Is Stern Review on Climate Change Alarmist?
Energy and Environment, Vol. 18, No. 5, pp. 521-532, 2007
4 Pages Posted: 16 Jan 2008 Last revised: 5 Oct 2009
Date Written: 2007
This paper is concerned with the conclusion of the Stern Review that the cost of climate change could be as much as 20% of the global GDP. In this paper, I identify two major sources of the variation in the estimates of the aggregate cost of climate change. One is the different climate change predictions of the AOGCM (Atmospheric Oceanic General Circulation Model) models, and the other is varying economic damage estimates. The main conclusion of this paper is that only under the alarmist approach- which assumes both the most severe climate change and the most extreme estimate of climate change damage to the economy- we can be convinced that the cost of climate change is close to 20% of the global GDP in 2100. In most other cases, the cost will be under 1% of the global GDP.
Keywords: UK Climate Policy, Stern Review, GCM predictions, Climate Change Impacts, and DICE model
JEL Classification: Q54
Suggested Citation: Suggested Citation