Congressional Budget Office: beware of lower-probability – but catastrophic -- consequences of climate change

A report issued this week by the Congressional Budget Office raises the importance of reducing the risk of the most catastrophic consequences of climate change. It says that “policymakers might wish to consider taking more action as a hedge against those severe outcomes than they would just to address the expected or most likely outcome.” More specifically, the CBO says:
“Depending on the costs of doing so, society may find it economically sensible to invest in reducing the risk of the most severe possible impacts from climate change even if their likelihood is relatively remote. In particular, the potential for unexpectedly severe and even catastrophic outcomes, even if unlikely, would justify more stringent policies than would result from simply balancing the costs of reducing emissions against the benefits of averting damages from the expected or most likely degree of warming.”
The report on “Potential Climate Change Impacts in the United States” (PDF) was requested by the Chairman of the Senate Energy and Natural Resources Committee, Jeff Bingaman (D-N.M.).-According to CBO director Douglas W. Elmendorf, the report “presents an overview of the current understanding of the impacts of climate change in the United States, emphasizing the wide range of uncertainty about the magnitude and timing of those impacts and the implications of that uncertainty for the formulation of effective policy responses.”
Some of the report’s conclusions are echoed in an article by Melinda Kimble and Letha Tawney, published in the May/June 2009 issue of The Environmental Forum. In “The Tale of the Fat Tail,” (PDF). They focus on the work of Martin Weitzman, of Harvard University, who warns that conventional economic analyses downplay relatively low probability but potentially catastrophic consequences. They conclude:
“It would be a relief if there was a precise way to measure the trade-off between cost now and damage in the future, as we’ve done with other pollution problems, but Weitzman’s analysis shows it is at best a very rough estimate that misses the significant risk of catastrophe. We would hope Congress and the administration make a strong economic and scientific argument for considering the risk of catastrophe and align the politics with this sobering reality...”
WWF’s observations of climate-change impacts around the world along with a growing body of scientific research suggests that the risks of catastrophe in fact may be greater than many have assumed. This adds even more weight to the argument that policies should place a greater emphasis on avoiding those potential outcomes.