Uncertainty of the future increases the value of climate mitigation today

How often have you heard that more certainty in climate science is needed before large scale mitigation polices should be implemented? Certainly many politicians and pundits have made that claim, and while at first blush this seems sensible, economists overwhelmingly say the opposite, as uncertainty increases so does the value of mitigation.

Costs increase nonlinearly with the amount of climate change. Therefore, the less you trust the IPCC results, the more dangerous the risk profile you face, and the more severe the constraints on carbon emissions and other anthropogenic forcings need to be. Yet, almost everybody argues this crucial point backwards.

This point was also recently made in a survey by J. Scott Holladay, Jonathan Horne, and Jason A Schwartz from NYU’s Institute for Policy Integrity, which found that “75% [of economists surveyed] agreed or strongly agreed that “uncertainty associated with the environmental and economic effects of greenhouse gas emissions increases the value of emission controls [also known as mitigation policies], assuming some level of risk‐aversion.”

Uncertainty cuts both ways.  Uncertainty may mean that the effects of global warming are less perilous than predicted, but it could just as well mean that they are more perilous. And since costs of global warming increase non-linearly (if we nudge past a major tipping point the costs will increase dramatically), the greater uncertainty the greater the risk.

In other words the decrease in costs of dealing with a lower than predicted climate sensitivity or a slower rate of warming, are much smaller than the increase in costs of dealing with a larger climate sensitivity or a greater rate of warming. Therefore the more uncertainty the greater the the risk, and the increase in value of mitigation.

This point really needs to be driven home, because almost everyone gets it wrong and argues the opposite.