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

Daniel H. Cole

QA - Rivista dell'Associazione Rossi-Doria, 2007, issue 4

Abstract: 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.

Keywords: Cost-Benefit Analysis; Discounting; Discount Rate; Climate Change (search for similar items in EconPapers)
JEL-codes: D60 D81 D90 H40 K32 O10 Q20 (search for similar items in EconPapers)
Date: 2007

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Persistent link: http://EconPapers.repec.org/RePEc:rar:journl:0063

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