Managing the Risk of Global Climate Catastrophe: An Uncertainty Analysis

Abstract

Despite much scientific progress over many decades, the nature of global climate change remains highly uncertain, and the possibility of global climate catastrophe is one of the main concerns in public debates about global climate change. In this paper, we present a model which incorporates the risk of climate catastrophe in an analysis of greenhouse gas abatement strategy. In this model, the timing and severity of climate catastrophe are treated probabilistically. The impacts of key uncertainties on optimal policy are analyzed, and the expected values of additional information that reduces the uncertainty associated with the world economy, carbon cycle, climate change, and climate damage are estimated.