Disutility of climate change damages may warrant much stricter climate targets
Cost-benefit integrated assessment models (IAMs) inform the policy deliberation process by determining cost-optimal greenhouse gas emission reduction pathways based on economic considerations. These models seek to maximise economic utility and treat estimates of climate impacts (damages) and mitigat...
| Main Authors: | , , , |
|---|---|
| Format: | Article |
| Language: | English |
| Published: |
IOP Publishing
2024-01-01
|
| Series: | Environmental Research Communications |
| Subjects: | |
| Online Access: | https://doi.org/10.1088/2515-7620/ad2111 |
| _version_ | 1797336271819898880 |
|---|---|
| author | Shridhar Kulkarni Andries Hof Kaj-Ivar van der Wijst Detlef van Vuuren |
| author_facet | Shridhar Kulkarni Andries Hof Kaj-Ivar van der Wijst Detlef van Vuuren |
| author_sort | Shridhar Kulkarni |
| collection | DOAJ |
| description | Cost-benefit integrated assessment models (IAMs) inform the policy deliberation process by determining cost-optimal greenhouse gas emission reduction pathways based on economic considerations. These models seek to maximise economic utility and treat estimates of climate impacts (damages) and mitigation costs at par as GDP losses, having the same impact on utility reduction. However, prospect theory suggests that a certain level of climate damages could be valued higher by society than the same level of mitigation costs, as climate damages often occur as sudden unexpected events. In this paper, we show how this concept could be taken into account in cost-benefit IAMs and explore possible consequences on optimal mitigation pathways. Our results suggest that compared to the standard utility approach, capturing explicit aversion to climate impact incidence shows optimal pathways with earlier and deeper emission reduction, lowering both net-negative emissions and mid-century temperature peaks in line with stringent Paris Agreement targets. |
| first_indexed | 2024-03-08T08:51:51Z |
| format | Article |
| id | doaj.art-f6e9491bd4b24606a31221c0d0f06caf |
| institution | Directory Open Access Journal |
| issn | 2515-7620 |
| language | English |
| last_indexed | 2024-03-08T08:51:51Z |
| publishDate | 2024-01-01 |
| publisher | IOP Publishing |
| record_format | Article |
| series | Environmental Research Communications |
| spelling | doaj.art-f6e9491bd4b24606a31221c0d0f06caf2024-02-01T10:16:35ZengIOP PublishingEnvironmental Research Communications2515-76202024-01-016202100110.1088/2515-7620/ad2111Disutility of climate change damages may warrant much stricter climate targetsShridhar Kulkarni0https://orcid.org/0000-0002-4798-4356Andries Hof1Kaj-Ivar van der Wijst2https://orcid.org/0000-0002-9588-7059Detlef van Vuuren3Copernicus Institute of Sustainable Development, Utrecht University , Utrecht, The NetherlandsCopernicus Institute of Sustainable Development, Utrecht University , Utrecht, The Netherlands; National Institute for Public Health and the Environment (RIVM) , Bilthoven, The NetherlandsCopernicus Institute of Sustainable Development, Utrecht University , Utrecht, The NetherlandsCopernicus Institute of Sustainable Development, Utrecht University , Utrecht, The Netherlands; PBL Netherlands Environmental Assessment Agency , The Hague, The NetherlandsCost-benefit integrated assessment models (IAMs) inform the policy deliberation process by determining cost-optimal greenhouse gas emission reduction pathways based on economic considerations. These models seek to maximise economic utility and treat estimates of climate impacts (damages) and mitigation costs at par as GDP losses, having the same impact on utility reduction. However, prospect theory suggests that a certain level of climate damages could be valued higher by society than the same level of mitigation costs, as climate damages often occur as sudden unexpected events. In this paper, we show how this concept could be taken into account in cost-benefit IAMs and explore possible consequences on optimal mitigation pathways. Our results suggest that compared to the standard utility approach, capturing explicit aversion to climate impact incidence shows optimal pathways with earlier and deeper emission reduction, lowering both net-negative emissions and mid-century temperature peaks in line with stringent Paris Agreement targets.https://doi.org/10.1088/2515-7620/ad2111climate mitigationintegrated assessment modellingclimate impact damage costscost-optimal pathwaysloss aversion |
| spellingShingle | Shridhar Kulkarni Andries Hof Kaj-Ivar van der Wijst Detlef van Vuuren Disutility of climate change damages may warrant much stricter climate targets Environmental Research Communications climate mitigation integrated assessment modelling climate impact damage costs cost-optimal pathways loss aversion |
| title | Disutility of climate change damages may warrant much stricter climate targets |
| title_full | Disutility of climate change damages may warrant much stricter climate targets |
| title_fullStr | Disutility of climate change damages may warrant much stricter climate targets |
| title_full_unstemmed | Disutility of climate change damages may warrant much stricter climate targets |
| title_short | Disutility of climate change damages may warrant much stricter climate targets |
| title_sort | disutility of climate change damages may warrant much stricter climate targets |
| topic | climate mitigation integrated assessment modelling climate impact damage costs cost-optimal pathways loss aversion |
| url | https://doi.org/10.1088/2515-7620/ad2111 |
| work_keys_str_mv | AT shridharkulkarni disutilityofclimatechangedamagesmaywarrantmuchstricterclimatetargets AT andrieshof disutilityofclimatechangedamagesmaywarrantmuchstricterclimatetargets AT kajivarvanderwijst disutilityofclimatechangedamagesmaywarrantmuchstricterclimatetargets AT detlefvanvuuren disutilityofclimatechangedamagesmaywarrantmuchstricterclimatetargets |