If it quacks like a duck

In its definition of terms, the Intergovernmental Panel on Climate Change (IPCC) goes to the trouble of redefining several that are in common usage by statisticians, economists – and the proverbial man on the Clapham omnibus.  

For example, here’s “forecast”:

“When a projection is branded "most likely" it becomes a forecast or prediction. A forecast is often obtained using deterministic models, possibly a set of these, outputs of which can enable some level of confidence to be attached to projections.”

In contrast, a “projection” is described as something broader, encompassing things like scenarios which are defined by the IPCC as follows (my emphasis):

“A scenario is a coherent, internally consistent and plausible description of a possible future state of the world.  It is not a forecast; rather, each scenario is one alternative image of how the future can unfold. A projection may serve as the raw material for a scenario, but scenarios often require additional information (e.g., about baseline conditions). A set of scenarios is often adopted to reflect, as well as possible, the range of uncertainty in projections. Other terms that have been used as synonyms for scenario are "characterisation", "storyline" and "construction".”

This needs to be unpacked.  In a moment I’ll demonstrate the way in which these definitions deviate from the standard use of the term “forecast” and why it’s important that we think of scenario projections as a form of forecasting.  I’ll then discuss why the IPCC – and the majority of financial regulators and climate risk practitioners – feels the need to have its own, narrower definition of a common term that’s intuitively understood by almost everyone else.