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Stern Review on the Economics of Climate Change - A Quick Round-up

The Stern Review was released today.
Trying to make sense of it and the analysis of it is complex - and not helped by the BBC's infantile over simplifications - for instance :
BBC NEWS | Business | At-a-glance: The Stern Review starts:

Carbon emissions have already pushed up global temperatures by half a degree Celsius

As far as I can see Stern is far too sensible to make such a statement.

Responses seem to fall into four camps:
We are doomed - there doesn't seem to be any attempt to understand what Stern is arguing with this camp.
We need to tax our way to prosperity. Well sort of, what Stern is arguing is that is a stitch in time saves nine. So spend a little now and we get much more back in the future.
Those who question the whole basis of the scientific "facts" he uses - see JunkScience.com for the comprehensive argument there.
And then a very small camp consisting mainly of Mr Worstall so far who have had the energy and insight to argue the economics.
This last group is the most interesting. It is an argument for another day as to whether the whole anthropogenic climate change science is sound or not, but it is surely reasonable to accept the IPCC report that Stern uses as his basis and then argue his methodology and reasoning is wrong from that.

Tim Worstall makes several points the key one is that the IPCC give a huge range of possible outcomes, and Stern seems to pick the most pessimistic one that responds best to early intervention.
And all his figures depend on the chosen "discount rate". He uses a discount rate of 3% dropping to 2% which is his "chosen" rate rather than the market rate. Change that rate a point or two, change the chosen scenario by a point or two and the whole picture changes.

My own quick reading is that Stern is a very clever man who has built a fantastic castle of recommendations and policy suggestions but that he has not felt it part of his remit to check the foundations he is building on. A common intellectual exercise is to take some assumptions to be correct and then see what that leads to. Fine for academia but disappointing to see little critical review of the science or underlying economic assumptions. And I don't expect to see any intelligent criticism apart from here on the web.

Comments

For starters, it's ridiculous to criticize Stern for not reviewing the science. He's not a scientist, and that wasn't his brief. Besides the fact the science is sound. Junkscience.com are the ones purveying the junk science. Their claim that increased temperatures are due to solar irradiation has already been disproved by the scientific community. Stern was quite safe in taking a sound scientific theory as a basic assumption.

Second, you are misrepresenting what Worstall said. He said that Stern chose the moderate and worst-case scenario. Which makes sense, because the best case scenario is the one that already involves mitigation. If you are looking for a scenario to compare mitigation efforts against, then why would you compare it to the scenario that already involves mitigation?

The discount rate is a better criticism. Analyses should be done with different discount rates.

To take the IPCC report as a starting point is itself controversial as the final version of the report was massaged by politicians, just as they did with the intelligence report on Sadam's claimed WMD.
Very many scientists have signed a petition in disagreement with the IPCC report.
The idea of so-called green taxes is just another politician's ploy to exercise control via big government.

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