Formulating Policy Responses to Global Warming in the Face of Uncertainty

The effects of risk and uncertainty on climate-change policy design are analysed. It is argued that while the science of climate change involves a consensus that anthropogenic greenhouse-gas emissions are driving higher temperatures and a changed global climate, there remains uncertainty about the extent of such changes and the risk of catastrophically large temperature increases in the absence of emission mitigation. The possible cost consequences of not addressing climate change are much greater than the costs of addressing it so that, from a range of perspectives, activist mitigation policies make sense. A critical assessment of Australian climate-change policy is provided, emphasising the key specific uncertainties that impact on policy design.