The impacts of climate variability on near-term policy choices and the value of information

Variability is one of the most salient features of the earth's climate, yet quantitative policy studies have generally ignored the impact of variabili ty on society's best choice of climate-change policy. This omission is trou bling because an adaptive emissions-reduction strategy, one that adjusts ab atement rates over time based on observations of damages and abatement cost s, should perform much better against extreme uncertainty than static, best -estimate policies. However, climate variability can strongly affect the su ccess of adaptive-abatement strategies by masking adverse trends or fooling society into taking too strong an action. This study compares the performa nce of a wide variety of adaptive greenhouse-gas-abatement strategies again st a broad range of plausible future climate-change scenarios. We find that : i) adaptive strategies remain preferable to static, best-estimate policie s even with very large levels of climate variability; ii) the most robust s trategies are innovation sensitive, that is, adjust future emissions reduct ion rates on the basis of small changes in observed abatement costs but onl y for large changes in observed damages; and iii) information about the siz e of the variability is about a third to an eighth as valuable as informati on determining the value of the key parameters that represent the long-term , future climate-change state-of-the-world.