Uncertainty Analysis Meets Climate Change
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Uncertainty Analysis Meets Climate Change
“Au rest, après nous le déluge” Poisson 1757
Roger CookeTU Delft Nov. 3 2011
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IPCC – Intergovernmental Panel on Climate Change
Fifth Assessment Report
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Coupled Model Intercomparison Project: 23 models ± 1 stdev (AR4) ≠ uncertainty
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• 5oC – collapse of Greenland ice sheet– large-scale eradication of coral reefs– disintegration of West Antarctic ice sheet– shut-down of thermohaline circulation– millions of additional people at risk of hunger, water shortage,
disease, or flooding (Parry, Arnell, McMichael et al. 2001; O’Neill and Oppenheimer 2002; Hansen 2005)
• 11-12°C – regions inducing hyperthermia in humans and other mammals
“would spread to encompass the majority of the human population as currently distributed” (Sherwood and Huber 2010)
What Are Predicted Impacts of Warming?
Uncertainty too deep to quantify ?
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“The AR5 will rely on two metrics for communicating the degree of certainty in key findings:”
1. “Confidence in the validity of a finding, based on the type, amount, quality, and consistency of evidence (e.g., mechanistic understanding, theory, data, models, expert judgment) and the degree of agreement. Confidence is expressed qualitatively.
2. Quantified measures of uncertainty in a finding expressed probabilistically (based on statistical analysis of observations or model results, or expert judgment).”
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A level of confidence is expressed using five qualifiers: “very low,” “low,” “medium,” “high,” and “very high.”
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“Likelihood, as defined in Table 1, provides calibratedlanguage for describing quantified uncertainty.”
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Expert Confidence does NOT predict statistical accuracy
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Five conclusions from the US National Research Council National Research Council. (2010). Advancing the science of climate change. Washington, DC: National Academies Press. P.28.
high confidence (8 out of 10) or very high confidence (9 out of 10):
(1) “The Earth is warming..” (2) ”Most of the warming over the last several decades can be
attributed to human activities” (3) “Global warming is closely associated with… other climate
changes” (4) “Individually and collectively …these changes pose risks for..
human and environmental systems (5) “Human-induced climate change and its impacts will continue
for many decades, and in some cases for many centuries”
What is the confidence in ALL of these?
P(Human cause | warming) = 8/10 orP(Human cause AND warming) = 8/10
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Economic Damages of Climate Change:
Model Uncertainty
• Stress test
• Canonical variations
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Neo-Classical GrowthA = total factor productivity, K = capital stock, N = labor, =
depreciation
Output(t) = A(t) K(t)γ N(t)1-γ
K(t+1) = (1) K(t) + Output(t) – Consump(t)
Bernoulli Equation (1694) Consump(t)=(t)Output(t) :
dK/dt = K(t) + B(t)K(t); (t) = 0.2, N=6.54 E9, A=0.027
K(t) = [(1 ) Bx=o..t e(1)x dx + e(1)t K(0) (1)]1/(1)
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Current
Capital Trajectory
Double Current
1 Dollar
Year
Trill
USD
200
8
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Barro and Sala-i-Martin 1999, p. 420
Convergence? Conditional on what?
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Damage from Temperature riseΛ = abatement, Temp(t) =
temperature rise above pre-industrial
[1Λ(t)] A(t) K(t)γ N(t)1-γ Output(t) = —————————— (1 + .0028Temp(t)2)
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Output[Trill $], outx(t) = output at time t; linear temperature increase No Abatement ; starting capital = 180 [Trill $]
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Canonical Variations
• Do other simple model forms
have structurally different behavior?
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Lotka Volterra vs of Bernoulli Model
T(GHG(t)) = cs ln(GHG(t)/280)/ln(2)
GHG(t+1) = 0.988 GHG(t) + 0.0047 Biosphere(t) + 0.1 GWP(t)
GWP(t+1) = [1+ 0.03 0.005 (T(GHG(t)))]GWP(t)
Emissions proportional to Gross World Output DICE initial value [GTC/$Trill 2008)
Gross World Output Growth Rate
(World Bank, last 48 yrs)Dell et al 2009
Green House Gases [ppmCO2e]
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With uncertainty
Phase Portrait
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DATA: Geography and Growth
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Yale G-Econ Database: Gross Cell Product
GCPpp Time average growth rate:[Ln(GCPpp) – min[lnGCPpp)] / 400
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Conditionalize on Amsterdam (growth rate = 0.0218)
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Conditionalize Amsterdam, TempAv + 5
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Normal Copula not good enough:
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Empirical copula
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Bernstein Copulae (Kurowicka)
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 10
0.1
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TempAV
LogG
CP
ppData
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 10
0.1
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TempAV
LogG
CP
ppSimulated with Bernstein Copula
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00.2
0.40.6
0.81
00.2
0.40.6
0.810
2
4
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TempAV
Bernstein Copula
LogGCPpp
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Who pays for Uncertainty?• Mitt Romney: “My view is that we don’t
know what’s causing climate change…and the idea of spending trillions and trillions of dollars to try to reduce CO2 emissions is not the right course for us”
• If emissions DO cause climate change?après nous le déluge
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Funding cuts in Earth observation
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We’re not taking climate uncertainty seriously
• Model inter comparisons dodge uncertainty
• Ambiguity dodges uncertainty• Uncertainty is a fig leaf for indecision
»But……
• Not everyone is uncertain
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ConclusionsJohn Shimkus: http://www.politico.com/news/stories/1110/44958.html“I do believe in the
Bible as the final word of God and I do believe that God said the Earth would not be destroyed by a flood”
The Illinois Republican running for the powerful perch atop the House Energy and Commerce Committee told POLITICO:
D’après moi, point de déluge
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Take Home Messages
INDECISION
AMBIGUITY
UNCERTAINTY
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Thanks for attention & Questions
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Pricing Carbon at the Margin (bau)
Year
War
min
g
Assume values of climate variables
Compute path
Compute NPV of damages from 1 t C
Different damage model
Different SOW
GET distribution over marginal cost of carbon
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Buying Down Risk
Year
War
min
g
Downside Risk
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0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 10
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TempAV
Pre
cAV
Data
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 10
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TempAV
Pre
cAV
Simulated with Bernstein Copula
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00.2
0.40.6
0.81
00.2
0.40.6
0.810
1
2
3
4
5
6
7
TempAV
Bernstein Copula
PrecAV
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0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 10
0.1
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TempAV
LogG
CP
ppData
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 10
0.1
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0.8
0.9
1
TempAV
LogG
CP
ppSimulated with Bernstein Copula
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