Climate Change Skepticism in the Face of Catastrophe

Despite overwhelming scientific evidence for man-made climate change, many people and more importantly policymakers still remain skeptical about the subject. While this phenomenon of ”climate-skepticism” prevents implementation of environmental policies around the globe, it is ignored in economic models of climate change. In this paper we fill this gap by creating a model that allows for climate skepticism. We model a climate-skeptic policymaker facing a potential climate catastrophe. We calculate optimal emission and consumption paths for both skeptic and climate-aware policymakers to explore the true cost of climate skepticism. Our findings are two-fold. First of all we find that when facing catastrophic climate change even a completely skeptic policy won’t lead to unbounded climate change and emissions. Secondly, we find that there is still a loss due to climate-change resulting from skepticism, and if one believes there is a 15% chance that climate change is real he should be in favor of a stringent environmental policy.