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Economics of tipping the climate dominoes

Nature Climate Change volume 6, pages 514–519 (2016)Cite this article

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Abstract

Greenhouse gas emissions can trigger irreversible regime shifts in the climate system, known as tipping points. Multiple tipping points affect each other’s probability of occurrence, potentially causing a ‘domino effect’. We analyse climate policy in the presence of a potential domino effect. We incorporate three different tipping points occurring at unknown thresholds into an integrated climate–economy model. The optimal emission policy considers all possible thresholds and the resulting interactions between tipping points, economic activity, and policy responses into the indefinite future. We quantify the cost of delaying optimal emission controls in the presence of uncertain tipping points and also the benefit of detecting when individual tipping points have been triggered. We show that the presence of these tipping points nearly doubles today’s optimal carbon tax and reduces peak warming along the optimal path by approximately 1 °C. The presence of these tipping points increases the cost of delaying optimal policy until mid-century by nearly 150%.

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Figure 1: A simplified schematic of our DICE-based integrated assessment model.
Figure 2: Schematic illustrating the recursive decision problem underlying the optimal policy choice.
Figure 3: The optimal carbon tax in the years 2015 and 2050, assuming no tipping point has yet occurred.
Figure 4: Optimal emissions and temperature with a single potential tipping point and with all three potential tipping points.
Figure 5: The probability of eventually triggering a next tipping point, conditional on having just triggered a first tipping point (out of three potential ones) in a given year.
Figure 6: The welfare and policy consequences of delaying optimal climate policy.

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Acknowledgements

C.P.T. gratefully acknowledges support by the National Science Foundation through the Network for Sustainable Climate Risk Management GEO-1240507.

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Authors and Affiliations

  1. Department of Economics, University of Arizona, McClelland Hall 401, Tucson, Arizona 85721-0108, USA

    Derek Lemoine

  2. Department of Agricultural and Resource Economics, University of California Berkeley, 207 Giannini Hall #3310, UC Berkeley, California 94720-3310, USA

    Christian P. Traeger

  3. Department of Economics, University of Oslo, Postbox 1095 Blindern, 0317 Oslo, Norway

    Christian P. Traeger

Authors
  1. Derek Lemoine
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  2. Christian P. Traeger
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Contributions

Both authors contributed in equal parts to the conceptual and numerical design of the study, as well as to the interpretation and presentation of the results. D.L. coded the novel tipping point interaction part of the model.

Corresponding author

Correspondence to Christian P. Traeger.

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The authors declare no competing financial interests.

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Lemoine, D., Traeger, C. Economics of tipping the climate dominoes. Nature Clim Change 6, 514–519 (2016). https://doi.org/10.1038/nclimate2902

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