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.