Risk Management and Climate Change
NBER Working Paper No. 18607
The selection of climate policies should be an exercise in risk management reflecting the many relevant sources of uncertainty. Studies of climate change and its impacts rarely yield consensus on the distribution of exposure, vulnerability, or possible outcomes. Hence policy analysis cannot effectively evaluate alternatives using standard approaches such as expected utility theory and benefit-cost analysis. This Perspective highlights the value of robust decision-making tools designed for situations, such as evaluating climate policies, where generally agreed-upon probability distributions are not available and stakeholders differ in their degree of risk tolerance. This broader risk management approach enables one to examine a range of possible outcomes and the uncertainty surrounding their likelihoods.
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Document Object Identifier (DOI): 10.3386/w18607
Published: Nature Climate Change | Perspective Print Share/bookmark Risk management and climate change Howard Kunreuther, Geoffrey Heal, Myles Allen, Ottmar Edenhofer, Christopher B. Field & Gary Yohe Affiliations Contributions Corresponding author Nature Climate Change 3, 447–450 (2013) doi:10.1038/nclimate1740 Received 29 June 2012 Accepted 09 October 2012 Published online 24 March 2013
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