The three key challenges are the monetary valuation of climate damage, the treatment of uncertainty, and discounting, which is about how to take account of the future costs and benefits of environmental policy measures.
Environmental policy seeks to avoid causing damage to the environment and health both in the present and the future, and climate change policy most vividly illustrates that the costs of climate change mitigation measures are lower than the costs of the damage incurred through inaction, clean-up and adaptation measures. Annex C of the OECD
report highlights the key elements of the assessment of climate damage and of uncertainty and discounting based on UBA
's Methodological Convention 2.0 for Estimates of Environmental Costs.