Recalculating the Costs of Global Climate Change

Without immediate action to reduce global warming, the Stern Review on the Economics of Climate Change warns that governments around the world risk severe economic damage, predicting a 20 percent reduction in the global gross domestic product. Economists have scrutinized the 700-page report, and express some concerns. William D. Nordhaus of Yale questions Stern’s valuation of future generations, assigning a higher discount rate to future generations and predicting less economic damage than the Stern report. But Nordhaus also points out that his calculations still call for immediate action, such as carbon-emission taxes, to reduce global dependence on carbon fuels. Sir Partha Dasgupta of the University of Cambridge suggests that current generations must engage in massive savings to increase the standard of living for future generations. “The choice of an appropriate policy toward global warming depends heavily on how one weighs the costs and benefits it imposes on different generations,” writes economics Professor Hal Varian. Economists, environmentalists and policymakers have ample data to juggle for setting policies – and future generations will have much to say about which policies were right or wrong. – YaleGlobal