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Title: The Economics of Climate Change: The Stern Review
Author(s): Nicholas Stern
Date of Publication: 2007 Publisher: Cambridge University Press
Pages:xix + 692 ISBN: 0 521 70080 9
Price: Format:Paperback
Target Readership Sen Secondary







Content: 1 – Climate change - our approach; 2 - Impacts of climate change on growth and development; 3 -The economics of stabilisation; 4 - Policy Responses to Mitigation; 5 - Policy responses to adaptation; 6 - International collective action.

Review: This report is by now well known (or at least quoted which may not be the same thing!) and has been the subject of some intense criticism. For those wanting more background the Treasury webpage has useful information and a discussion (albeit brief) appears in Wikipedia.

The question remains as to the value of this text in amongst countless others and its use in education. Despite the criticisms it does provide us with a detailed overview of current ideas but from an economic rather than scientific perspective. It is this that makes the text useful. Common complaints are made that climate science is not sufficiently economically focussed to make practical suggestions. Given the focus of both the author and the government department sponsoring the work this argument fails this time. The 27 chapters are divided into six parts. Prior to that we have a summary of conclusions which helps the reader by providing an overview of the key points. Part one outlines the basics behind climate change and the methodology to be used in the report. This first chapter on climate change is a very useful overview and well worth reading. The other chapters focus on the economic methodology being followed. It's here that Stern seems to differ most with other workers because he uses a different method of calculating future costs and returns (discount rate) and also uses discount percentages that others might not. Here is the central problem - the future cannot be known and so any use of discount rate (or climate change for that matter) is conjectural. This is what makes the climate change debate so highly charged and difficult to assess. One point Stern does make is that inter-generational equity should pay a greater part in decision making. He also notes that it is a significant ethical problem. Part two gathers current data and uses it to assess likely changes. The first chapter here takes a global picture and looks at possible changes for health, water etc. Two following and complementary chapters explore implications for developing and developed nations respectively. Finally, there's a return to economic methodology with a detailed critique of current modelling ideas. Part three considers only the economics of climate change - costs and benefits. We start with a review of emissions growth to show how changes have occurred and might alter in the future. This is followed by a review of how we might address these emissions and the costs associated in dealing with it. After further examination of the economic modelling process there's a welcome look at the opportunities arising from climate change. This is one aspect that is not always given air time. It points out that any business change will mean a business opportunity for someone. Currently, the carbon trading market is one such example but there will be many others and what might be useful is to see how we can use change to our advantage. A final chapter considers suitable goals for any climate policy. Part four looks at how we might mitigate changes. Responses are mainly economic with chapters devoted to taxation, carbon trading, and technology with some discussion on how to change behaviour and preferences. What we can't mitigate we need to adapt to and it is clear that adaptation is a key issue in the latest climate reports. The aim is to be able to deal with the effects (whilst still trying to reduce the severity). There's a brief look at how adaptation might work followed by examination of economic measures and their relative importance. The final part acknowledges the importance of international action and shows how it can be fostered. Starting with existing agreements, the review continues to look at ways in which climate-friendly action can be taken and how economic ideas can be used to spread innovation. A final chapter provides a very brief note on the value of international action.

This is a very dense report with technical detail out of the reach of most readers. It is here that the arguments are at their most intense. So, what can the student make of the information presented here? Most importantly, there is a wealth of data brought together from a number of sources, attractively presented and easy enough for the lay reader. Chapters are structured to be read at several levels and the overview is certainly within the grasp of students. As they progress in their studies so they can tackle more complex work (economics students would have most to gain here as one might think!). It is a significant book not because of the novelty of what it says (this is largely a re-working of existing documents as one might expect of a review) but because of its economics heritage and the way it puts climate change backstage arguing that its economics that will help solve the issue. Overall a worthwhile text that should be a library standard.





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