Climate targets under uncertainty: challenges and remedies

We start from the observation that climate targets under uncertainty should be interpreted as safety constraints on the probability of crossing a certain threshold, such as 2A degrees C global warming. We then highlight, by ways of a simple example, that cost-effectiveness analysis for such probabilistic targets leads to major conceptual problems if learning about uncertainty is taken into account and the target is fixed. Current target proposals presumably imply that targets should be revised in the light of new information. Taking this into account amounts to formalizing how targets should be chosen, a question that was avoided by cost-effectiveness analysis. One way is to perform a full-fledged cost-benefit analysis including some kind of monetary damage function. We propose multi-criteria decision analysis including a target-based risk metric as an alternative that is more explicite in its assumptions and more closely based on given targets.