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Inaction and climate stabilization uncertainties lead to severe economic risks

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  • Martha Butler
  • Patrick Reed
  • Karen Fisher-Vanden
  • Klaus Keller
  • Thorsten Wagener

Abstract

Climate stabilization efforts must integrate the actions of many socio-economic sectors to be successful in meeting climate stabilization goals, such as limiting atmospheric carbon dioxide (CO 2 ) concentration to be less than double the pre-industrial levels. Estimates of the costs and benefits of stabilization policies are often informed by Integrated Assessment Models (IAMs) of the climate and the economy. These IAMs are highly non-linear with many parameters that abstract globally integrated characteristics of environmental and socio-economic systems. Diagnostic analyses of IAMs can aid in identifying the interdependencies and parametric controls of modeled stabilization policies. Here we report a comprehensive variance-based sensitivity analysis of a doubled-CO 2 stabilization policy scenario generated by the globally-aggregated Dynamic Integrated model of Climate and the Economy (DICE). We find that neglecting uncertainties considerably underestimates damage and mitigation costs associated with a doubled-CO 2 stabilization goal. More than ninety percent of the states-of-the-world (SOWs) sampled in our analysis exceed the damages and abatement costs calculated for the reference case neglecting uncertainties (1.2 trillion 2005 USD, with worst case costs exceeding $60 trillion). We attribute the variance in these costs to uncertainties in the model parameters relating to climate sensitivity, global participation in abatement, and the cost of lower emission energy sources. Copyright Springer Science+Business Media Dordrecht 2014

Suggested Citation

  • Martha Butler & Patrick Reed & Karen Fisher-Vanden & Klaus Keller & Thorsten Wagener, 2014. "Inaction and climate stabilization uncertainties lead to severe economic risks," Climatic Change, Springer, vol. 127(3), pages 463-474, December.
    • Handle: RePEc:spr:climat:v:127:y:2014:i:3:p:463-474
    DOI: 10.1007/s10584-014-1283-0
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    2. Alan F. Rodriguez-Jasso & Arturo Briseno & Ana L. Zorrilla, 2024. "Climate Inaction in Business Management: An Exploratory Review of the Literature," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 13(4), pages 1-87, July.
    3. J. Farmer & Cameron Hepburn & Penny Mealy & Alexander Teytelboym, 2015. "A Third Wave in the Economics of Climate Change," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(2), pages 329-357, October.

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