On 19 July 2005 the Chancellor announced a major review of the economics of climate change, to understand more comprehensively the nature of the economic challenges and how they can be met, in the UK and globally.
The Stern Review is an independent, rigorous and comprehensive analysis of the economic aspects of this crucial issue, reporting to the Prime Minister and Chancellor. It has been conducted by Sir Nicholas Stern, Head of the UK Government Economic Service, and a former Chief Economist of the World Bank. This book will be invaluable for all students of the economics and policy implications of climate change, and economists, scientists and policy makers involved in all aspects of climate change.
There is now clear scientific evidence that emissions from economic activity, particularly the burning of fossil fuels for energy, are causing changes to the Earth's climate. A sound understanding of the economics of climate change is needed in order to underpin an effective global response to this challenge.
The Stern Review is an independent, rigourous and comprehensive analysis of the economic aspects of this crucial issue. It has been conducted by Sir Nicholas Stern, Head of the UK Government Economic Service, and a former Chief Economist of the World Bank. The Economics of Climate Change will be invaluable for all students of the economics and policy implications of climate change, and economists, scientists and policy makers involved in all aspects of climate change.
The first half of the Review focuses on the impacts and risks arising from uncontrolled climate change, and on the costs and opportunities associated with action to tackle it. A sound understanding of the economics of risk is critical here. The Review emphasises that economic models over timescales of centuries do not offer precise forecasts - but they are an important way to illustrate the scale of effects we might see.
The second half of the Review examines the national and international policy challenges of moving to a low-carbon global economy.
"...what separates the review from nearly 1,000 peer-reviewed scientific articles, none of which cast any doubt on the basic hypothesis, is partly that it appeals to self-interest (possible economic collapse and millions of migrants escaping to the west) and partly because global awareness of climate change is rising." - The Guardian
"...it is the first really comprehensive review of the economics of climate change. For nearly 20 years it has been the science of climate change that has made all the headlines... We've heard a thousand calls to action, to stop global warming happening. But what would that cost the world? And what would doing nothing cost us? ...now Sir Nicholas Stern and his team have come up with concrete numbers." - The Independent
1. Climate change: our approach;
2. Impacts of climate change on growth and development;
3. The economics of stabilisation;
4. Policy responses for mitigation;
5. Policy responses for adaptation;
6. International collective action
Sir Nicholas Stern is Adviser to the UK Government on the Economics of Climate Change and Development, reporting to the Prime Minister. As well as being Head of the Stern Review on the Economics of Climate Change, he is Head of the Government Economic Service, and previously Second Permanent Secretary to Her Majesty's Treasury and Director of Policy and Research for the Prime Minister's Commission for Africa. He is also a former Chief Economist for the World Bank and Special Counsellor to the President of the European Bank for Reconstruction and Development. His research and publications have focused on economic development and growth, economic theory, tax reform, public policy and the role of the state and economies in transition. He is a Fellow of the British Academy and a Foreign Honorary Member of the American Academy of Arts and Sciences. His most recent book is Growth and Empowerment: Making Development Happen (MIT Press, 2005).
"The Stern Review shows us, with utmost clarity, while allowing fully for all the uncertainties, what global warming is going to mean; and what can and should be done to reduce it. It provides numbers for the economic impact, and for the necessary economic policies. It deserves the widest circulation. I wish it the greatest possible impact. Governments have a clear and immediate duty to accept the challenge it represents."
– Sir James Mirrlees, recipient of the Nobel Prize for Economics, 1996
"The stark prospects of climate change and its mounting economic and human costs are clearly brought out in this searching investigation. What is particularly striking is the identification of ways and means of sharply minimizing these penalties through acting right now, rather than waiting for our lives to be overrun by rapidly advancing adversities. The world would be foolish to neglect this strong but strictly time-bound practical message."
– Amartya Sen, recipient of the Nobel Prize for Economics, 1998
"The Stern Review of The Economics of Climate Change provides the most thorough and rigorous analysis to date of the costs and risks of climate change, and the costs and risks of reducing emissions. It makes clear that the question is not whether we can afford to act, but whether we can afford not to act. [...] And it provides a comprehensive agenda-one which is economically and politically feasible-behind which the entire world can unite in addressing this most important threat to our future well being."
– Joseph Stiglitz, recipient of the Nobel Prize for Economics, 2001
"[...] the world is waiting for a calm, reasonable, carefully argued approach to climate change: Nick Stern and his team have produced one."
– Robert M. Solow, recipient of the Nobel Prize for Economics, 1987
"[...] a comprehensive and authoritative analysis of this issue. [...] is an excellent summary of current knowledge of the topic. [...] presenting excellent case studies and graphices of key issues directly relevant to physical and human geography."
"I very much welcome The Stern Review, which provides a much needed critical economic analysis of the issues associated with climate change [...]"
– Paul Wolfowitz, President of the World Bank
"Nicholas Stern [...] rose to the challenge admirably. [...] the Stern report is a landmark publication. It is a wide-reaching report from a man of gravity, and should be taken seriously. [...] This book is extremely readable, and something that all interested in climate change and its consequences should have."
– Journal of Biosocial Science
"The Stern Review of The Economics of Climate Change is a vital step forward in securing an effective global policy on climate change. Led by one of the world's top economists, the Stern Review shows convincingly that the benefits of early global action to mitigate climate change will be far lower than the costs. The report establishes realistic guidelines for action [...] The Stern Review will play an important role in helping the world to agree on a sensible post-Kyoto policy."
– Jeffrey D. Sachs, Director of the Earth Institute at Columbia University and Special Advisor to UN Secretary General
"The Economics of Climate Change sends a very important and timely message: that the benefits of strong, early action on climate change outweigh the costs. [...] Congratulations to Sir Nick Stern and his team for producing a landmark review which I have no doubt will strengthen the political will to change of governments around the world."
– Claude Mandil, Executive Director of the International Energy Agency
"The scientific evidence of global warming is overwhelming but some commentators and lobby groups have continued to oppose offsetting actions on economic and competitiveness grounds. This comprehensive and authoritative report demolishes their arguments, explaining clearly the complex economics of climate change. It makes plain that we can cut emissions radically at a cost to the economy far less than the economic and human welfare costs which climate change could impose."
– Baron Jonathan Adair Turner, Former Director of UK Confederation of British Industry and Economic Advisor to the Sustainable Development Commission
"When the history of the world's response to climate change is written, The Stern Review will be recognized as a turning point. [...] Sir Nicholas and his team have provided important intellectual leadership as humanity engages with its greatest challenge. [...] While the details will be debated, the main thrust of the report is clear and compelling – the expected benefits of tackling climate change far outweigh the expected costs."
– Cameron Hepburn, Oxford University
"Pay now to fix global warming or risk a worldwide economic depression later [...] The [Stern] report moves economic discussion of how humanity should deal with global warming to center stage [...]"
– USA Today
"The overwhelming message of [...] [the] Stern review on the economics of climate change is that it is now time to move on from arguing about statistics to taking drastic action at an international level. [...] Even if Stern is only half right then [...] the consequence of doing nothing is still so dreadful that it ought not to be contemplated."
"[The report's] basic point seems unassailable: failure to act now will exact much greater penalties later on [...] If people and industries are made to pay heavily for the privilege, they will inevitably be driven to develop cleaner fuels, cars and factories [...]"
– The New York Times
"The Stern review makes two invaluable contributions. The first is that it recasts environmentalism as economics [...] Stern's second serious contribution is to provide a formula for durable environmentalism, one which binds business and government."
– The Times