This paper discusses methodological aspects of recent climate change damage studies. Assessing the total and/or marginal damage costs of environmental change is often difficult and it is certainly difficult in the case of climate change. A major obstacle is the uncertainty on the physical impacts of climate change, especially related to extreme events and so-called ‘low-probability high-impact ’ scenarios. The subsequent transposition of physical impacts into monetary terms is also a delicate step, given that climate change impacts involve both market and non-market goods and services, covering health, environmental and social values, and that impacts may be distant in time and space. The complexity of climate change cost assessment thus involves several crucial dimensions, including non-market evaluation, risk and uncertainty, baseline definition, equity and discounting, further elaborated in this paper in the course of the overview of the literature and of the overview and evaluation of the key methodological issues. Key words: Climate change damage costs; cost of inaction; methodological aspects; risk and uncertainty; discounting; equity. Working Paper FNU-122

The La Follette School takes no stand on policy issues; opinions expressed in this paper reflect the views of individual researchers and authors. Willingness to pay for climate policy: a review of estimates