There is now clear scientific evidence that emissions from economic activity, particularly the burning of fossil fuels for energy, are causing changes to the Earth's climate. A sound understanding of the economics of climate change is needed in order to underpin an effective global response to this challenge. The Stern Review is an independent, rigourous and comprehensive analysis of the economic aspects of this crucial issue. It has been conducted by Sir Nicholas Stern, Head of the UK Government Economic Service, and a former Chief Economist of the World Bank. The Economics of Climate Change will be invaluable for all students of the economics and policy implications of climate change, and economists, scientists and policy makers involved in all aspects of climate change. There is now clear scientific evidence that emissions from economic activity, particularly the burning of fossil fuels for energy, are causing changes to the Earth's climate. A sound understanding of the economics of climate change is needed in order to underpin an effective global response to this challenge. The Stern Review is an independent, rigourous and comprehensive analysis of the economic aspects of this crucial issue. It has been conducted by Sir Nicholas Stern, Head of the UK Government Economic Service, and a former Chief Economist of the World Bank. The Economics of Climate Change will be invaluable for all students of the economics and policy implications of climate change, and economists, scientists and policy makers involved in all aspects of climate change. The Stern Review is an independent, rigourous and comprehensive analysis of the economic aspects climate change. It will be invaluable for all students of the economics and policy implications of climate change, and economists, scientists and policy makers involved in all aspects of climate change. Preface ix Acknowledgements xi Introduction xiii Summary of Conclusions xv Part I Climate Change -- Our Approach Introduction 1(2) The Science of Climate Change: Scale of the Environment Challenge 3(22) Economics, Ethics and Climate Change 25(21) Ethical Frameworks and Intertemporal Equity 46(19) Part II Impacts of Climate Change on Growth and Development Introduction 63(2) How Climate Change will Affect People Around the World 65(39) Implications of Climate Change for Development 104(34) Costs of Climate Change in Developed Countries 138(23) Economic Modelling of Climate-Change Impacts 161(32) Part III The Economics of Stabilisation Introduction 191(2) Projecting the Growth of Greenhouse-Gas Emissions 193(23) Climate Change and the Environmental Kuznets Curve 216(2) The Challenge of Stabilisation 218(20) Identifying the Costs of Mitigation 238(29) Macroeconomic Models of Costs 267(15) Structural Change and Competitiveness 282(15) Key Statistics for 123 UK Production Sectors 297(5) Opportunities and Wider Benefits from Climate Policies 302(16) Towards a Goal for Climate-Change Policy 318(33) Part IV Policy Responses for Mitigation Introduction 349(2) Harnessing Markets for Mitigation -- The Role of Taxation and Trading 351(17) Carbon Pricing and Emissions Markets in Practice 368(25) Accelerating Technological Innovation 393(34) Beyond Carbon Markets and Technology 427(30) Part V Policy Responses for Adaptation Introduction 455(2) Understanding the Economics of Adaptation 457(14) Adaptation in the Developed World 471(15) Adaptation in the Developing World 486(23) Part VI International Collective Action Introduction 507(2) Framework for Understanding International Collective Action for Climate Change 509(21) Creating a Global Price for Carbon 530(25) Supporting the Transition to a Low-Carbon Global Economy 555(26) Promoting Effective International Technology Co-operation 581(22) Reversing Emissions from Land Use Change 603(19) International Support for Adaptation 622(18) Conclusions: Building and Sustaining International Co-operation on Climate Change 640(5) Abbreviations and Acronyms 645(4) Postscript 649(9) Technical Annex to Postscript 658(15) Index 673 Preface ix Acknowledgements xi Introduction xiii Summary of Conclusions xv Part I Climate Change -- Our Approach Introduction 1(2) The Science of Climate Change: Scale of the Environment Challenge 3(22) Economics, Ethics and Climate Change 25(21) Ethical Frameworks and Intertemporal Equity 46(19) Part II Impacts of Climate Change on Growth and Development Introduction 63(2) How Climate Change will Affect People Around the World 65(39) Implications of Climate Change for Development 104(34) Costs of Climate Change in Developed Countries 138(23) Economic Modelling of Climate-Change Impacts 161(32) Part III The Economics of Stabilisation Introduction 191(2) Projecting the Growth of Greenhouse-Gas Emissions 193(23) Climate Change and the Environmental Kuznets Curve 216(2) The Challenge of Stabilisation 218(20) Identifying the Costs of Mitigation 238(29) Macroeconomic Models of Costs 267(15) Structural Change and Competitiveness 282(15) Key Statistics for 123 UK Production Sectors 297(5) Opportunities and Wider Benefits from Climate Policies 302(16) Towards a Goal for Climate-Change Policy 318(33) Part IV Policy Responses for Mitigation Introduction 349(2) Harnessing Markets for Mitigation -- The Role of Taxation and Trading 351(17) Carbon Pricing and Emissions Markets in Practice 368(25) Accelerating Technological Innovation 393(34) Beyond Carbon Markets and Technology 427(30) Part V Policy Responses for Adaptation Introduction 455(2) Understanding the Economics of Adaptation 457(14) Adaptation in the Developed World 471(15) Adaptation in the Developing World 486(23) Part VI International Collective Action Introduction 507(2) Framework for Understanding International Collective Action for Climate Change 509(21) Creating a Global Price for Carbon 530(25) Supporting the Transition to a Low-Carbon Global Economy 555(26) Promoting Effective International Technology Co-operation 581(22) Reversing Emissions from Land Use Change 603(19) International Support for Adaptation 622(18) Conclusions: Building and Sustaining International Co-operation on Climate Change 640(5) Abbreviations and Acronyms 645(4) Postscript 649(9) Technical Annex to Postscript 658(15) Index 673