Abstract
A number of influential assessments of the economic cost of climate change rely on just a small number of coupled climate–economy models. A central feature of these assessments is their accounting of the economic cost of epistemic uncertainty—that part of our uncertainty stemming from our inability to precisely estimate key model parameters, such as the Equilibrium Climate Sensitivity. However, these models fail to account for the cost of aleatory uncertainty—the irreducible uncertainty that remains even when the true parameter values are known. We show how to account for this second source of uncertainty in a physically well-founded and tractable way, and we demonstrate that even modest variability implies trillions of dollars of previously unaccounted for economic damages.
Highlights
A number of influential assessments of the economic cost of climate change rely on just a small number of coupled climate–economy models
Their deterministic models generate trajectories of the expectation of global mean temperatures (GMT). These assessments can account for uncertainty in the expected response to changing greenhouse gas concentrations by varying model parameters, but by design they omit that part of our uncertainty that arises from the deviations of individual realistic trajectories from the trajectory of the expectation
The annual damages are discounted and summed across all future years to give an estimate of total economic damages from climate change (Supplementary Note 5)
Summary
A number of influential assessments of the economic cost of climate change rely on just a small number of coupled climate–economy models. That adding realistic variability in global temperature in this way creates substantial uncertainty in future damages, equivalent to trillions of dollars of previously unaccounted for economic costs of climate change. Adding realistic temperature variability gives rise to substantial uncertainty in total climate damages (Fig. 2b).
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