Decision-makers have confirmed the long term objective of preventing a temperature increase greater than 2 °C. This paper aims at appraising by means of a cost-benefit analysis whether decision makers’ commitment to meet the 2 °C objective is credible or not. Within the framework of a cost-benefit type integrated assessment model, we consider that the economy faces climate damages with a threshold at 2 °C. We run the model for a broad set of scenarios accounting for the diversity of “worldviews” in the climate debate. For a significant share of scenarios we observe that it is considered optimal to exceed the threshold. Among those “non-compliers” we discriminate ”involuntary non-compliers” who cannot avoid the exceedance due to physical constraint from ”deliberate compliers” for whom the exceedance results from a deliberate costs-benefit analysis. A second result is that the later mitigation efforts begin, the more difficult it becomes to prevent the exceedance. In particular, the number of ”deliberate non-compliers” dramatically increases if mitigation efforts do not start by 2020, and the influx of involuntary non-compliers become overwhelming f efforts are delayed to 2040. In light of these results we argue that the window of opportunity for reaching the 2 °C objective with a credible chance of success is rapidly closing during the present decade. Further delay in finding a climate agreement critically undermines the credibility of the objective.
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1 A comprehensive description is provided in supplementary material.
2 The climate externality does not enter into the utility function. It is only captured by a damage function.
3 Allowing for carbon dioxide removal (CDR) would alter our results, but to an extent unknown. We believe that it would only slightly modified them: when the constraint that abatement is below 1 is not binding, allowing for CDR (i.e. removing this constraint) does not change the optimal solution. For a significant set of solutions, the constraint is effectively non-binding (see e.g. the solution discussed in Section 4.1).
4 Comments following the (Stern 2006) Review (Dasgupta 2007; Nordhaus 2007; Weitzman 2007; Yohe and Tol 2007) have mainly emphazised the impact of the so-called unusually low rate of pure time preference of 0.1 % (which makes the discount rate used in Stern’s runs amount to 1.4 %) on Stern’s recommendation of early and strong mitigation action. In turn, the “policy ramp” promoted by Nordhaus (2008) would be driven by a more conventional level of pure time preference (2.8 %) leading to a discount rate of 4.1 %.
5 The precise formula of the SCC is provided in supplementary material.
6 The same analysis has also been carried out with temperature thresholds of 2.5 °C and 3 °C. We find the same type of results with however one or two decades of delay, depending on the temperature threshold (the higher the threshold, the later the occurrence of the non-compliers wave).
7 Transition matrix of this repartition is provided in supplementary material
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Perrissin Fabert, B., Pottier, A., Espagne, E. et al. Why are climate policies of the present decade so crucial for keeping the 2 °C target credible?. Climatic Change 126, 337–349 (2014). https://doi.org/10.1007/s10584-014-1222-0