Wednesday, April 11, 2007

The Legacy of the Stern Review

Apologies for the lack of posts over the last 2 weeks - academic research has a way of disrutpting blogging especially when you are in countries with insufficient internet speed.

Obviously much has been missed but I hope to post a few catch up posts over the next few days.

The first is a nice little paper by Gary W. Yohe, Richard S.J. Tol and Dean Murphy relating to the recent Stern Review.

On Setting Near-term Climate Policy while the Dust Begins to Settle: The Legacy of the Stern ReviewDate: 2007-03

By: Gary W. Yohe
Richard S.J. Tol (Economic and Social Research Institute, Dublin)
Dean Murphy

We review the explosion of commentary that has followed the release of the Stern Review: The Economics of Climate Change, and agree with most of what has been written. The Review is right when it argues on economic grounds for immediate intervention to reduce emissions of greenhouse gases, but we feel that it is right for the wrong reasons. A persuasive case can be made that climate risks are real and increasingly threatening. If follows that some sort of policy will be required, and the least cost approach necessarily involves starting now. Since policy implemented in 2007 will not “solve” the climate problem, near term interventions can be designed to begin the process by working to avoid locking in high carbon investments and providing adequate incentives for carbon sequestration. We argue that both objectives can be achieved without undue economic harm in the near term by pricing carbon at something on the order of $15 per ton as long as it is understood that the price will increase persistently and predictably at something like the rate of interest; and we express support for a tax alternative to the usual cap-and-trade approach.

Keywords: Stern Review, climate change, climate policy, social discount rate; risk and equity aversion
JEL: Q54

We have not started a page within our Globalisation and the Environment project website that will attempt to collate research papers in this area.

The Economics of Climate Change: The Stern Review

No comments: