Documents Stern, Nicholas 21 results

"Climate change is a major threat to the sustainability and inclusiveness of our societies, and to the planet's habitability. A just transition to a low-carbon economy is the only viable way forward. This paper reviews the climate change challenge. It stresses the criticality of systems changes (energy, transport, urban, land use, water) in a climate-challenged world, and the importance of infrastructure investment geared toward such systems changes. The key policies to enable the transition are: public spending on and investment frameworks for sustainable infrastructure, pricing carbon, regulations, promoting sustainable use of natural resources, scaling up and aligning finance with climate objectives, low-carbon industrial and innovation policies, building resilience and adaptation, better measurement of well-being and sustainability, and providing information and education on climate risks. Implemented well, climate action would unlock the inclusive growth story of the 21st century, making our societies more sustainable, inclusive, and prosperous."

"The climate crisis and the global economic impact of the Covid-19 crisis occur against a background of slowing growth and widening inequalities, which together imply an urgent need for a new environmentally sustainable and inclusive approach to growth. Investments in "clean" innovation and its diffusion are key to shaping this, accompanied by investments in complementary assets including sustainable infrastructure, and human, natural and social capital which will not only help achieve net-zero greenhouse gas emissions, but will also improve productivity, living standards and the prospects of individuals. In this article, we draw on the theoretical and empirical evidence on the opportunities, drivers and policies for innovation-led sustainable growth. We highlight the importance of a coordinated set of long-term policies and institutions that can enable and foster private sector investments in clean innovation and assets quickly and at scale. In doing so, we draw inspiration from Chris Freeman's work on the system-wide drivers of innovation, and his early vision of achieving environmental sustainability by reorienting growth."

"In this paper, Nicholas Stern argues that the COVID-19 and climate crises, and the weaknesses that produced them, should be tackled together and that the response must be a new sustainable, resilient and inclusive approach to growth and development. The paper explores relevant policies and actions and then turns to the changes to economics necessary to pursue these ideas and imperatives.

The core finding of The Economics of Climate Change: The Stern Review – that the costs of inaction on climate change are much greater than the costs of action – was compelling when the Review was published in 2006; 15 years on it is even stronger. While greenhouse gas emissions have continued to rise and the impacts of climate change have manifested faster and with greater intensity than expected, the costs of clean energy technologies have been falling further and more quickly than anticipated. Any reasonable estimate of the costs of inaction would be still higher now, and the costs of action lower, than in 2006. The deeper understanding of the problem that we now have, the paper argues, implies that we must shift the focus of our economic analyses towards the dynamics of change, the fostering of investment and innovation necessary, the management of disruption, and the great opportunities that lie in a new form of development."

"Designing policy for climate change requires analyses which integrate the interrelationship between the economy and the environment. We argue that, despite their dominance in the economics literature and influence in public discussion and policymaking, the methodology employed by Integrated Assessment Models (IAMs) rests on flawed foundations, which become particularly relevant in relation to the realities of the immense risks and challenges of climate change, and the radical changes in our economies that a sound and effective response require. We identify a set of critical methodological problems with the IAMs which limit their usefulness and discuss the analytic foundations of an alternative approach that is more capable of providing insights into how best to manage the transition to net-zero emissions."

"The risks of climate change are potentially immense. The benefits of taking action are also clear: we can see that economic development, reduced emissions, and creative adaptation go hand in hand. A committed and strong low-carbon transition could trigger a new wave of economic and technological transformation and investment, a new era of global and sustainable prosperity. Why, then, are we waiting? In this book, Nicholas Stern explains why, notwithstanding the great attractions of a new path, it has been so difficult to tackle climate change effectively. He makes a compelling case for climate action now and sets out the forms that action should take.



Stern argues that the risks and costs of climate change are worse than estimated in the landmark Stern Review in 2006—and far worse than implied by standard economic models. He reminds us that we have a choice. We can rely on past technologies, methods, and institutions—or we can embrace change, innovation, and international collaboration. The first might bring us some short-term growth but would lead eventually to chaos, conflict, and destruction. The second could bring about better lives for all and growth that is sustainable over the long term, and help win the battle against worldwide poverty. The science warns of the dangers of neglect; the economics and technology show what we can do and the great benefits that will follow; an examination of the ethics points strongly to a moral imperative for action. Why are we waiting?"

"The employment effect of climate policy has emerged as an important concern of policy makers, not least in the USA. Yet the impact of climate policy on jobs is complex. In the short term, jobs will shift from high-carbon activities to low-carbon activities. The net effect could be job creation, as low-carbon technologies tend to be more labour-intensive, at least in the short term until efficiency gains bring down costs. In the medium term, the effect will be felt economy-wide as value chains and production patterns adjust. This effect is more difficult to gauge, particularly if climate policy is unilateral and trade effects have to be taken into account. However, the biggest effect is expected to be long term, when climate policy will trigger widespread structural adjustment. Such episodes of ‘creative destruction' are often associated with innovation, job creation and growth."

"This paper considers how environmental policies should respond to macroeconomic downturns. It first explores the implications of the global economic downturn of 2008–9 for environmental policies, focusing in particular on the example of action against climate change. The arguments for and against activist fiscal policies in general are then reviewed, and the case made that a demand-induced downturn provides a very good opportunity to undertake a necessary step change in the public spending component of environmental policies and to start working through a backlog of public investment to improve the environment. Fiscal policy should be used to improve the allocation of resources across time and space. Recent fiscal stimuli are considered in the light of this discussion. It is also argued that there is little cause to delay the introduction of price signals to internalize environmental externalities. But the levels at which such signals should be set requires careful analysis; changes over the business cycle may be warranted, depending on the nature of the environmental externality and the cause(s) of the business cycle in question."

"Climate change is a global problem unparalleled in scale requiring international collaboration across sectors, countries and disciplines. The world has only a few years to establish a strong and credible global deal for action to reduce emissions if it is to avoid large risks of severe damage to the planet and to the prospects for sustained growth and development. The challenge cannot be underestimated and marginal changes are simply not sufficient to stabilise temperatures so that substantial risks from climate change can be reduced. It requires radically transformed development paths on the back of a technological revolution. The strategy for a global deal needs to be one of strong, effective and timely action to protect growth, support poverty reduction and create new economic opportunities. Delayed and piecemeal actions, relying on old technologies, will only exacerbate poverty, reduce growth and curtail market choice."

"A global target of stabilizing greenhouse-gas concentrations at between 450 and 550 parts per million carbon-dioxide equivalent (ppm CO2e) has proven robust to recent developments in the science and economics of climate change. Retrospective analysis of the Stern Review (2007) suggests that the risks were underestimated, indicating a stabilization target closer to 450 ppm CO2e. Climate policy at the international level is now moving rapidly towards agreeing an emissions pathway, and distributing responsibilities between countries. A feasible framework can be constructed in which each country takes on its own responsibilities and targets, based on a shared understanding of the risks and the need for action and collaboration on climate change. The global deal should contain six key features: (i) a pathway to achieve the world target of 50 per cent reductions by 2050, where rich countries contribute at least 75 per cent of the reductions; (ii) global emissions trading to reduce costs; (iii) reform of the clean development mechanism to scale up emission reductions on a sectoral or benchmark level; (iv) scaling up of R&D funding for low-carbon energy; (v) an agreement on deforestation; and (vi) adaptation finance."

"Further substantial climate change is unavoidable and the risks to the natural world, the economy and our everyday lives are immense. The way we live in the next thirty years – how we invest, use energy, organise transport and treat forests – will determine whether these risks become realities.
Although poor countries – the least responsible for climate change – will be hit earliest and hardest, all countries must adapt to the effects: hurricanes and storms strike New Orleans and Mumbai; flooding causes devastation in England and Mozambique; droughts occur in Australia and Darfur; and sea level rise will affect Florida and Bangladesh.
Lord Stern, author of the Stern Review on the Economics of Climate Change and former Chief Economist at the World Bank, is the world's leading authority on what we can do in the face of such unprecedented threat. Action on climate change will require the greatest possible international collaboration, but if successful will ensure not just our future, but our future prosperity.
Focusing on the economic management of investment and growth from the perspective of both adaptation and mitigation, Stern confronts the most urgent questions facing us now: what is the problem? What are the dangers? What can be done to reduce emissions, at what cost? How can the world adapt? And what does all this mean for corporations, governments and individuals?"