Reflections–Managing Uncertain Climates: Some Guidance for Policy Makers and Researchers

Frank J. Convery and Gernot Wagner

Review of Environmental Economics and Policy, 2015, vol. 9, issue 2, 304-320

Abstract: Climate change—and, by extension, climate policy—is beset with unknowns and unknowables. This "Reflections" article presents an overview of approaches to managing climate uncertainties, in the hopes of providing guidance for current policy decisions as well as future research. We propose the following guidance for policy makers: Treat climate change as a risk management problem; recognize that benefit-cost analysis is only the first of many steps in deciding on optimal climate policy; in assessing abatement choices, use a discount rate that declines over time; recognize the importance of framing, evidence, and connecting the dots; reward modesty. We suggest the following questions for consideration by researchers: Can we improve forecasting? Can we improve the way we address nonlinearities and possible irreversibilities? What other (sub)disciplines merit a closer look? How can we create the right incentives for updating and expanding economic damage functions and climate-economy models? What alternative decision criteria merit further exploration? What does ‘not knowing’ tell us?

Date: 2015
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