The Stern Review

Good Afternoon Everyone,

            In writing a sustainable economics blog, it would be rather irresponsible of me if I overlooked the contribution of Sir Nicholas Stern. In 2006, Nic Stern published the infamous (at least among economists) Stern Review on the Economics of Climate Change. Much of the credit for the recent increase in climate change discourse should be directed at Stern, though Al Gore deserves credit too (Gore more for getting the word out there, Stern actually provides the content and research- 600 pages of it!). I’m going to share with you some of the key aspects of climate change, as described by Stern, that people are generally unaware of.

 1. Rich countries contributed much more to climate change than do poor ones. (Image from Jonathan A. Patz et al, 2007)

2. Poor countries will face the greatest negative impacts from climate change. (Image from Jonathan A. Patz et al, 2007)

      
      3. There is considerable uncertainty regarding how much temperatures will increase, and how the economy will be affected. Stern predicts with 90% confidence that temperatures will rise anywhere from 2.6 Degrees Celsius to 6.5 Degrees Celsius. The economic implications of this increase in temperature are even less certain; some economists even contend that climate change is a good thing and will yield greater output (their rationale centers on northern Russia and Canada becoming more habitable and better suited for agriculture). Stern's estimates add to the uncertainty as he predicts the range of losses in 2200 to be between 2.7 and 32.6 percent of GDP per capita.

        4. About half of the measures Stern recommends taking to lessen the affects of global warming will come at a negative cost-they will both decrease emissions and save money. Examples include switching to more efficient: insulation, lighting, and transportation.

                Stern concludes that we must act immediately to avoid the catastrophic effects of global warming; however, drastic action has not yet been taken. Why?

      

     Answer coming next (hint it involves the discount rate)