Sensitivity of Climate Policy to Uncertainty about the Carbon Cycle

Hauke Kite-Powell, Marine Policy Center
Andy Solow, Marine Policy Center



Climate policy is concerned primarily with the management of carbon emissions to reduce future climate change.  Carbon emissions from human activities interact with the natural global carbon cycle to determine atmospheric CO2 concentrations, which determine atmospheric temperature and climate.  Rational climate policy requires making tradeoffs between investments to reduce net carbon emissions in the near term, and uncertain future benefits from reduced climate change. The oceans play an important role in the global carbon cycle, and have absorbed about a third of CO2 from fossil fuel combustion to date. Future climate change depends in part on how the rate at which the oceans absorb CO2 change as the planet warms; there is at present considerable uncertainty about this. By comparing economically optimal climate policies (carbon taxes) under different levels of uncertainty about future ocean carbon uptake, we will estimate the economic value of scientific research that reduces uncertainty about the future role of the oceans in the global carbon cycle.