Moving beyond benefit–cost analysis of climate change

Abstract

The conventional benefit–cost approach to understanding the climate problem has serious limitations. Fortunately, an alternative way of thinking about the problem has arisen in recent decades, based on analyzing the cost effectiveness of achieving a normatively defined warming target. This approach yields important insights, showing that delaying action is costly, required emissions reductions are rapid, and most proved reserves of fossil fuels will need to stay in the ground if we’re to stabilize the climate. I call this method ‘working forward toward a goal’, and it is one that will see wide application in the years ahead.