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Did the Stern Review underestimate US and global climate damages?

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Author Info

  • Ackerman, Frank
  • Stanton, Elizabeth A.
  • Hope, Chris
  • Alberth, Stephane

Abstract

The Stern Review received widespread attention for its innovative approach to the economics of climate change when it appeared in 2006, and generated controversies that have continued to this day. One key controversy concerns the magnitude of the expected impacts of climate change. Stern's estimates, based on results from the PAGE2002 model, sounded substantially greater than those produced by many other models, leading several critics to suggest that Stern had inflated his damage figures. We reached the opposite conclusion in a recent application of PAGE2002 in a study of the costs to the US economy of inaction on climate change. This article describes our revisions to the PAGE estimates, and explains our conclusion that the model runs used in the Stern Review may well underestimate US and global damages. Stern's estimates from PAGE2002 implied that mean business-as-usual damages in 2100 would represent just 0.4 percent of GDP for the United States and 2.2 percent of GDP for the world. Our revisions and reinterpretation of the PAGE model imply that climate damages in 2100 could reach 2.6 percent of GDP for the United States and 10.8 percent for the world.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 37 (2009)
Issue (Month): 7 (July)
Pages: 2717-2721

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Handle: RePEc:eee:enepol:v:37:y:2009:i:7:p:2717-2721

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Web page: http://www.elsevier.com/locate/enpol

Related research

Keywords: Climate change in the United States PAGE integrated assessment model Climate impacts;

References

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  1. Richard S. J. Tol & Gary W. Yohe, 2006. "A Review of the Stern Review," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 7(4), pages 233-250, October.
  2. Weitzman, Martin L., 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," Scholarly Articles 3693423, Harvard University Department of Economics.
  3. William D. Nordhaus, 2007. "A Review of the Stern Review on the Economics of Climate Change," Journal of Economic Literature, American Economic Association, vol. 45(3), pages 686-702, September.
  4. Wahba, Mohammed & Hope, Chris, 2006. "The marginal impact of carbon dioxide under two scenarios of future emissions," Energy Policy, Elsevier, vol. 34(17), pages 3305-3316, November.
  5. Alberth, Stephan & Hope, Chris, 2007. "Climate modelling with endogenous technical change: Stochastic learning and optimal greenhouse gas abatement in the PAGE2002 model," Energy Policy, Elsevier, vol. 35(3), pages 1795-1807, March.
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Cited by:
  1. Pycroft, Jonathan & Vergano, Lucia & Hope, Chris & Paci, Daniele & Ciscar, Juan Carlos, 2011. "A tale of tails: Uncertainty and the social cost of carbon dioxide," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy, vol. 5(22), pages 1-29.
  2. Juan-Carlos Ciscar & László Szabó & Denise Regemorter & Antonio Soria, 2012. "The integration of PESETA sectoral economic impacts into the GEM-E3 Europe model: methodology and results," Climatic Change, Springer, vol. 112(1), pages 127-142, May.
  3. Jim Davies & James MacGee & Jacob Wibe, 2011. "The Impact of Climate Change and Climate Policy on the Canadian Economy," University of Western Ontario, Economic Policy Research Institute Working Papers 20112, University of Western Ontario, Economic Policy Research Institute.
  4. Hope, Chris W., 2011. "The social cost of CO2 from the PAGE09 model," Economics Discussion Papers 2011-39, Kiel Institute for the World Economy.
  5. Ackerman, Frank & Stanton, Elizabeth A. & Bueno, Ramón, 2010. "Fat tails, exponents, extreme uncertainty: Simulating catastrophe in DICE," Ecological Economics, Elsevier, vol. 69(8), pages 1657-1665, June.

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