Presentation given during the OECD Expert workshop on Economic Modelling of Climate and Related Tipping Points by Elizabeth Kopits, US Environmental Protection Agency

1. National Center for Environmental Economics
U.S. Environmental Protection Agency
Incorporating climate tipping points into
policy analysis
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Elizabeth Kopits
October 18, 2021
The views expressed during this presentation are those of the presenter and do
not necessarily represent those of the U.S. EPA or the U.S. IWG.

2. Overview
• Climate tipping points generally enter policy discussions through a
concern about “catastrophic” climate change
– the potential for “catastrophic impacts” due to climate change is the most important
aspect for determining the optimal level of response (Pindyck & Wang 2012,
Weitzman 2009)
– “the economic case for a stringent GHG abatement policy, if it is to be made at all,
must be based on the possibility of a catastrophic outcome” (Pindyck 2012)
• Economic analyses of climate change are often criticized for failing
to adequately capture possible “catastrophic” impacts
• How much this matters depends on the policy analysis one is doing
– It is one thing to incorporate tipping points and uncertainty into a briefing for
Congress or the President and the broader case for taking action.
– Its quite a different challenge to incorporate tipping points into analysis of GHG
mitigation benefits (e.g., social cost of greenhouse gas (SC-GHG) estimation).
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3. Overview
• One obstacle that has impeded progress is the inconsistent and
sometimes nebulous use of “catastrophic” and related terms
• Kopits et al. (2013) reviewed the state of the literature as a starting
point for a discussion of how to improve economic modelling of
potential large-scale impacts of climate change
• Overall, we found the literature not yet useful for substantively
informing policy
– Uniform way in which economic studies had typically modeled such impacts
resulted in modeling of events that do not resemble those of concern.
• There has been an explosion of research since that time, and
increased collaboration between economists & physical scientists
– This workshop is an excellent way to showcase where progress has been
made!
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4. Kopits, Marten, and Wolverton (2013)
Review of the Literature
• Catastrophic Impacts from the Climate Science
Perspective
• How Economists Define and Model Climate Catastrophes
• Review of evidence on 15 often discussed potential large-
scale earth system changes due to climate change
– Based on tipping elements identified in Lenton et al. (2008)
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5. 5
“Catastrophes” Abrupt Climate Change from
Climate Science Perspective
• “an abrupt climate change occurs when the climate system is
forced to cross some threshold, triggering a transition to a
new state at a rate determined by the climate system itself
and faster than the cause” (NRC 2002)
• Definitions vary but 3 most salient aspects of the typical use
of the term are
1) the change occurs relatively quickly
– “rapid”, “abrupt”, “sudden” has been used to describe 1, 10, 1000 yrs
2) it causes a natural system to move to a new steady state
– shifts system dynamics, alters the path/speed of change
3) it potentially results in a relatively large impact
– geographic breadth can range from a few countries to global
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6. 6
Climate “Tipping Points”
• In climate science literature, “catastrophic” climate change
discussion has focused on large scale changes that result from
crossing a threshold, or “tipping point” causing the natural
system to move to a new equilibrium.
– Such a change in state typically consists of three basic components
(NRC 2002): trigger, amplifier, and a source of persistence making the
new state stable and self-reinforcing
• Impacts (changes to the system) will still occur prior to
crossing the threshold
• Key uncertainties pertain to the location of thresholds, how
quickly they will be passed, linkages between various tipping
points, etc.
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7. 7
Economic Use of “Catastrophe”
• Commonly describes a permanent and instantaneous
regime shift that lowers welfare and occurs with a low
probability
– Used as far back as Cropper (1976) [not for climate]
– Most common interpretation of “catastrophe” in climate
change economics literature
• Yohe (1996), Gjerde et al. (1999), Castelnuovo et al. (2001), Bosello and
Moretto (1999), Lemoine and Traeger (2011), many others
– Used to represent: collapsing ice sheets, shutdown of the THC,
among other events
– “Arrival rate” and resulting welfare change chosen ad-hoc
– Find “catastrophes” to have a large policy impacts

8. 8
Economic Use of “Catastrophe” (cont’d.)
• How this matches scientific data on likelihood, impact,
and timing of large-scale climate events is rarely
evaluated
• Linkage between natural system changes and welfare
impacts appears to almost never be carefully developed
• Hulme (2003) stated no estimates for the welfare loss of
a THC shutdown are “rooted in substantive
environmental, economic, or social research.”
• How well does this representation of “catastrophes”
match the scientific evidence and the likely economic
impacts?

9. 9
2013 Review of Evidence on Potentially
“Catastrophic” Earth System Changes
• Kopits et al. (2013) reviewed 15 often discussed potential large-
scale earth system changes due to climate change
– Based on Lenton et al. (2008)
• Find considerable variation in likelihood of “tipping point”
behavior, warming needed to pass potential critical threshold,
geographic extent of impacts, transition timescale, types of
physical and economic impacts
• None appear to result in discontinuous, permanent loss in
welfare once a threshold is crossed
• Regardless of degree of certainty about existence of tipping
point and location of critical threshold, important large-scale
changes are expected within this century
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10. 10
Overview of Potential Climate “Catastrophes”
Potential "Catastrophe"
"Policy
Relevant
Tipping
Element"
(Lenton et al.
2008)
Warming
threshold
(Lenton et al.
2008)*
Transition
Timescale
(Lenton et al.
2008)
Relative
likelihoodof
occurring
(Lenton 2011)
Relativeimpact
(Lenton 2011)
Tippingpoint
of "greatest
concern“
(Allison et al.
2009)
Melting of Arctic summersea-ice X +0.5-2 C ~10 yr High Low
Collapseof Greenland ice sheet (GIS) X +1-2 C >300 yr Med-High Med-High X
Collapseof West Antarctic ice sheet (WAIS)
X +3-5 C >300 yr ,1000+ Med High X
Change in amplitudeand/orvariabilityof
ENSO X +3-6 C ~100 yr Low Med-High
Dieback of Amazon rainforest X +3-4 C ~50 yr Med Med X
Dieback of Boreal forest X +3-5 C ~50 yr Low Med-Low
Weakening/Shutdownof Atlantic
ThermohalineCirculation (THC) X +3-5 C ~100 yr Low Med
Collapseof West African monsoon(WAM)
/Greening of the Sahel X +3-5 C ~10 yr Med-Low High X
Collapse/VolatileIndian Summer Monsoon
(ISM) X N/A ~1 yr (not considered) (not considered) X
Retreat of Tundra - ~100 yr (not considered) (not considered)
Permafrostthaw - <100 yr (not considered) (not considered)
Weakening/Shutdownof Antarctic Bottom
Water (AABW) formation Unclear** (not considered) (not considered)
Massiverelease of marine methanehydrates unclear >1,000 yr (not considered) (not considered)
Ocean anoxia unclear ~10,000 yr (not considered) (not considered)
Climate-induced Arctic ozone hole Unclear <1 yr (not considered) (not considered)
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Source: Kopits et al. (2013)

11. Scope for Near Term Modeling Improvements?
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Potential "Catastrophe"
Likelihood of significant
physical impacts occurring
this century
Scientific consensus in
how physical impacts
will unfold?
Physical endpoints for which
(at least 21st C)
projections are available
Melting of Arctic summer sea-ice High, changes alreadyobserved More
September sea ice extent,regional winter
temperature and precipitation impacts
Collapseof Greenland ice sheet (GIS) Medium-High More Sea level rise
Collapseof West Antarctic ice sheet (WAIS) Medium-High More Sea level rise
Change in amplitudeand/orvariabilityof
ENSO
Medium Less
change in ENSO amplitude, frequency,and
variability?
Dieback of Amazon rainforest Medium-High Less
Change in tree cover, vegetation,soil carbon,
precipitation,amplified regionalwarming; pdfs for
change in vegetation carbon storage by region
Dieback of Boreal forest Medium More
Weakening/Shutdownof Atlantic
ThermohalineCirculation (THC)
Medium-Low Less
Regional change in temperature,precipitation,sea
level from instantaneous hosingexperiment
Collapseof West African monsoon(WAM)
/Greening of the Sahel
Medium-Low Less
Collapse/VolatileIndian Summer Monsoon
(ISM)
High, changes alreadyobserved Less?
Retreat of Tundra High, changes alreadyobserved More
Permafrostthaw High, changes alreadyobserved More
Change in active layer depth,extent of permafrost
area, accompanyingatmosphericcarbon flux
Weakening/Shutdownof Antarctic Bottom
Water (AABW) formation
Needs more study Less
Massiverelease of marine methanehydrates Low More?
Ocean anoxia
Low in deep ocean. Coastal
areas need more study
More?
Climate-induced Arctic ozone hole Needs more study More?
Source: Kopits et al. (2013)

12. Primary Physical Impacts Leading to Economic
Consequences of Climate “Catastrophes”
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Potential "Catastrophe"
Changesin Temperature
Sea Level
Rise
Changesin
Precipitation
Shifts in frequency/
magnitude of
extreme weather
events
Other – e.g., impacts
on ecosystems/
species/biodiversity?
Direct
From additional
GHG feedback
Melting of Arctic summer sea-ice X (hemispheric) X (CO2 & CH4) X X X
Collapseof Greenland ice sheet (GIS) X (local) X (CO2 & CH4) X (global) X
Collapseof West Antarctic ice sheet
(WAIS)
X (local) X (CO2 & CH4) X (global) X
Change in amplitude/variabilityofENSO X (regional) X (CO2) X (regional) X X X
Dieback of Amazon rainforest X (regional) X (CO2) X X X
Dieback of Boreal forest X (local) X (CO2) X? X X
Weakening/Shutdownof Atlantic
ThermohalineCirculation (THC)
X (hemispheric) X (CO2) X (regional) X X X
Collapseof West African monsoon(WAM)
/Greening of the Sahel
X (regional) X X X
Collapse/VolatileIndian Summer
Monsoon (ISM)
X (local
summer)
X X
Retreat of Tundra X (regional?) X
Permafrostthaw in Siberia X (regional?) X X
Weakening/Shutdownof Antarctic Bottom
Water (AABW) formation
X ? ? ? ? ?
Massiverelease of marine methane
hydrates
X (CH4) X?
Ocean anoxia ? X
Climate-induced Arctic ozone hole X (regional) X
Source: Kopits et al. (2013)

13. 13
Discussion
• There is an error in translation when modelers incorporate the
“catastrophe” work of physical scientists into integrated assessment
models (IAMs)
– Disconnect between timescales considered by physical science
communities and realization of physical and economics consequences in
economic studies
– In modeling economic consequences, assumptions are often ad-hoc
– This gap suggests that previous economic studies may only show the
sensitivity of optimal policy to potential large-scale events but provide few
specific policy implications
• The notion of a single instantaneous event triggering a physical or
welfare change appears ill suited for the types of large-scale natural
events it is being used to represent
– Need to better capture the dynamics of earth systems and the associated
uncertainties when in modeling physical endpoints that are input into
damage functions
– Include all relevant/potential earth system changes not just a single or
generic one
– Improve mapping of dynamics changes in welfare effects
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14. 14
Discussion (cont’d.)
• To be policy relevant can not just assume an ad-hoc X%
reduction in consumption if event Y occurs
– In some cases, the appropriate structure already exists to measure welfare
changes if the natural system dynamics are modeled appropriately
– In others, more work is needed to capture the full effect
• E.g., Development of the welfare connection to new physical endpoints
• Better representation of active adaptation to capture welfare impacts of
increases in the rate of change in physical endpoint
• The irreversibility associated with crossing a tipping point and the
uncertainties associated with the location may have important policy
implications
– Has been studied for a generic climate “catastrophe” but only just starting
to be explored using more realistic modeling
– May be difficult to assess with all of the complexities of natural system
dynamics requiring a more complete IAM to be used as a calibrating tool for
a further reduced form model
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15. Moving forward
• All is not lost, IAM frameworks allow for better climate and other
earth system modeling (even in a reduced form) that can improve
approximation of physical impacts of a number of these large-scale
earth system changes
• Researchers in the next sessions will show us where progress has
been made!
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