Incorporating ‘catastrophic’ climate change into policy analysis

Although existing economic research is informative with regard to the importance of including potential ‘catastrophic’ climate change impacts in the analysis of GHG mitigation benefits, the generic and abstract form of the ‘catastrophe’ implemented has led to a lack of specific policy implications. This article provides an important starting point for a discussion of how to improve economic modelling of potential large-scale impacts of climate change. It considers how the term ‘abrupt climate change’ has been used in the scientific literature to describe changes in the climate system and carefully reviews the characteristics of the events that have been discussed in this context. The findings are compared to the way in which the economic literature has modelled potential economic and human welfare impacts of these ‘catastrophic’ events. In general, the economics literature is found to have modelled such impacts in a uniform way that fails to account for differences in relevant end points and timescales. The result is policy recommendations based on events that do not resemble those of concern. Better treatment of these events in integrated assessment modelling would help ensure that future research efforts can serve as meaningful policy input.