Tall tales and fat tails: the science and economics of extreme warming

Abstract

It has recently been highlighted that the economic value of climate change mitigation depends sensitively on the slim possibility of extreme warming. This insight has been obtained through a focus on the fat upper tail of the climate sensitivity probability distribution. However, while climate sensitivity is undoubtedly important, what ultimately matters is transient temperature change. A focus on transient temperature change stresses the interplay of climate sensitivity with other physical uncertainties, notably effective heat capacity. In this paper we present a conceptual analysis of the physical uncertainties in economic models of climate mitigation, leading to an empirical application of the DICE model, which investigates the interaction of uncertainty in climate sensitivity and the effective heat capacity. We expand on previous results exploring the sensitivity of economic evaluations to the tail of the climate sensitivity distribution alone, and demonstrate that uncertainty about the system's effective heat capacity also plays a very important role. We go on to discuss complementary avenues of economic and scientific research that may help provide a better combined understanding of the physical and economic processes associated with a rapidly warming world.

Feedback, dynamics, and optimal control in climate economics

“…However, the implementation in [63] is not strictly causal in that the atmospheric temperature at the next time step depends on the radiative forcing at the next time step. This was previously observed in [11] and [12]. We explicitly provide the derivation of the model here for future reference.…”

Endogenous Growth, Convexity of Damage and Climate Risk: How Nordhaus' Framework Supports Deep Cuts in Carbon Emissions

“…It is worth emphasising, before moving on to the results, that there are other potentially significant sources of risk attending to the impacts of greenhouse gas emissions. Some of these are in the climate system – for instance the effective heat capacity of the oceans (Calel et al ., ) – yet a focus on S captures the essence of physical climate risk in a clear and simple way. Other sources of risk relate to damage for any given temperature and could also be modelled with probabilities, were the evidence to justify doing so.…”

“…where F t is radiative forcing, F 2ÂCO 2 is the radiative forcing resulting from a doubling in the atmospheric stock of carbon dioxide, S is the climate sensitivity, T LO is the temperature of the lower oceans, j 1 is a parameter determining speed of adjustment and j 2 is the coefficient of heat loss from the atmosphere to the oceans. Calel et al (2014) contains a detailed explanation of the physics behind this equation.…”

Estimating the Economic Impact of the Permafrost Carbon Feedback

“…The third line of research has focused on exploring economic and physical uncertainties in IAMs through the use of Monte Carlo methods: Ackerman et al (2010) explored the implications of varying simultaneously the climate sensitivity parameter and the damage function exponent using the DICE model; Pycroft et al (2011) conducted a similar exercise using PAGE09; Calel et al (2013) demonstrated that the uncertainty about the effective heat capacity of the upper ocean mattered significantly for economic evaluations.…”