This paper is based on the premise that strategies for dealing with climate change must incorporate and quantify all the relevant uncertainties, and be designed to manage the resulting risks.

It attempts to quantify the uncertainty of mitigation costs, climate change dynamics, and economic damage for alternative carbon budgets. The paper ranks climate policies according to different decision-making criteria concerning uncertainty, risk aversion and intertemporal preferences. The findings are taken to show that preferences over uncertainties are as important as the choice of the widely discussed time discount factor. Climate policies consistent with limiting warming to 2 °C above preindustrial levels are compatible with a subset of decision-making criteria and some model parametrizations, but not with the commonly adopted expected utility framework.

[Adapted from source]