Stern Review

The Stern Review ( Stern Review on the English Economics of Climate Change) is a published on 30 October 2006 report by former World Bank chief economist and current head of the economic service of the British Government Nicholas Stern. The prepared on behalf of the British government some 650 -page report examines in particular the economic consequences of global warming.

Findings of the report

The concentration of greenhouse gases in the atmosphere is compared to the state before the industrial revolution already from 280 ppm (parts per million or millionths in the atmosphere) of carbon dioxide equivalents increased to 430 ppm today and increases annually by about 2 ppm.

Climate change is a threat to life on earth. However, it is still possible to avoid the worst risks and impacts of climate change with sustainable costs, acting on it now quickly to national and international level.

In order to avoid serious consequences for the world economy, the concentration of greenhouse gases in the atmosphere should be kept below 550 ppm. Even in this case, the average global temperature would rise by 2 to 3 ° C.

The concentration of greenhouse gas concentrations can be limited to 550 ppm, if the increase in emissions is stopped within 15 years and then reduces emissions by around 2%. Since the total economic output, gross domestic product, is tripled to quadruple by 2050 around, it means that emissions must be pressed by around three-quarters per unit of gross domestic product by 2050.

The annual cost of measures to stabilize greenhouse gas concentration 500-550 ppm of carbon dioxide equivalents are are estimated at about 1% of global gross domestic product when it is now starting to act decisively.

If nothing is done to reduce the emissions of greenhouse gases, the concentration of greenhouse gases in the atmosphere could be as early as 2035 to reach twice their pre-industrial levels, which would mean an increase in the average temperature of more than 2 ° C. In the longer term would be the probability that the temperature rise would exceed 5 ° C, with more than 50% if action is not taken. This increase would correspond to the increase in average temperature since the last ice age.

The annual cost of climate change if no action is taken, corresponding to the loss of at least 5 % of global gross domestic product. If one takes into account a wider range of risks and impacts, the damage could rise to 20 % or more of the expected global gross domestic product. It should be noted that developing and emerging countries get above average to feel the economic consequences of climate change.

In order to compare current expenses and subsequent losses, future values ​​are discounted. Star puts this at a value of 3.3 percent in the first year, which is reduced in the course of a hundred years to a little over two percent. The value is made up in part of the expected growth of the world economy and in part from uncertainties. This second term discounting is stronger than they would be recognized by the golden rule of accumulation.

The world does not need to decide between the prevention of climate change and promoting growth and development. Combating climate change is a long term strategy for growth and can be done in a way that is not the aspirations for growth of rich or poor countries. Action on climate change create new markets, such as markets for technologies for CO2 - neutral energy generation and CO2 - efficient goods and services.

Emissions can be reduced by increasing energy efficiency, changes in demand as well as through the use of clean power plants, heating and transport technologies. The power sector would have worldwide emit at least 60% less carbon dioxide by 2050, so that the concentration of greenhouse gases is stabilized at or below 550 ppm carbon dioxide equivalents. Profound reductions in emissions would be needed in the transport sector. The production processes in the economy accruing carbon must be separated and stored in extensive dimensions are (CO2 sequestration ) to permit the continued use of fossil fuels without harming the atmosphere. The reduction in emissions outside the energy industry as they arise for example when deforestation is essential. The loss of forests annually contributes more to global emissions than the transport sector. The conservation of forests is an extremely cost-effective way to reduce emissions.

For an effective global policy on climate protection measures need to be taken mainly in the following three areas:

• There must be a price for carbon emissions are collected - through CO2 taxes, emissions trading and government regulation. The expansion and linkage of the large number of emissions trading approaches in the world is a powerful way to promote profitable emission reductions.

• Innovations to use low-carbon technologies should be encouraged. The support of energy research and development should be at least double the world, supporting the use of new low-carbon technologies should grow by five times. International co-operation as regards the establishment of product standards is a powerful way to increase energy efficiency.

• Obstacles to a more efficient use of energy must be eliminated. The public must be better informed in order to change attitudes and behavior.

Climate change demands an international response on the basis of a common understanding of long-term goals and agreement on a framework for action. Many countries and regions are already acting: the EU, China and California are examples. The United Nations and the Kyoto Protocol UNFCCC provide a basis for international cooperation. But it is even more ambitious action in the world required. It is essential that climate change is fully integrated into development policy, and that rich countries honor their pledges to increase overseas development aid to help developing countries adapt to climate change.

Reactions of politicians, the media and scientists

The spread of the British Government with a global media campaign ahead of the UN Climate Change Conference of the United Nations in Nairobi report has found much attention, particularly in Europe.

Reactions of politicians

British Prime Minister Tony Blair attended the launch of the report. He stressed in his opinion, outstanding significance of the report.

The then Australian Prime Minister John Howard announced that 60 million Australian dollars to invest in projects that will help reduce the emission of greenhouse gases. The Kyoto Protocol would Australia still does not sign. However, the first act of his successor, Kevin Rudd was the ratification of the Kyoto Protocol.

In Germany, among others, Federal Environment Minister Sigmar Gabriel results of the Stern Report followed. He said in an interview with the news magazine Der Spiegel on 6 November 2006, it would have the medium one percent of gross domestic product for climate protection are output. To do nothing would at least five times as expensive. A decision of the party council of the Alliance 90/The Greens on 6 November 2006 states the Stern report: " By 2100, every euro bows for climate protection up to twenty euros to climate damage. "

Reactions of media

Numerous newspapers attacked by the Stern Review on climate change risks mentioned that were highlighted in the press statement by the UK Ministry of Treasury, with spectacular headlines. For example, the headline of the German newspaper Die Welt "Climate change may cause the Great Depression. " Tagesschau ARD reported, it could be expected by 2100, damages equivalent to almost 5.5 trillion euros per year. The British Independent devoted to the Stern report, the first nine pages of his edition of 31 October with a comprehensive analysis. The Independent reported - like many German newspapers - to the predictions of the Stern Report, among other things:

• By 2100, the average global temperature by up to 6 ° C could increase if no measures to avoid emissions are performed.
• The number of malaria-endemic African / inside will grow by 60 million.
• 4 million km2 of coastal area at risk of flooding from rising sea levels, home to one twentieth of the world's population.
• The agricultural yields in Africa and Arabia can to sink up to 35% when increasing the temperature by 3 ° C. The increased risk of serious famine for 550 million more people; A rise 2 ° C would be the case for 200 million people.

The explanations of the Stern Report on these forecasts were not sufficiently addressed in the media. In later published by UK Ministry on the Internet answers to questions about the Stern report is, however, emphasized that there is data RELATES to the results of the Stern Report, which are based on a new, highly aggregated model, and it is for calculations periods into the next century and beyond iN QUESTION. You should as " Illustration" and will not, as the report emphasize clearly taken literally ( "they Should not, as the Review emphasises ' strongly, be taken too literally. " )

Reactions of scientists

On the scientific side, the study was evaluated very differently.

Positive and favorable comment to the Stern Report came, among others, the economic Nobel laureates Robert M. Solow, James Mirrlees, Joseph E. Stiglitz and Amartya Sen and Jeffrey Sachs, the UN Special Adviser on the Millennium Development Goals.

On November 28, 2007 the Konrad -Adenauer- Foundation published the international climate report. About 50 foreign employees report from its countries, such as climate change in Europe, Asia, Africa and Latin America is perceived. The report provides an overview of the impacts of climate change and dealing with the climate change in the individual states. The initiative of the Konrad Adenauer Foundation is based in part on the Stern Report, which received worldwide attention at the time. A more recent version is on Nov. 21p with Air Report 2011 - published policy and perception.

Some scientists star was also criticized, in particular its damage estimates were exaggerated. A comprehensive review under the title The Stern Review: A Dual Critique was, by Robert M. Carter, CR de Freitas, Indur M. Goklany, David Holland and Richard Lindzen from a scientific perspective and from Ian Byatt, Ian Castles, Indur M. Goklany David Henderson, Nigel Lawson, Ross McKitrick, Julian Morris, Alan Peacock, Colin Robinson and Robert Skidelsky published from an economic perspective, in which the accuracy and completeness as well as the objectivity of the report be questioned. This criticism was also sharply attacked himself. The geoscientist Andrew Glikson of the Australian National University compared the approach of the authors of A Dual Critique even with the creationists.

William Nordhaus, Sterling Professor of Economics at Yale University, said that the fundamental questions of climate change policy - how much, how fast, and how costly - remain open in the Stern Review. Stern put unusually low discount rates ( " close to zero " ) basis, so that damage that will occur in decades, would be heavily weighted towards today's expenses. On the adoption of more appropriate according to Nordhaus discount rates, the present value of the catastrophic results would almost disappear.

Richard Tol, who has worked in Dublin, Sussex University and the Free University of Amsterdam on Economic and Social Research Institute, threw Stern ago in an interview to have the damage far too high and set the cost of emission reduction is much too low. Star 've only used extremely pessimistic scenarios for its loss estimate 5-20 % of gross domestic product and other studies, the damage from far calculate less than one percent, embezzled, the discount rate was also too low. The report offers no real cost-benefit analysis and could be dismissed as " alarmist and incompetent ." But this should not mean that climate change is not a problem and greenhouse gas emissions would not be reduced. Rather, there are good arguments for emission reduction.

In contrast to the above-mentioned reviews, a group of scientists came to the economist Frank Ackerman to the conclusion that the Stern review underestimated by his calculations, the consequences of climate change on, but. The expected average damage in 2100 is higher than that in Stern's estimate of 10.8 % of world GDP, by far.

The environmental economists Thomas Sterner and U. Martin Persson defended the Stern report against the criticism of the discount rate used. Even if they had no serious objections to the model assumptions used for discounting from star to let his results justify even without the critical low discount rates. So did star such damages, which are not captured by the market, probably underestimated; future deficiencies and shortages due to climate change and the changing composition of the economy would also lead to rising relative prices for certain goods and services, which increases the expected damage could and WOULD counter the effect of discounting.

Mike Hulme, director of the Tyndall Centre for Climate Change Research in Norwich, England, held the Stern report is premature. The uncertainty in climate scenarios were in his opinion so great that serious studies on the economic impacts of climate change are not used to commission. Hulme had been repeatedly asked by the British government to analyze the costs of climate change. But he had always refused because he could not represent the result of such a study, he said the journal Nature. Hulme commented: "This is not the last word of scientists and economists, it is the last word of civil servants. "

Similar criticism is expressed Bjørn Lomborg, professor at the Copenhagen Business School, the Wall Street Journal. Lomborg has organized the " Copenhagen Consensus ". He believes there projects with which to achieve much more with much less cost leave for advancing global prosperity than with measures to reduce greenhouse gas emissions.

Richard B. Howarth, an environmental economist at Dartmouth College, on the other hand defended the Stern Report. Contrary to the criticisms were the star model assumptions regarding the time preference and risk aversion of people basically true. Strong emission reductions could also be justified by the fact that decision-makers have no right to burden posterity unpaid damage. She discovered that the star of his results are not moral ( criticized ) argument -dependent.

Ottmar Edenhofer, chief economist of the Potsdam Institute for Climate Impact Research ( PIK), expressed extremely positive: " The Stern report is called the Copernican revolution go down in the history of climate policy - it now is no longer about whether we need an ambitious climate policy, but about how an ambitious climate policy should look like. The question of economists whether climate protection pays is now answered: Ambitious climate protection is necessary and affordable. "

Clive Spash from the Commonwealth Scientific Industrial Research Organisation ( CSIRO ) criticized the approach of cost -benefit analyzes in principle as unfit. Stern does not distinguish sufficiently between ( assessable ) risks and ( can not be estimated ) uncertainties. Stern also neglect important literature, stripe ethical issues superficially and make economic growth out of the question.

Nico Stehr and Hans von Storch criticized the report as one-sided, what regards the possible difference or convergence of mitigation and adaptation. They state it as in the previous climate science and policy an almost singular focus on prevention strategies rather than turn to more adaptation strategies. Storch and Stehr keep the demands for an end to global warming in the spirit of the UN Framework Convention on Climate as well as a reduction approach on the Kyoto agreement also for entirely unrealistic.

Felix Ekardt criticized the climate economics as a whole, including star and his opponents. In addition to the above, but also by other researchers points ( problematic handling of forecast uncertainty, dubious Diskontierungsmodell ) he developed further criticisms: To put Star outdated, still too optimistic climate data based. Furthermore, it is the whole of the (not just climate ) economics underlying preference / efficiency approach ethically and legally untenable. Significant injury factors such as the threat of resource wars would disappear also. Further unquantifiable issues such as damage to life and health would be translated in an arbitrary manner in monetary values ​​.

Star itself represents in retrospect the view that the review undervalued the risks of climate change. The Integrated Assessment models used in the report would provide a too constricted image and important questions and ethical perspectives not included. The statement that the costs of trade are much less than the cost of non-action could be taken even clearer.