Nordhaus on the Stern Review

William Nordhaus reviews the Stern Review on the Economics of Climate Change here (pdf, hat tip Prometheus). He says that “It is virtually impossible for mortals outside the group that did the modeling to understand the detailed results in the Review“, and criticizes the Review’s “extreme assumption about discounting”,

The Review proposes using a social discount rate that is essentially zero…

While this feature of low discounting might appear benign in climate change policy, we could imagine other areas where the implications could themselves be dangerous. Imagine the preventive war strategies that might be devised with low social discount rates. Countries might start wars today because of the possibility of nuclear proliferation a century ahead; or because of a potential adverse shift in the balance of power two centuries ahead; or because of speculative futuristic technologies three centuries ahead. It is not clear how long the globe could long survive the calculations and machinations of zero-discount-rate military powers. This is yet a final example of a surprising implication of a low discount rate…

The radical revision of the economics of climate change proposed by the Review does not arise from any new economics, science, or modeling. Rather, it depends decisively on the assumption of a near-zero social discount rate…

… the central questions about global-warming policy – how much, how fast, and how costly – remain open. The Review informs but does not answer these fundamental questions.

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One thought on “Nordhaus on the Stern Review

  1. Pingback: Climate Change Elucidated :: Nordhaus on the Stern Review

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