Stern's report was attacked for being alarmist when it came out in 2006. But now he is going for a new global environment deal in Copenhagen next year. What are its chances?by Alun Anderson / July 26, 2008 / Leave a comment
The Stern review on the economics of climate change irrevocably altered the climate debate when it came out in October 2006. For the first time, environmentalists who had shouted loudly about the dangers of climate change were joined by an apparently hard-headed economist, commissioned by a government and with a team of 15 economic analysts and modellers at his command.
Nicholas Stern, a former World Bank chief economist, was working at the treasury when he was asked to look at the economics of climate change. The conclusion of his 700-page report—that the world must act quickly or face devastating consequences—was not new, but the language it used was. Stern presented an economic argument that rapid and affordable action now would prevent huge losses later. That in turn made it easier for politicians and business leaders to back action on climate change.
While environmentalists welcomed the review, more than a few economists did not. Richard Tol, professor at the Economic and Social Research Institute in Dublin, claimed that it cherry-picked the most pessimistic studies. He presented the familiar economist’s reaction: “Stern assumes that society will never get used to higher but stable temperatures, changed rainfall patterns or higher sea levels. This is a rather dim view of human ingenuity.”
William Nordhaus, a Yale professor of economics, rejected Stern’s view that urgent action was needed. He focused on one part of the review—its cost-benefit analysis—and the value Stern selected for the “discount rate,” the rate at which future consumption ought to be discounted to make it equivalent in value to consumption today when people are not as rich. Nordhaus’s attacks are repeated in his new book, A Question of Balance (Yale). An adulatory review of the book by physicist Freeman Dyson in the New York Review of Books claims that if the world answered the Stern call for “draconian” cuts in emissions, “several generations of Chinese citizens would be impoverished to make their descendants only slightly richer.” Dyson quotes Nordhaus’s view of Stern as taking “the lofty vantage point of the world social planner… stoking the dying embers of the British empire.”
Then there are the critics who believe the threat from climate change has been exaggerated. Nigel Lawson has written (Prospect online, November 2005) that the intergovernmental panel on climate change (IPCC) is determined to “suppress or ignore dissenting views.” In a new book, An Appeal to Reason (Duckworth), Lawson…