Some Thoughts on the Damage Estimates Presented in the Stern Review

Abstract

This brief note reviews some of the underlying structure behind the estimates of the costs that could be associated with future climate change that were prepared for the Stern Review (2006). Section 1 accomplishes this task, and notes explicitly the sensitivity of the estimates to not only the range of possible sources of climate impacts now included in the calculations, but also assumptions about the utility discount rate. The second section responds to the comparison of these estimates to the economic cost limiting the emission of greenhouse gases. Finally, Section 3 offers some thoughts about context. In summary, there are many questions raised about how the Stern Review computes aggregate economic impacts and evaluates global mitigation costs, and a few are raised here. The basic conclusion that we need mitigation and we need it now is, however, undeniable.