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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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.
The authors declare no competing financial interests.
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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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