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Recommendations for improving the treatment of risk and uncertainty in economic estimates of climate impacts in the Sixth Intergovernmental Panel on Climate Change Assessment Report

Stoerk, Thomas, Wagner, Gernot and Ward, Robert E. T. (2018) Recommendations for improving the treatment of risk and uncertainty in economic estimates of climate impacts in the Sixth Intergovernmental Panel on Climate Change Assessment Report. Review of Environmental Economics and Policy. ISSN 1750-6824

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Identification Number: 10.1093/reep/rey005

Abstract

Large discrepancies persist between projections of the physical impacts of climate change and economic damage estimates. These discrepancies increase with increasing global average temperature projections. Based on this observation, we recommend that in its Sixth Assessment Report (AR6), the Intergovernmental Panel on Climate Change (IPCC) improve its approach to the management of the uncertainties inherent in climate policy decisions. In particular, we suggest that the IPCC: (i) strengthen its focus on applications of decision-making under risk, uncertainty, and outright ambiguity; and (ii) estimate how the uncertainty itself affects its economic and financial cost estimates of climate damage and, ultimately, the optimal price for each ton of carbon dioxide released. Our hope is that by adopting these recommendations, AR6 will be able to resolve some of the documented inconsistencies in estimates of the physical and economic impacts of climate change and more effectively fulfill the IPCC’s mission to provide policy-makers with a robust and rigorous approach for assessing the potential future risks of climate change.

Item Type: Article
Official URL: https://academic.oup.com/reep
Additional Information: © 2018 Association of Environmental and Resource Economists
Divisions: Grantham Research Institute
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HB Economic Theory
JEL classification: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and Uncertainty
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate; Natural Disasters
Sets: Research centres and groups > Grantham Research Institute on Climate Change and the Environment
Date Deposited: 16 May 2018 10:50
Last Modified: 20 Jan 2020 01:26
Projects: ES/K006576/1
Funders: Economic and Social Research Council
URI: http://eprints.lse.ac.uk/id/eprint/87957

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