The stern review and the uncertainties in the economics of climate change

Abstract

The Stern Review of the Economics of Climate Change presented by Lord Nicholas Stern and his team has been touted as the most rigorous analysis at present regarding the risks associated with global climate change. The Stern Review presents the costs and benefits of reducing greenhouse gas emissions and comes to the stark conclusion that global inaction could result in even greater costs than the investment in immediate preventative action for long-term emission stabilization. However, even though the Stern Review addresses important aspects needed to establish an effective global policy on climate change, it is necessary to review the uncertainties associated with the Stern Review's conclusions and overall analysis. The uncertainties in the economics of climate change arise from three distinct realms: (i) the Scientific uncertainties, (ii) the uncertainties in the economic framework, and (iii) the uncertainties in the implications for policy. This review addresses these individual aspects in brief in an attempt to give a general understanding of the critiques and debates regarding the Stern Review.