Economic Value of Narrowing the Uncertainty in Climate Sensitivity: Decadal Change in Shortwave Cloud Radiative Forcing and Low Cloud Feedback

Several previous studies have been published on the economic value of narrowing the uncertainty in climate sensitivity (Cooke et al. 2015, Cooke et al. 2016, Hope, 2015). All three of these studies estimated roughly 10 Trillion U.S. dollars for the Net Present Value and Real Option Value at a discount rate of 3%. This discount rate is the nominal discount rate used in the U.S. Social Cost of Carbon Memo (2010). The Cooke et al studies approached this problem by examining advances in accuracy of global temperature measurements, while the Hope 2015 study did not address the type of observations required. While temperature change is related to climate sensitivity, large uncertainties of a factor of 3 in current anthropogenic radiative forcing (IPCC, 2013) would need to be solved for advanced decadal temperature change observations to assist the challenge of narrowing climate sensitivity. The present study takes a new approach by extending the Cooke et al. 2015,2016 papers to replace observations of temperature change to observations of decadal change in the effects of changing clouds on the Earths radiative energy balance, a measurement known as Cloud Radiative Forcing, or Cloud Radiative Effect. Decadal change in this observation is direclty related to the largest uncertainty in climate sensitivity which is cloud feedback from changing amount of low clouds, primarily low clouds over the world's oceans. As a result, decadal changes in shortwave cloud radiative forcing are more directly related to cloud feedback uncertainty which is the dominant uncertainty in climate sensitivity. This paper will show results for the new approach, and allow an examination of the sensitivity of economic value results to different observations used as a constraint on uncertainty in climate sensitivity. The analysis suggests roughly a doubling of economic value to 20 Trillion Net Present Value or Real Option Value at 3% discount rate. The higher economic value results from two changes: a larger increase in accuracy for SW cloud radiative forcing vs temperature, and from a lower confounding noise from natural variability in the cloud radiative forcing variable compared to temperature. In particular, global average temperature is much more sensitive to the climate noise of ENSO cycles.