Climate Change & Uncertainty
Climate change is likely the most important issue of our time. The overwhelming majority of the scientific community agrees that climate change is a reality and that its primary causes are anthropogenic (Oreskes 2007, Christoff 2010, Glieck et al 2010).
Consensus does not imply finality, however. Rather, although the debate about the existence of climate change has effectively ended, the question of how the changes will proceed and what the likely outcomes will be remains open. In this area the science is indeed unsettled and there remains a great deal of uncertainty. This is especially true with respect to the concept of climate sensitivity and the threshold effects likely to be triggered by climate change (Alley 2004).
This uncertainty has important implications for managing the effects of climate change. In particular the “fat tail” phenomenon (Weitzman 2010) suggests the “unlimited downside liability” of climate change implies that there should be greater action taken today to limit the impacts of climate change.
Section II: Climate Change Consensus
To begin, it should be acknowledged that science does not work by process of consensus – theories are proposed, tested and, if their predictions are verifiable and replicable, they are broadly accepted. However, science has very few absolutes; theories are continually scrutinized. That does not mean that the science is unsettled or that sound policy cannot be based on its predictions.[1] Furthermore, “consensus” does not mean absolute agreement on all points. Rather, in the context of scientific theory, consensus is generally taken to be a “measure of a central tendency and as such, it necessarily has a distribution of perspectives around that central measure” (Pielke 2005). When the distribution of perspectives around a central tendency has reached a sufficient concentration around one point it can safely be said that point is the consensus opinion.
Perspectives on the reality of climate change have reached sufficient density around the affirmative to say that this is now the scientific consensus (Oreskes 2007, Alley 2004, Anderegg et al 2010, Glieck et al 2010, Doran and Zimmerman 2007). Numerous studies of the opinions of scientists have consistently reported between ninety and ninety-seven percent of scientists believe that climate change is occurring (Doran and Zimmerman 2007, Anderegg et al 2010, Oreskes 2004).[2]
Beyond merely agreeing that climate is indeed changing, more and more scientists agree that humans are causing this change. In a letter signed by 255 members of the National Academy of Sciences Glieck et al (2010) states, “there is compelling, comprehensive, and consistent objective evidence that humans are changing the climate…” The National Academy of Science was more direct when it said, “Climate change is occurring, is caused largely by human activities…” (NRC 2010). These are strong statements that indicate scientists are quite confident of the reality of climate change and the large role that humans are playing in creating climate change.
It is here that the consensus, and certainty about climate change, begins to break down. While scientists are certain about the reality of climate change and its anthropogenic nature, they are less certain about its effects, as the next section will discuss.
Section III: Climate Change Uncertainty
There are several critical areas in which the science of climate change remains unsettled. The first, and most important of these, is climate sensitivity. This is a “measure of the climate system’s response to sustained radiative forcing … defined as the global average warming following a doubling of CO2 concentrations” (Weitzman 2010). While the 2007 IPCC report states that there is sixty-six percent chance that a doubling of CO2 will result in warming of 2-4.5°C (Dietz 2010) various other climate models predict changes ranging from 1°C up to 12°C (Oreskes 2007).
A second serious uncertainty in the science is the understanding of the role that thresholds will play in climate change (Alley 2004). The planet has hundreds of geophysical systems that are currently in equilibrium. Each of these systems has developed and operates within the climatic conditions that have been prevalent for the last several thousand years. However, as climate change pushes the planet out of the boundaries of these conditions it is unclear how these systems will react (Alley 2004, Christoff 2010). It is believed that many of these systems have a threshold value that, once crossed, will cause the system to go into a new equilibrium (Alley 2004, Lenton et al 2008). The uncertainty surrounds exactly what that threshold value is, what the new equilibrium might look like, and even how many of these systems exist.[3] Whether or not these thresholds are reached and what happens if they are has major implications for the long-term impacts of climate change
A third area of uncertainty is de-glaciation and sea-level rise (Bray 2010, Christoff 2010). Although scientists know that both Greenland and Antarctica are losing ice mass it is unclear what the long-term impacts on sea level will be, both in how much the sea will rise and how quickly. The IPCC presents a range of possible values for sea-level rise by 2100 but there is little consensus on these numbers (Bray 2010). Additionally, some scientists believe that the collapse of the West Antarctic Ice Sheet could occur within the next hundred years, leading to several meter sea level rise while others predict it will occur over the next several centuries (Lenton et al 2008).
Section IV: Fat-tails and Risk Management
The high level of uncertainty over what the results of climate change will be have important implications for how the risk of these results is managed. These implications are most clearly elucidated by Weitzman (2010) in his discussion of the fat-tail phenomenon. In short, risk assessment regarding climate change is different than most risk assessment because of three things: (1) the potential damage from climate change could be catastrophic, (2) the probability of these catastrophic damages actually occurring is not insignificant and, crucially, (3) scientists don’t know how catastrophic the damage may be nor how insignificant the probability actually is (Richardson et al 2009, Plummer 2011, Weitzman 2010). [4]
Risk management typically assumes that while a catastrophe is possible, the likelihood of one occurring is remarkably small, too small to justify allowing the potential consequences to dictate risk management responses. Weitzman’s point is that the nature of scientists’ uncertainty about the scope of climate change makes typical risk assessment assumptions inappropriate. First, too much is unknown about what exact temperature difference is required to bring about a catastrophe. Second, the welfare effects of catastrophic climate change could be extremely high and the proper way of determining these effects (called a damage function in economics) is unknown (Weitzman 2010, Dietz 2010, Plummer 2011). What is known is that the effects could be large enough to dictate policy responses even though there is a low probability of them occurring. Finally, even a low probability is not low enough. As Weitzman (2010) puts it, “the critical question…is how fast does the probability of a catastrophe decline relative to the welfare impact of that catastrophe?” In the case of climate change, Weitzman’s answer is not fast enough.
If Weitzman is correct – and empirical work suggests that fat tails are three times as likely as thin tails in the probability distribution of temperature changes (Mason and Wilmot 2011) – then the costs of climate change policy should be weighed against the costs of catastrophic climate change (Crost and Traeger 2010, Weitzman 2010, Pindyck 2007). Because the cost of inaction, or too little action, is so high, the optimal price to pay to avoid these costs is much higher than if the distribution had a thin tail (Pindyck 2007).[5] Although this price remains sensitive to discount rates (Deitz 2010, Sterner and Persson 2007) – contrary to Weitzman’s claims – even with low discount rates the implied price is much higher than what policy makers are currently considering (Weitzman 2010).
Section V: Conclusion
The existence of climate change is no longer in doubt among the scientific community. It is widely acknowledge to be occurring and to be caused primarily by humans. Anthropogenic climate change is therefore something that must be acknowledged and prepared for to maintain a livable planet. The challenge for policy makers is to craft policies to ensure a livable planet in the face of the remaining scientific uncertainty about the effects of climate change.
This uncertainty is centered on how climate change will change the planetary systems on which humans depend. It is likely that climate change will cause some of the largest geophysical systems to cross thresholds that push them towards new equilibrium but it remains uncertain what these thresholds are and what the new equilibrium will be. Furthermore, climate change will certainly lead to higher seas but how much higher is unclear. Even the relationship at the heart of climate change, how much warming will occur with a doubling of CO2 in the atmosphere, is uncertain.
References
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Anderegg, W.R.L., Prall, J.W., Harold, J., and Schneider, S.H. 2010. Expert Credibility in Climate Change. Proceedings of the National Academy of Sciences.
Bray, D. 2010. The scientific consensus of climate change revisited. Environmental Science and Policy 13. 340- 350.
Christoff, P. 2010. Touching the void: The Garnaut Review in the chasm between climate science, economics and politics. Global Environmental Change, 20. 214-117.
Crost, B., and Traeger, C.P. 2010. Risk and aversion in the integrated assessment of climate change. Department of Agricultural and Resource Economics: UC Berkley.
Dietz, S. 2010. High impact, low probability? An empirical analysis of risk in the economics of climate change. Climatic Change. 1-23.
Doran, P.T., and Zimmerman M.K. 2009. Examining the Scientific Consensus on Climate Change. EOS, 90(3).
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Lenton, T.M., Held, H., Kriegler, E., Hall, J.W., Lucht, W., Rahmstorf, S., and Schellnhuber, H.J. 2008. Tipping Elements in the Earth’s Climate System. Proceedings of the National Academy of Sciences, 105(6). 1786-1793.
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Mason, C.F., and Wilmot, N. 2011. On Climate Jumps and Fat Tails. European Association of Environmental and Resource Economists, 18th Annual Conference: Rome, Italy.
National Research Council. 2010. America’s Climate Choices: Panel on Advancing the Science of Climate Change. The National Academies Press. Washington, DC.
Oreskes, N. 2004. The Scientific Consensus on Climate Change. Science 306. 1686.
Oreskes, Naomi. 2007. The scientific consensus on climate change: How do we know we’re not wrong? In Joseph F. DiMento, Pamela Doughman. Climate Change. MIT Press.
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[1] A facetious, and slightly misleading, example of this in the context of climate change can be seen on a bumper sticker that reads, “Climate change is a theory, like gravity.”
[2] While some of these studies have been controversial (Doran and Zimmerman 2007), later studies confirm their results (Anderegg et al 2010, Oreskes 2007).
[3] Some major ones include the north Atlantic drift, methane stored in permafrost, and carbon stored in the deep ocean.
[4] Take the amount the temperature will increase. While temperature increases between 2-4.5°C are the most likely outcome of climate change, the probability that the temperature increase is closer to a catastrophic 10° is still remarkably high (Weitzman 2010, Dietz 2010).
[5] Under certain assumptions (rational, intertemporal utility maximizing agents with a utility function positively related to consumption) the optimal price to pay today is infinity. This arises because in a climate catastrophe consumption is assumed to go to zero. As a result, the marginal utility of consumption at that point is infinity. The optimal amount for a rational agent to pay today to increase consumption in the future is equal to the marginal utility of consumption at that point in the future. It should be clear then that the rational agent would be wiling to pay infinity today to ensure that some consumption remains in the future, in other words, to avoid catastrophic climate change. Obviously this is an extreme case, but it serves to illustrate the point that the socially optimal point is far below the current amount spent on avoiding climate change quite well.
