Advanced Search
MyIDEAS: Login

The Stern Review: A Deconstruction

Contents:

Author Info

  • Gary W. Yohe
  • Richard S.J. Tol

    ()
    (Economic and Social Research Institute, Dublin)

Abstract

Using a simple model designed for transparency but nonetheless calibrated to support the much-quoted damage estimates of the Stern Review of the Economics of Climate Change, we demonstrate significant sensitivity of those results to assumptions about the pure rate of time preference, the discounting time horizon, rates of risk and equity aversion used to compute certainty- and equity equivalent annuities, and presumed static regional vulnerability. Manipulation of any of these parameters one at a time across reasonable ranges can diminish damage estimates by as much as 84% or, in the case of extending the time horizon, increase damage estimates by 900%. We also confirm the usual result that limiting atmospheric concentrations to specific benchmarks above 400 ppm cannot eliminate damages. Nonetheless, we applaud the Stern Review author team for reconfirming that the climate problem can productively be approached as an economic problem whose solutions can be explored with the tools of decision analysis.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.fnu.zmaw.de/fileadmin/fnu-files/publication/working-papers/sterngecwp.pdf
File Function: First version, 2007
Download Restriction: no

Bibliographic Info

Paper provided by Research unit Sustainability and Global Change, Hamburg University in its series Working Papers with number FNU-125.

as in new window
Length: 19 pages
Date of creation: Feb 2007
Date of revision: Feb 2007
Handle: RePEc:sgc:wpaper:125

Contact details of provider:
Postal: Bundesstrasse 55, 20146 Hamburg
Phone: +49 40 42838 6593
Fax: +49 40 42838 7009
Web page: http://www.fnu.zmaw.de/
More information through EDIRC

Related research

Keywords: economics of climate change; certainty equivalent and equity equivalent annuity; relative risk aversion; equity aversion; pure rate of time preference;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Raj Chetty, 2003. "A New Method of Estimating Risk Aversion," NBER Working Papers 9988, National Bureau of Economic Research, Inc.
  2. Mirrlees, J. A. & Stern, N. H., 1972. "Fairly good plans," Journal of Economic Theory, Elsevier, vol. 4(2), pages 268-288, April.
  3. William D. Nordhaus, 2006. "The "Stern Review" on the Economics of Climate Change," NBER Working Papers 12741, National Bureau of Economic Research, Inc.
Full references (including those not matched with items on IDEAS)

Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. What to do about climate change: looking beyond the discount rate controversy
    by Economic Logician in Economic Logic on 2012-11-29 14:53:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Tanaka, Kenta & Managi, Shunsuke & Kondo, Katsunobu & Masuda, Kiyotaka & Yamamoto, Yasutaka, 2012. "Potential climate effects on Japanese rice productivity," MPRA Paper 35823, University Library of Munich, Germany.
  2. Andy Reisinger, 2011. "Interdisciplinarity: are we there yet?," Climatic Change, Springer, vol. 108(1), pages 23-30, September.
  3. Dritan Osmani, . "A note on optimal transfer schemes, stable coalition for environmental protection and joint maximization assumption," Working Papers FNU-176, Research unit Sustainability and Global Change, Hamburg University.
  4. Aline Chiabai & Ibon Galarraga & Anil Markandya & Unai Pascual, 2011. "The Equivalency Principle for Discounting the Value of Natural Assets: An Application to an Investment Project in the Basque Coast," Working Papers 2011-10, BC3.

Lists

This item is featured on the following reading lists or Wikipedia pages:
  1. Stern Review in Wikipedia English ne '')

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:sgc:wpaper:125. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Uwe Schneider).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.