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The Stern Review and its critics: implications for the theory and practice of costs-benefits analysis

  • Daniel H. Cole
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    The “Stern Review: The Economics of Climate Change” reached conclusions and policy recommendations dramatically different from most of the earlier economic analyses of climate change. It found that the costs of climate change, as well as the potential net benefits of greenhouse gas reductions, were much higher than previously estimated, and consequently recommended more rapid and extensive cuts in emissions than had many other economist analysts. A number of prominent economists have criticized the Stern Review on various grounds, including its damage estimates and the selection of parameter values, which affect the interest rate at which future costs and benefits are discounted to present value. This paper summarizes the Stern Review and its critiques, and assesses them from a process-oriented perspective to determine what they can teach us, positively and negatively, about how benefit-cost analyses should (or should not) be carried out.

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    Article provided by Associazione Rossi Doria in its journal QA.

    Volume (Year): (2007)
    Issue (Month): 4 (November)

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    Handle: RePEc:rar:journl:0063
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    1. Margolis, Michael & Naevdal, Eric, 2004. "Safe Minimum Standards in Dynamic Resource Problems—Conditions for Living on the Edge of Risk," Discussion Papers dp-04-03, Resources For the Future.
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    6. Heal, G., 1998. "Valuing the Future: Economic Theory and Sustainability," Papers 98-10, Columbia - Graduate School of Business.
    7. Ben Groom & Cameron Hepburn & Phoebe Koundouri & David Pearce, 2005. "Declining Discount Rates: The Long and the Short of it," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 32(4), pages 445-493, December.
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