Did the Stern Review underestimate US and global climate damages?
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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- Sir Ian Byatt & Bob Carter & Ian Castles & Chris de Freitas & Indur M. Goklany & David Henderson & David Holland & Lord Lawson of Blaby & Richard S. Lindzen & Ross McKitrick & Julian Morris & Sir Alan, 2006. "The Stern Review: A Dual Critique," World Economics, World Economics, Economic & Financial Publishing, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 7(4), pages 165-232, October.
- 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.
- Weitzman, Martin L., 2009.
"On Modeling and Interpreting the Economics of Catastrophic Climate Change,"
3693423, Harvard University Department of Economics.
- Martin L. Weitzman, 2009. "On Modeling and Interpreting the Economics of Catastrophic Climate Change," The Review of Economics and Statistics, MIT Press, vol. 91(1), pages 1-19, February.
- 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.
- 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.
- 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.
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