Evaluation endpoints and climate policy: Atmospheric stabilization, benefit-cost analysis, and near-term greenhouse-gas emissions

The Framework Convention on Climate Change calls for stabilizing atmospheric concentrations of carbon dioxide and other greenhouse gases. In contrast, many economists espouse the goal of minimizing the present value of abatement costs and damages. The choice between evaluation endpoints - least-cost stabilization and maximization of benefits less costs - involves a tradeoff between accuracy and relevance. Atmospheric concentrations associated with candidate abatement policies can be more accurately predicted, for any level of confidence, than can the monetary values of climate damages associated with those policies. The monetary value of damages is more relevant to the question of what resources should be devoted to abatement, however, because atmospheric concentrations are of little interest except as they influence climate and its impacts on economic activities, ecosystems, and other elements of human concern. As demonstrated using both analytic and numerical models, the choice between endpoints is not solely a matter of analytic convenience but has substantive implications when comparing near-term abatement policies. For the next few decades, maximization of benefits less costs is likely to require greater abatement than will cost-effective stabilization of atmospheric concentrations.