A Critique of the Stern Report

Abstract

The recently released Stern Review of the Economics of Climate Change demonstrates, given certain assumptions, that adopting an aggressive near-term policy may be better than never doing anything at all. However, the question policymakers should be asking is how aggressive do policies need to be in the near term. Society needs to weigh a number of alternatives besides the single one considered by the Stern report, namely stabilizing greenhouse gas concentrations at 550 ppm. The risks of climate damages go up with ever-higher stabilization targets, but the mitigation costs fall rapidly. Society needs to settle on the best tradeoff.