Working Paper: NBER ID: w13927
Authors: Geoffrey Heal
Abstract: What have we learned from the outpouring of literature as a result of the Stern Review of the Economics of Climate Change? A lot. We have explored the model space and the parameter space much more thoroughly, though there are still unexplored regions. While there are aspects of the Stern Review's analysis with which we can disagree, it seems fair to say that it has catalyzed a fundamental rethinking of the economic case for action on climate change. We are now in a position to give some conditions that are sufficient to provide a case for strong action on climate change, but need more work before we have a fully satisfactory account of the relevant economics. In particular we need to understand better how climate change affects natural capital - the natural environment and the ecosystems comprising it - and how these affect human welfare.
Keywords: No keywords provided
JEL Codes: D8; D9; Q01
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Emission of greenhouse gases (Q54) | Market failure (H49) |
| Correcting negative externality (D62) | Pareto improvements (D61) |
| Choice of discount rates (H43) | Economic case for climate action (Q54) |
| Lower pure rate of time preference (D15) | Stronger justification for immediate action (H84) |
| Impacts of climate change on natural capital (Q54) | Understanding overall costs and benefits of climate action (Q54) |