A Review of the Stern Review on the Economics of Climate Change
- (pp. 686-702)
AbstractHow much and how fast should we react to the threat of global warming? The Stern Review argues that the damages from climate change are large, and that nations should undertake sharp and immediate reductions in greenhouse gas emissions. An examination of the Review's radical revision of the economics of climate change finds, however, that it depends decisively on the assumption of a near-zero time discount rate combined with a specific utility function. The Review's unambiguous conclusions about the need for extreme immediate action will not survive the substitution of assumptions that are consistent with today's marketplace real interest rates and savings rates.
CitationNordhaus, William, D. 2007. "A Review of the Stern Review on the Economics of Climate Change." Journal of Economic Literature, 45 (3): 686-702. DOI: 10.1257/jel.45.3.686
- O41 One, Two, and Multisector Growth Models
- Q51 Valuation of Environmental Effects
- Q54 Climate; Natural Disasters; Global Warming
- Q58 Environmental Economics: Government Policy