Journal of Environmental Economics and Management 48 (2004) 723–741 Uncertain climate thresholds and optimal economic growth Klaus Keller, a, Benjamin M. Bolker, b and David F. Bradford c,d,e,f a Department of Geosciences, The Pennsylvania State University, University Park, PA 16802-2714, USA b Department of Zoology, University of Florida, Gainesville, FL 32611-8525, USA c Woodrow Wilson School of Public and International Affairs, Princeton University, Princeton, NJ 08544-1013, USA d School of Law, New York University, New York, NY 10012-1074, USA e Department of Economics, Princeton University, Princeton, NJ 08544-1013, USA f National Bureau of Economic Research, Cambridge, MA 02138-5398, USA Received 14 August 2000; revised 17 August 2001 Abstract We explore the combined effects of a climate threshold (a potential ocean thermohaline circulation collapse), parameter uncertainty, and learning in an optimal economic growth model. Our analysis shows that significantly reducing carbon dioxide ðCO 2 Þ emissions may be justified to avoid or delay even small (and arguably realistic) damages from an uncertain and irreversible climate change—even when future learning about the system is considered. Parameter uncertainty about the threshold specific damages and the CO 2 level triggering a threshold can act to decrease near-term CO 2 abatements that maximize expected utility. r 2003 Elsevier Inc. All rights reserved. Keywords: Climate policy; Climate thresholds; Abrupt climate change; North Atlantic thermohaline circulation; Optimal growth model; Learning; Uncertainty 1. Introduction Anthropogenic emissions of carbon dioxide ðCO 2 Þ may cause significant climate change during the next century [1]—a situation prompting divergent policy recommendations. Some climate researchers have argued that CO 2 emissions should be considerably abated to avoid climate thresholds such as a collapse of the ocean thermohaline circulation (e.g., [46,51]). In contrast, many optimal economic growth models suggest that the tradeoff between uncertain future climate damages and certain present costs for controlling CO 2 emissions justify only low levels of ARTICLE IN PRESS  Corresponding author. E-mail address: kkeller@geosc.psu.edu (K. Keller). 0095-0696/$-see front matter r 2003 Elsevier Inc. All rights reserved. doi:10.1016/j.jeem.2003.10.003