Overview

The Stern Review on the Economics of Climate Change is a comprehensive report published on 30 October 2006 by economist Lord Nicholas Stern for the British government. Spanning some 700 pages, it examined the economic risks posed by climate change and the costs and benefits of strong, early action. The review argued that the economic consequences of failing to address climate change could be large relative to the cost of mitigation and adaptation, and it recommended a broad policy response to limit emissions and support low‑carbon development. For the original publication details see the official release.

Key findings

Stern presented two headline estimates that shaped subsequent debate: that unmitigated climate change could reduce global welfare by a significant share of global GDP each year, while the cost of stabilizing greenhouse gas concentrations could be a much smaller fraction of world output. The report favored long‑term atmospheric concentration targets and noted 350 ppm as a cautious long‑term aspiration. It stressed that many impacts are non‑market in nature (ecosystems, health, extreme events), which complicates simple GDP accounting. Readers seeking more on climate impacts can consult broader summaries of climate science and impacts here and on global warming here.

Approach and structure

The Review combined evidence from climate science, integrated assessment models, and economics. It used scenarios to explore future emissions, temperature change and economic outcomes, and it discussed discounting, risk and uncertainty explicitly. While quantitative estimates guided its conclusions, Stern also emphasized qualitative risks — irreversible damages, tipping points and distributional effects — that standard cost–benefit techniques can understate. For context on economic implications at the global level, see discussions of the world economy and climate interactions here.

Policy recommendations

Stern recommended a package of policy tools to reduce emissions and encourage innovation, including:

  • pricing carbon through emissions trading or taxes, to create incentives across the economy;
  • investment in low‑carbon technology, energy efficiency and infrastructure;
  • support for adaptation in vulnerable countries and communities;
  • international cooperation to share technology and finance, especially for developing countries.

Reception and legacy

The Review attracted widespread attention and sparked debate in economics and policy circles. Supporters praised its emphasis on precaution and the moral case for protecting future generations. Critics questioned specific modeling choices, notably the discount rate and some economic assumptions. Regardless of detailed disagreements, the Stern Review is widely credited with elevating economic arguments for early climate action and influencing national and international policy discussions in the years that followed.

Notable facts

Lord Stern, described by some as a leading climate economist, later continued work on economic and climate issues, including roles with international commissions on growth and climate. The Review remains a frequently cited reference in discussions of climate economics and policy trade‑offs, particularly where the balance of mitigation costs and the risks of severe future damages are considered.