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    Implications of the Stern Review for LAC, Part I

    By Keith R | December 26, 2006

    Topics: Biofuels, Biotechnology, Climate Change, Economics & the Environment, Energy & the Environment, Energy Efficiency, Environmental Protection, Renewable Sources, Sustainable Forestry | 1 Comment »

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    Okay, I know what you’re thinking: the Stern Review — the analysis of the economic costs/benefits of coming to grips with global climate change that was commissioned by the UK Government and coordinated by the head of the Government Economic Service (and ex-Chief Economist at the World Bank) Sir Nicholas Stern — has been out for more than a month already and has been flogged to death by the media and bloggers ever since. Why read yet another discussion on the Stern Review?

    Because this one is different!

    First off, I won’t simply regurgitate here all the official press releases, the news reports, commentator debates and skeptics’ attacks that have been emitted on this like some have. You can get plenty of that elsewhere.

    Second, I don’t feel personally qualified to pass judgment on the quality of Stern’s analysis and the confidence we should have in his conclusions. I’m neither a climatologist nor an economist by training, so I leave the debate on whether Stern picked the correct climate change models, the most appropriate carbon target, disaster damage estimates, discount rate (here, here and here) and outcome probabilities to people with far more expertise in such things than I.

    Third, the focus, the lens through which I deal with all topics here in The Temas Blog, is Latin America and the Caribbean (LAC). In all the treatments of the Stern Review I’ve read so far (and I’ve read many!), I have yet to see a discussion of its implications for this region. So if you’re looking for a discussion of what the Stern Review means for US or European policy, then I’m afraid you should keep looking.

    Of course, on the other hand, if you’re interested in a discussion of its implications for US or European development aid and environmental technical cooperation with LAC nations, or the OECD position on trade in environmental goods and services, then you’re in the right place.

    To download a PDF of the entire Stern Review report in English, click on this link. There are also PDFs for download in English, Spanish or Portuguese of the Review’s executive summary.


    Before going further, I want to state upfront a couple of assumptions and perspectives I utilize in examining the Stern Review and its implications for LAC nations.

    First off, if you’ve read my prior entries on global climate change, you know that I agree with the vast majority of scientists in that major climate change is indeed underway, that its principal engine are greenhouse gas (GHG) emissions linked primarily to man’s activities, and that sometime during the 21st century, we will see major environmental and health impacts. We can debate the precise timings (mid-century? earlier? later?), mechanisms and severity (i.e., whether it will be bad or worse), but I think most people realize and accept that it is happening and, barring dramatic action by individuals, communities, industry and service sectors and, of course, government, many of its negative impacts will be felt during the 21st century.

    Second, I essentially concur with Nordhaus and Quiggin on several key points about how to view the Stern Review, namely:

    Third, I see the role of the Stern Review not as the final word on the economics of climate change (especially after reading Maddison’s critique!), but rather as the catalyst for getting us all (and not just a handful of economists) to discuss seriously and openly the economic costs and benefits of action and inaction, who pays and when, and what policy options make the most sense economically. An honest, in-depth and broad-based discourse on the economics of addressing global climate change has been missing in negotiations and policy debates.

    Fourth, like it or not, the Stern Review and its conclusions and recommendations are reshaping the international policy debate. It is to be the linchpin of UK foreign and development policy, likely will heavily influence the direction of related European Union (EU) and Group of Eight (G-8) initiatives, and is virtually guaranteed to be cited as a basis for decisions in the World Bank, Global Environment Facility (GEF), Inter-American Development Bank (IDB) and various UN institutions concerned with climate change, energy, forestry, environment, science and technology and anything even faintly related to addressing climate change. Policymakers in LAC, those dealing with LAC, and business and NGOs working in the region would be well advised to become familiar and conversant with the Review’s assertions and recommendations, even if it is only to challenge, modify or improve on them.

    Some Messages for LAC to Draw from the Review’s Main Presentation

    In the hundreds of pages of the main body of the Review, LAC and its constituent nations are mentioned rarely by name. But there are a number of messages in the main texts that apply nonetheless and should be noted, contemplated and discussed by those concerned with the future of the region:

    In Part II, I look at the LAC-focused report commissioned by Stern as an input to the overall Review.

    — Keith R

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    One Response to “Implications of the Stern Review for LAC, Part I”

    1. Anonymous Says:

      My only dissension from your post would be over a statement in the introduction where you agree that some have overplayed how serious the economic effects of climate change will be without mitigation. I haven’t seen these claims but two points seem like to be relevent: I listened to Nicholas talk at London School of Economics and two key points came out of that for me; firstly, the range 5-20% as i understand it, exists largely due to different scientific considerations…there is increasing concern about positive feedbacks in the climate system, this cutting edge science tends to lead to the 20% figure, the higher figure therefore seems to me not just one part of the range, but the part of the range that accurately reflects the entire scientific thinking. Also, he pointed out that at the upper end of the temperature range, the models he used where most likely not up to the job, and that long terms assumptions (beyond 2100) where probably to rosy for the upper end scenarios.

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