Working Paper: NBER ID: w12741
Authors: William D. Nordhaus
Abstract: How much and how fast should the globe reduce greenhouse-gas emissions? How should nations balance the costs of the reductions against the damages and dangers of climate change? This question has been addressed by the recent "Stern Review on the Economics of Climate Change," which answers these questions clearly and unambiguously. We need urgent, sharp, and immediate reductions in greenhouse-gas emissions. An analysis of the "Stern Review" finds that these recommendations depend decisively on the assumption of a near-zero social discount rate. The Review's unambiguous conclusions about the need for extreme immediate action will not survive the substitution of discounting assumptions that are consistent with today's market place.
Keywords: Climate Change; Economics; Greenhouse Gas Emissions
JEL Codes: Q4; Q5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| social discount rate (H43) | policy recommendations regarding emissions reductions (Q58) |
| conventional social discount rate (H43) | urgency of recommendations (C41) |
| Stern Review's recommendations (Q58) | near-zero social discount rate (H43) |