The Impacts of Climate Change on International Economic Relations: Perspectives from the Stern Review

14 Pages Posted: 6 Feb 2007

See all articles by Simon Dietz

Simon Dietz

London School of Economics - Grantham Research Institute on Climate Change and the Environment and Department of Geography and Environment

Date Written: 1 February 2007

Abstract

The Stern Review on the Economics of Climate Change was launched on October 30th last year. The attention it received in academic, political and popular circles worldwide has been perhaps unprecedented for a government report of its kind. Running now to nearly 700 pages, the Review contains a tremendous volume of analysis on all aspects of climate-change economics and policy. Nevertheless, it has become best known for the conclusion that, unabated, climate change could eventually have impacts on global economic growth and human development on a scale comparable to the great wars and economic depression of the first half of the 20th century. At the same time, these impacts can largely still be avoided by a decisive shift away from production of greenhouse gases, and this can be achieved at much less cost.

This will come as no surprise to many, but some have pointed out that it sounds a different note to previous economic analyses. Indeed, as has also been noted, the Review actually relies on models used in these previous studies, so why does it come to a different conclusion? I argue that the Review's conclusions are based on two foundations. One is a strong ethical commitment to safeguarding opportunities for future generations. This commitment is made via the economic calculus of discounting the future. The other is a realisation that climate change is about risk and uncertainty, and how economics and policy reacts to that. We must entertain the prospect of huge changes in physical and human geography, even if they make the practices of economic analysis and policy-making more difficult. I also consider the impacts of climate change on the international economy, in particular the distribution of impacts between North and South and the potential for global security threats through migration and violent conflict. There is certainly great potential for civil strife as a result of climate change, but I remind readers that the evidence to support sweeping propositions is actually quite sparse. If we are to take strong action to reduce greenhouse gas emissions, then there is a much broader basis for doing so.

Keywords: Climate change, cost-benefit analysis, conflict, migration, mitigation

JEL Classification: F02, H40, Q00, Q20,

Suggested Citation

Dietz, Simon, The Impacts of Climate Change on International Economic Relations: Perspectives from the Stern Review (1 February 2007). Available at SSRN: https://ssrn.com/abstract=960766 or http://dx.doi.org/10.2139/ssrn.960766

Simon Dietz (Contact Author)

London School of Economics - Grantham Research Institute on Climate Change and the Environment and Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

HOME PAGE: http://personal.lse.ac.uk/dietzs

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