Stern Report

From ClimateWiki

The Stern Report on the Economics of Climate Change is a report that discusses the effect of global warming on the world economy. Although not the first economic report on climate change, it the largest and most well known.

The Report's executive summary states:

"The Report first examines the evidence on the economic impacts of climate change itself, and explores the economics of stabilising greenhouse gases in the atmosphere. The second half of the Report considers the complex policy challenges involved in managing the transition to a low-carbon economy and in ensuring that societies can adapt to the consequences of climate change that can no longer be avoided."

Summary of the Report's main conclusions

The benefits of strong, early action on climate change outweigh the costs.

The scientific evidence points to increasing risks of serious, irreversible impacts from climate change associated with business-as-usual (BAU) paths for emissions.

Climate change threatens the basic elements of life for people around the world — access to water, food production, health, and use of land and the environment.

The impacts of climate change are not evenly distributed — the poorest countries and people will suffer earliest and most. And if and when the damages appear it will be too late to reverse the process. Thus we are forced to look a long way ahead.

Climate change may initially have small positive effects for a few developed countries, but it is likely to be very damaging for the much higher temperature increases expected by mid-to-late century under BAU scenarios.

Integrated assessment modelling provides a tool for estimating the total impact on the economy; our estimates suggest that this is likely to be higher than previously suggested.

Emissions have been, and continue to be, driven by economic growth; yet stabilisation of greenhouse gas concentration in the atmosphere is feasible and consistent with continued growth.

Central estimates of the annual costs of achieving stabilisation between 500 and 550ppm CO2e are around 1% of global GDP, if we start to take strong action now. [...] It would already be very difficult and costly to aim to stabilise at 450ppm CO2e. If we delay, the opportunity to stabilise at 500-550ppm CO2e may slip away.'

The transition to a low-carbon economy will bring challenges for competitiveness but also opportunities for growth. Policies to support the development of a range of low-carbon and high-efficiency technologies are required urgently.

Establishing a carbon price, through tax, trading or regulation, is an essential foundation for climate change policy. Creating a broadly similar carbon price signal around the world, and using carbon finance to accelerate action in developing countries, are urgent priorities for international cooperation.

Adaptation policy is crucial for dealing with the unavoidable impacts of climate change, but it has been under-emphasised in many countries.

An effective response to climate change will depend on creating the conditions for international collective action.

There is still time to avoid the worst impacts of climate change if strong collective action starts now.

Positive Responses

The Stern Report receives positive attention from several sectors. Those quoted approving of the Report include:

Paul Wolfowitz, former President of the World Bank

Claude Mandil, Executive Director of the International Energy Agency

Kirit Parikh, Member, Planning Commission, Government of India

Adair Turner, Former Director of UK Confederation of British Industry and Economic Advisor to Sustainable Development Commission

Sir Rod Eddington, Adviser to the UK Government on the long term links between transport and economic growth, and former Chief Executive of British Airways

Several academic economists are also quoted praising the Report.

Criticism

The Stern Report has received various unfavorable responses.

Some economists argue that the Report overestimates the present value of the costs of climate change, and underestimates the costs of emission reduction.

Other critics argue that the economic cost of the proposals put forward by Stern would be severe, or that the scientific consensus view on global warming, on which Stern relied, is incorrect.

For example, criticisms are often similar to that which was provided by Zonia M. Pino of The Heartland Institute:

"Stern’s research is based on the Special Report on Emissions Scenarios produced by the United Nations’ Intergovernmental Panel on Climate Change. The IPCC’s scenarios—all of which assume global warming is anthropogenic (human-induced)—have been criticized by many of the leading voices in climate science and economics. Signatories to the Manhattan Declaration on Climate Change affirmed that 'global climate has always changed and always will, independent of the actions of humans' and more than 31,000 scientists have signed a petition proffered by the Oregon Institute of Science and Medicine which states, 'there is no convincing scientific evidence that human release of carbon dioxide, methane, or any other greenhouse gases is causing or will, in the foreseeable future, cause catastrophic heating of the Earth’s atmosphere and disruption of the Earth’s climate.' The IPCC’s report has also been criticized by many economists for overstating future economic growth in developing nations as well as for failing to recognize that nations with different economies will have different levels of carbon output. Ian Castle, an Australian statistician and visiting fellow at the Asia Pacific School of Economics and Government at the Australian National University, has noted, 'IPCC emissions scenarios are technically unsound, having been derived by converting national GDPs in nominal values into a common currency using exchange rates.' Castle also has argued that 'it is not true that the per-capita emissions of rich countries will necessarily increase as they become still richer. No country in western Europe today emits the 3.2 tonnes of carbon per head that Britons emitted in 1913, and per-capita emissions in the United States, Canada, Germany, France, the Netherlands, Belgium, and Sweden are now lower than the peak levels reached in the 1970s or earlier.'"