SignificanceMost current cost−benefit analyses of climate change suggest global climate policy should be relatively weak. However, relatively few studies account for the market or nonmarket impacts of passing environmental tipping points that cause abrupt and irreversible damages. We use a stochastic dynamic model of the climate and economy to quantify the effect of tipping points on climate change policy. We show that environmental tipping points can profoundly alter cost−benefit analysis, justifying a much more stringent climate policy, which takes the form of a higher immediate price on carbon.