The Economics of Climate Change

Speaker: Sir Nicholas Stern, Chief Economic Adviser to the Government of the UK
 
Date: 9 November 2006
 
1% of GDP for 500ppm is a bargain argues Sir Nicholas Stern
The British economist outlined the main findings of his study, the "Stern Review on the Economics of Climate Change", focusing in particular on the cost/benefit analysis of what he defined as a ‘global externality’. He emphasised that, although the developing countries will be especially vulnerable to the negative impact of climate change, the developed countries will not be immune. Such impacts were not confined to the often-cited environmental damage but include the risk of water and food shortages, extreme weather events as well as negative dynamics for capital markets.
On the basis of the scientific data gathered, Stern was able to put a price tag of 1% of GDP (in 2050) on the policies needed to cut emissions to a level that would stabilise the presence of carbon dioxide (CO2) in the atmosphere to 550 parts per million (ppm). He argued that, on the basis of the current trends and the available technology, this was a more realistic target than the 450ppm that some are calling for. In any event, he concluded that the benefits of reducing emissions far outweigh the costs, and urgent steps should be taken, as any delay could entail increased risks and higher costs.   

See the slides of Sir Stern's Presentation