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

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 (1) strengthen its focus on applications of decision making under risk, uncertainty, and outright ambiguity and (2) 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 policymakers with a robust and rigorous approach for assessing the potential future risks of climate change.

Thomas Stoerk, Gernot Wagner, Robert E T Ward. In: Review of Environmental Economics and Policy, Volume 12, Issue 2, 1 August 2018, Pages 371–376, https://doi.org/10.1093/reep/rey005