The Stern Review

The Stern Review on Climate Change is nearly 700 pages in length, and is the most comprehensive economic review ever carried out on climate change.

Sir Nicholas Stern, Head of the Government Economic Service and former World Bank Chief Economist, undertook the review. The Chancellor of the UK Government commissioned the Review in July 2005, and it was published in late October 2006. The report was provided to the UK Prime Minister and Chancellor.



The Stern Review confirms what many already know; “The scientific evidence is now overwhelming: climate change is a serious global threat, and it demands an urgent global response.”

The Review maintains that every country will be affected by climate change, however it is the poorest countries that will suffer earliest and most (like Africa ). Climate change has the potential to raise average temperatures by over 5°C from pre-industrial levels. Such changes would transform the physical geography of our planet, as well as the human geography, how and where we live our lives.

Based on the assessment of the science carried out by the Intergovernmental Panel on Climate Change (IPCC) in 2001, and new evidence, the Stern Review calculates that the dangers of unabated climate change would be equivalent to at least 20% of GDP each year. The three working groups contributing to the Fourth IPCC Report will be released at various stages during 2007 and Stern’s figures are being vindicated, providing greater momentum for global action.

In contrast to huge Gross Domestic Product (GDP) losses, the costs of action to reduce greenhouse gas emissions and avoid the worst impacts of climate change could be limited to around 1% (see poscript below) of global GDP each year. Undoubtedly, people would pay a little more for carbon-intensive goods, but global economies could continue to grow.

In other words, by reducing carbon emissions we would be better off economically (not to mention the healthier environment). Stern makes a ‘no brainer’ case, if we tackle climate change it leads to a pro-growth strategy, and if we ignore climate change, it will ultimately undermine economic growth.

Actions to Reduce Climate Change

In summarising Stern states, “There is still time to avoid the worst impacts of climate change, if we take strong action now… Climate change demands an international response, based on a shared understanding of long-term goals and agreement on frameworks for action.” The three actions Stern sees as critical to combating climate change are presented below:


Firstly, and to accomplish significant reductions in greenhouse gases, we need strong national and international low carbon policies. The UN Framework Convention on Climate Change and the Kyoto Protocol provide a basis for international co-operation, along with a range of partnerships and other approaches. But more ambitious action is now required around the world. You must speak out now, while politicians are receptive, and whilst we still have a window for mitigation strategies. Raise your voice by writing and emailing, use the telephone, call talk back shows, and communicate this threat to all your friends. The 3 Step Climate Action Plan was developed by to provide a means of accomplishing this. Remember YOU can make a difference!

Secondly, the Stern Review points out we need policies on renewable technologies. This will drive the development and deployment of a range of low-carbon, high-efficiency products and renewable energy which is needed to replace our dependence on fossil fuels.

Thirdly, The Stern Review points out that we need to remove barriers to energy efficiency, and to inform, educate and persuade individuals about what they can do to respond to climate change. A shared understanding of the nature of climate change, and its consequences, is critical in shaping behaviour. If we can achieve this it will underpin both national and international action.

Now is the time… inform yourself, your children and your friends, speak out!

The complete report is available here

Postscript to the Stern Review January 2007: In response to the suggestion that the estimate of 1% is too low, it is worth noting a number of points. The figure of 1% is a central estimate within a range that is consistent with the literature, and that is therefore likely to be consistent with the review of the same literature currently being finalised by the Intergovernmental Panel on Climate Change for its Fourth Assessment Report. Achieving stabilisation at the lower end of the range of costs depends upon good policy frameworks, to bring forward appropriate low-carbon technologies and to provide flexibility in when, where and how emissions are reduced. The cost of 1% of GDP each year is certainly not trivial – in 2050 it would be equivalent to a cost of $1 trillion at market exchange rates (GDP in 2050 is expected to be $100 trillion). But this is manageable without slower growth. An overall cost of around 1% of GDP to achieve stabilisation below 550 ppm CO2e, as suggested here, would have an impact similar to a one-off 1% rise in price or cost indices. However, if investments in the next two or three decades were made in high-carbon infrastructure, it could cost far more than 1% subsequently to reduce the resulting emissions to levels consistent with stabilisation below 550ppm CO2e.

privacy policy