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Type Journal Article
Scope Discipline-based scholarship
Title Environmental tipping points significantly affect the cost−benefit assessment of climate policies
Organization Unit
Authors
  • Yongyang Cai
  • Kenneth L Judd
  • Timothy M Lenton
  • Thomas Siegmund Lontzek
  • Daiju Narita
Item Subtype Original Work
Refereed Yes
Status Published in final form
Language
  • English
Journal Title Proceedings of the National Academy of Sciences of the United States of America
Publisher National Academy of Sciences
Geographical Reach international
ISSN 0027-8424
Volume 112
Number 15
Page Range 4606 - 4611
Date 2015
Abstract Text Most current cost-benefit analyses of climate change policies suggest an optimal global climate policy that is significantly less stringent than the level required to meet the internationally agreed 2 °C target. This is partly because the sum of estimated economic damage of climate change across various sectors, such as energy use and changes in agricultural production, results in only a small economic loss or even a small economic gain in the gross world product under predicted levels of climate change. However, those cost-benefit analyses rarely take account of environmental tipping points leading to abrupt and irreversible impacts on market and nonmarket goods and services, including those provided by the climate and by ecosystems. Here we show that including environmental tipping point impacts in a stochastic dynamic integrated assessment model profoundly alters cost-benefit assessment of global climate policy. The risk of a tipping point, even if it only has nonmarket impacts, could substantially increase the present optimal carbon tax. For example, a risk of only 5% loss in nonmarket goods that occurs with a 5% annual probability at 4 °C increase of the global surface temperature causes an immediate two-thirds increase in optimal carbon tax. If the tipping point also has a 5% impact on market goods, the optimal carbon tax increases by more than a factor of 3. Hence existing cost-benefit assessments of global climate policy may be significantly underestimating the needs for controlling climate change.
Free access at DOI
Digital Object Identifier 10.1073/pnas.1503890112
PubMed ID 25825719
Other Identification Number merlin-id:12516
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