies under the uncertainties in the Fifth Assessment Report of the IPCC

Nature Climate Change volume 5, pages 937–940 (2015)Cite this article

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Abstract

Strategies for dealing with climate change must incorporate and quantify all the relevant uncertainties, and be designed to manage the resulting risks1. Here we employ the best available knowledge so far, summarized by the three working groups of the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC AR5; refs 2, 3, 4), to quantify the uncertainty of mitigation costs, climate change dynamics, and economic damage for alternative carbon budgets. We rank climate policies according to different decision-making criteria concerning uncertainty, risk aversion and intertemporal preferences. Our findings show that preferences over uncertainties are as important as the choice of the widely discussed time discount factor. Climate policies consistent with limiting warming to 2 °C above preindustrial levels are compatible with a subset of decision-making criteria and some model parametrizations, but not with the commonly adopted expected utility framework.

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Figure 1: Diagram illustrating the methodology.
Figure 2: Influence of carbon budgets, model and state uncertainties on the distribution of the gross world product (GWP) per capita in 2100.
Figure 3: Selected carbon budgets according to three decision-making criteria: relative risk aversion, consumption smoothing and pure rate of time preference.

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Acknowledgements

We thank K. Keller from the Pennsylvania State University for supplying the climate model and his support. The paper was written while V.B. and M.T. were fellows at the Center for Advanced Studies in the Behavioural Sciences (CASBS) at Stanford University. The research leading to these results has received funding from the Italian Ministry of Education, University and Research and the Italian Ministry of Environment, Land and Sea under the GEMINA project, from the EU FP7 under grant agreement no. 308329 (ADVANCE) and from the European Research Council 336703-RISICO at IEFE, Bocconi University.

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Authors and Affiliations

  1. Fondazione Eni Enrico Mattei (FEEM), Corso Magenta 63, 20123 Milan, Italy,

    L. Drouet, V. Bosetti & M. Tavoni

  2. Centro Euro-mediterraneo sui Cambiamenti Climatici (CMCC), Corso Magenta 63, 20123 Milan, Italy,

    L. Drouet, V. Bosetti & M. Tavoni

  3. Department of Economics, Bocconi University, Via Sarfatti 25, 20136 Milan, Italy,

    V. Bosetti

  4. Department of Management and Economics, Politecnico di Milano, Via Lambruschini 4/B, 20156 Milan, Italy,

    M. Tavoni

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  1. L. Drouet
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All authors were involved in designing the research and contributed equally to the writing of the manuscript. L.D. performed the scientific computing.

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Correspondence to L. Drouet.

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Drouet, L., Bosetti, V. & Tavoni, M. Selection of climate policies under the uncertainties in the Fifth Assessment Report of the IPCC. Nature Clim Change 5, 937–940 (2015). https://doi.org/10.1038/nclimate2721

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