Abstract
Sir Nicholas Stern, former Chief economist of the World Bank, was asked by the British government to lead a review on the economics of global climate change. The Stern Review was published in October 2006 and attracted a great deal of attention from various circles, from academic to NGOs and the media in Europe, but also worldwide. This article aims first to highlight the Review’s main points and to single out a selection of the most significant factual data and quantitative evaluations that make up the Review’s rich contribution to the subject, going beyond the well-publicised striking results in which the possible damages of climate change are compared to the impact of the two world wars of the 20th century, but lasting forever. The survey concludes with reflections on criticism of the Stern Review made by several economists, mostly in the US, regarding the integrated assessment modelling exercise included in the Review. The most consequential criticisms are related to the low discount rate used to tackle this very long-term issue and the treatment of adaptation of future generations to a new global climate. Paradoxically, the much-attacked choice of a low discount rate chosen to ensure an equal treatment of the utility of all generations is the best-grounded in the utilitarian philosophy that underpins the type of economics that both the Stern Review and most of its critics share.
Highlights
The Review of Economics on Climate Change was prepared under the responsibility of Sir Nicholas Stern, Head of the British Government Economics Service and Adviser to the British Government on the economics of climate change at the request of the Chancellor of the Exchequer, the Rt
Almost all the economists critical of the Stern Review agree in emphasising that the climate problem is a genuine one deserving an immediate and international commitment in favour of some degree of prevention and adaptation
The practical scope of the methodological and theoretical points of disagreement is confined to selecting the target and to the timetable for controlling greenhouse gas (GHG) emissions and developing investment in adaptation potential
Summary
The Review of Economics on Climate Change was prepared under the responsibility of Sir Nicholas Stern, Head of the British Government Economics Service and Adviser to the British Government on the economics of climate change at the request of the Chancellor of the Exchequer, the Rt. It is intended to present the main points made in the report and the body of information, factual data and quantitative evaluations which form the Review’s substantial contribution to the subject, supplementing the main results and principal recommendations which it arrives at. This presentation is based essentially on the report itself and takes account of additional contributions (see the list in Box 1). To this regard, the paper does not aim to introduce a critical discussion of specific data or statements included in the Review, which is already a referenced review of scientific literature. Box 1: Reference documents published by the Stern Review team
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