Misplaced Pages

• Integrated assessment modelling provides a tool for estimating the total impact on the economy; our estimates suggest that this likely to be higher than previously suggested.
• Emissions have been, and continue to be, driven by economic growth; yet stabilisation of greenhouse gas concentration in the atmosphere is feasible and consistent with continued growth.
• 'Central estimates of the annual costs of achieving stabilisation between 500 and 550ppm CO₂e are around 1% of global GDP, if we start to take strong action now. It would already be very difficult and costly to aim to stabilise at 450ppm CO₂e. If we delay, the opportunity to stabilise at 500-550ppm CO₂e may slip away.'
• The transition to a low-carbon economy will bring challenges for competitiveness but also opportunities for growth. Policies to support the development of a range of low-carbon and high-efficiency technologies are required urgently.
• Establishing a carbon price, through tax, trading or regulation, is an essential foundation for climate change policy. Creating a broadly similar carbon price signal around the world, and using carbon finance to accelerate action in developing countries, are urgent priorities for international cooperation.
• Adaptation policy is crucial for dealing with the unavoidable impacts of climate change, but it has been under-emphasised in many countries.
• An effective response to climate change will depend on creating the conditions for international collective action.
• There is still time to avoid the worst impacts of climate change if strong collective action starts now.

Background

On 19 July 2005 the Chancellor of the Exchequer, Gordon Brown announced that he had asked Sir Nicholas Stern to lead a major review of the economics of climate change, to understand more comprehensively the nature of the economic challenges and how they can be met, in the UK and globally. The Stern Review was prepared by a team of economists at HM Treasury; independent academics were involved as consultants only. The scientific content of the Review was reviewed by experts at the Walker Institute.

Positive critical response

The Stern Review attracted positive attention from several sectors. Pia Hansen, a European Commission Spokeswoman, said doing nothing is not an option, "we must act now". Simon Retallack of the UK think tank IPPR said "This removes the last refuge of the "do-nothing" approach on climate change, particularly in the US." Tom Delay of The Carbon Trust said "The Review offers a huge business opportunity." Richard Lambert, Director General of the Confederation of British Industry, said that a global system of carbon trading is "urgently needed". Charlie Kronick of Greenpeace said "Now the government must act and, among other things, invest in efficient decentralised power stations and tackle the growth of aviation."

Miles Templeman, Director-General of the Institute of Directors, said: "Without countries like the US, China or India, making decisive commitments, UK competitiveness will undoubtedly suffer if we act alone. This would be bad for business, bad for the economy and ultimately bad for our climate."

Asset managers F&C look to the business opportunities and say "this is an unprecedented opportunity to generate real value for our clients". Brendan Barber, General Secretary of the Trades Union Congress, was optimistic about the opportunities for industry to meet demands created by investment in technology to combat climate change. The Prince of Wales’ Corporate Leaders Group on Climate Change, formed by 14 of UK’s leading companies shared this hope. Chairman of Shell UK, James Smith, expressed the hope of the group that business and Government would discuss how Britain could obtain “first mover advantage" in what he described as "massive new global market".

On November 1, 2006, Australian Prime Minister, John Howard, responded by announcing that AU$60 million would be allotted to projects to help cut greenhouse gas emissions while reiterating that Australia would not ratify the Kyoto Protocol. Much of this funding is directed at the non-renewable coal industry.

British Prime Minister, Tony Blair, stated that the Review demonstrated that scientific evidence of global warming was "overwhelming" and its consequences "disastrous" if the world failed to act. The UK Treasury, which commissioned the report, simultaneously published a document of favourable comments on the Review. Those quoted include:

• Paul Wolfowitz, former President of the World Bank
• Claude Mandil, Executive Director of the International Energy Agency
• Kirit Parikh, Member, Planning Commission, Government of India
• Adair Turner, Former Director of UK Confederation of British Industry and Economic Advisor to Sustainable Development Commission
• Sir Rod Eddington, Adviser to the UK Government on the long term links between transport and economic growth, and former Chief Executive of British Airways

Several academic economists are also quoted praising the Review (see Response of economists).

The Stern review was not released for regular peer-review, since the UK Government doesn't undertake peer review on commissioned reviews. Papers were published and presentations held, that outlined the approach in the months preceding the release.

Unfavorable critical response

The Stern Review has received various critical responses. Some economists have argued that the Review overestimates the present value of the costs of climate change, and underestimates the costs of emission reduction. Other critics have argued that the economic cost of the proposals put forward by Stern would be severe, or that the scientific consensus view on global warming, on which Stern relied, is incorrect. By contrast, some argue that the Review emission reduction targets are too weak, and that the climate change damage estimates in the Review are too small.

General criticisms

In an article in the Daily Telegraph (2006), Ruth Lea, Director of the Centre for Policy Studies, questions the scientific consensus on climate change on which the Stern Review is based. She says that "authorities on climate science say that the climate system is far too complex for modest reductions in one of the thousands of factors involved in climate change (i.e., carbon emissions) to have a predictable effect in magnitude, or even direction." Lea questions the long-term economic projections made in the Review, commenting that economic forecasts for just two or three years ahead are usually wrong. Lea goes on to describes the problem of drawing conclusions from combining scientific and economic models as "monumentally complex", and doubts whether the international cooperation on climate change, as argued for in the Review, is really possible. In conclusion, Lea says that the real motive behind the Review is to justify increased tax on fuels.

Radical ideas are needed not only at the level of understandings but also of forward strategies. The Stern Review is much stronger on the former than the latter, and leaves a lot of questions unanswered on implementation, particularly the downstream practicalities of bringing avoided deforestation into climate mitigation efforts.

Soon after publication of the Stern Review, former Chancellor of the Exchequer Nigel Lawson gave a lecture at the Centre for Policy Studies, briefly criticising the Review and warning of what he called "eco-fundamentalism". In 2008, Lawson gave evidence before the House of Commons Treasury Select Committee, criticising the Review.

Environmental writer Bjørn Lomborg criticised the Stern Review in OpinionJournal:

Mr. Stern's core argument that the price of inaction would be extraordinary and the cost of action modest falls apart when one actually reads the 700-page tome. Despite using many good references, the Stern Review on the Economics of Climate Change is selective and its conclusion flawed. Its fear-mongering arguments have been sensationalized, which is ultimately only likely to make the world worse off.

Reason magazine's science correspondent Ronald Bailey describes the "destructive character" of the Stern Review's policy proposals, saying that "Surely it is reasonable to argue that if one wants to help future generations deal with climate change, the best policies would be those that encouraged economic growth. This would endow future generations with the wealth and superior technologies that could be used to handle whatever comes at them including climate change. So hurrying the process of switching from carbon-based fuels along by boosting energy costs means that humanity will have to delay buying other good things such as clean water, better sanitation, more and better food, and more education."

Commenting on the Review's suggested increases in environmental tax, the British Chambers of Commerce have pointed to the dangers to business of additional taxation.The Business, a British magazine, reported that cost estimates for reducing emissions in the Stern Review are wrong. This is based on a leaked United Nations report obtained by the magazine, which says that mitigating climate change could cost up to 5% of global gross domestic product. Journalist Fraser Nelson argues that “if the Intergovernmental Panel on Climate Change figures are right, they open up the possibility that the British proposals would cost as much as they save, making them redundant.”

Stern’s investment advice makes sense only if you think that warming will hammer GDP by 10% a year. You don’t gain much at all from emission cuts, however, if you think GDP will only drop by 5% a year if we do nothing. And if you think warming will only cost the global economy 2% of GDP every year, then Stern’s investment advice is lunacy.

In the BBC radio programme The Investigation (2007), a number of economists and scientists argue that Stern assumptions in the Review are far more pessimistic than those made by most experts in the field, and that the Review's conclusions are at odds with the mainstream view.

Scientific consensus is incorrect or does not exist

A paper by Carter et al (2006) sets out a scientific critique of the Review. Martin Livermore, of the Scientific Alliance, has said that "climate is not driven primarily by human use of fossil fuels" and that the money to be spent is unlikely to have much effect: it would be better spent on the world's poor. In the Daily Telegraph (2006), Nigel Farage, leader of the UK Independence Party, said that politicians were jumping on the "green" bandwagon, but that for popular support, politicians would need to be sure that the science was not simply the "new witchcraft".

Response of economists

There has been a mixed reaction to the Stern Review from economists. Several economists have been critical of the Review, for example, a paper by Byatt et al. (2006) describes the Review as "deeply flawed". Some have supported the Review, while others have argued that Stern's conclusions are reasonable, even if the method by which he reached them is incorrect.

Discounting

One of the issues debated among economists is discount rate used in the Review. Discounting is part of the Stern Review's cost-benefit analysis. Discounting is used by economists to compare economic impacts occurring at different times. There are four main reasons commonly proposed by economists for placing a lower value on consumption occurring in the future rather than in the present:

• future consumption should be discounted simply because it takes place in the future and people generally prefer the present to the future (inherent discounting)
• consumption levels will be higher in the future, so the marginal utility of additional consumption will be lower
• future consumption levels are uncertain
• improved technology of the future will make it easier to address global warming concerns

Using a high discount rate decreases the assessed benefit of actions designed to reduce greenhouse gas emissions. The Stern Review's discount rate, of approximately 1.4%, is lower than that used in most previous studies on climate change economics.

Inherent discounting

Debate over the Stern Review initially focused on the first of these points. In the Review, Stern used a social discount rate based on the "Ramsey" formula, which includes a term for inherent discounting, also called the pure rate of time preference (PTP-rate). Stern accepts the case for discounting, but argues that applying a PTP-rate of anything much more than zero to social policy choice is ethically inappropriate. His view is supported by a number of economists, including Geoffrey Heal, Thomas Sterner,William Cline, and Brad DeLong. Cline wrote a book on global warming, published in 1992, where he made similar ethical choices to Stern for discounting. DeLong, echoing Frank Ramsey and Tjalling Koopmans, wrote “My view--which I admit may well be wrong--of this knotty problem is that we are impatient in the sense of valuing the present and near-future much more than we value the distant future, but that we shouldn't do so.”

William Nordhaus, of Yale University, who has done several studies on the economics of global warming, has criticised the Review for its low 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. So the central questions about global-warming policy — how much, how fast, and how costly — remain open. The Review informs but does not answer these fundamental questions.

The difference between Stern’s estimates and those of Nordhaus can largely (though not entirely) be explained by the difference in the PTP-rate. Previous studies by Nordhaus and others have adopted PTP-rates of up to 3 per cent, implying that (other things being equal) an environmental cost or benefit occurring 25 years in the future is worth about half as much as the same benefit today. Other critics of Stern's discount rate include Hal Varian and Richard Tol, who argue that in a democratic society, the preferences of the majority of people, as revealed in the market, are more important than the arguments of philosophers.

Nobel prize winner Kenneth Arrow has commented on the Stern Review in the Economist's Voice and for Project Syndicate:

Critics of the Stern Review don’t think serious action to limit CO₂ emissions is justified, because there remains substantial uncertainty about the extent of the costs of global climate change, and because these costs will be incurred far in the future. However, I believe that Stern’s fundamental conclusion is justified: we are much better off reducing CO₂ emissions substantially than risking the consequences of failing to act, even if, unlike Stern, one heavily discounts uncertainty and the future.

According to Arrow, Stern's conclusions can still pass a cost-benefit analysis even with a considerably higher discount rate (up to around 8%). Arrow acknowledges that this argument depends on Stern's mitigation cost estimate (a central estimate of 1% GDP) being correct.

In an appearance before the House of Commons Treasury Select Committee (2008), Stern was asked about the discount rate used in the Review:

Stern: We are in pretty good company here in that Solow, Sen, Keynes, Ramsey and all kinds of people have adopted the approach to pure time discounting that we have adopted. It is not particularly unusual.

John Roemer (along with collaborators Humberto Llavador and Joaquim Silvestre) has argued that an analysis of the problem must consider both the ethical and economic issues associated with discounting. He has made the claim that high rates of discounting as the ones proposed by Nordhaus are only consistent with the infinitely-lived-representative-agent approach to economic modeling. Intergenerational justice would require more realistic assumption: one particular view is what Roemer calls the "sustainabilitarian" approach, which seeks to maximize present consumption subject to the constraint that future generations enjoy a quality of life at least as good as that enjoyed by the current generation. He supports the discount factors used in the Stern analysis, particularly the view that discounting should reflect only the probability that the world will end at a given future date, and not the "impatience" of an infinitely lived representative consumer.)

Treatment of uncertainty

Uncertainty about future consumption may be addressed either through adjustments to the discount rate or by replacing uncertain flows of consumption with certainty equivalent flows. Stern adopted the latter approach, but was criticised by Tol and Yohe (2006) for double counting, a claim rejected by Stern (Dietz et al. 2007). Whilst critical of Stern's discounting, Martin Weitzman has argued that standard discounting procedures are inherently incapable of dealing with extreme, low-probability events, such as the risk of catastrophic climate change.

Future consumption will be higher

With increasing average consumption in future, the marginal utility of consumption will decline. The elasticity of the marginal utility of consumption (part of the social discount rate) may be interpreted as a measure of aversion to inequality. Partha Dasgupta has criticised the Stern Review for parametric choices that, he argues, are inadequately sensitive to inequality. In subsequent debate, Stern has conceded the case for a higher elasticity, but noted that this would call for much more extensive redistribution of income within the current generation (Dietz et al. 2007).

Improved technology

As far as discounting is concerned, the effects of improved technology work through increased consumption and do not need to be treated separately. However, specification of an optimal response to climate change will depend on assumptions about improvements in technology and the extent to which such improvements will be induced by policies that increase the cost of emissions.

Market rates

Both supporters and opponents of Stern's discount rate have used comparisons with market rates of return on capital to justify their position.Robert Mendelsohn, a critic of the Review, has said:

investments in mitigation that cannot even earn a positive rate of return will be worth far less to future generations than those same dollars invested in the market. Placing climate change before investments in other important nonmarket services such as conservation, health, education, security, and transportation also cannot be justified in the name of future generations. From the perspective of future generations, it is in their interest that all investments earn the same rate of return. The ethical justification for intentionally overspending on selective projects with low rates of return is weak indeed.

The discount rate chosen by Stern is close to the real interest rate for government bonds. The higher rates preferred by Stern's critics are closer to the weighted average cost of capital for private investment; see the extensive review by Frederick et al. (2002) According to Quiggin, the difference between the two is determined by the equity premium. Quiggin says that there is no generally accepted theory accounting for the observed magnitude of the equity premium and hence no easy way of determining which approach, if either, should be regarded as the appropriate market comparator.

General comments

HM Treasury have issued a document where several economists are quoted praising the Stern Review, includingRobert Solow, James Mirrlees, Amartya Sen, Joseph Stiglitz, and Jeffrey Sachs. Sachs and Stiglitz have also written favourable articles on the Review.

Richard Tol, an environmental economist at the Economic and Social Research Institute, is highly critical of the Stern Review, and has said that "If a student of mine were to hand in this report as a Masters thesis, perhaps if I were in a good mood I would give him a 'D' for diligence; but more likely I would give him an 'F' for fail. There is a whole range of very basic economics mistakes that somebody who claims to be a Professor of Economics simply should not make. Stern consistently picks the most pessimistic for every choice that one can make. He overestimates through cherry-picking, he double counts particularly the risks and he underestimates what development and adaptation will do to impacts." Tol has referred to the Stern Review as "populist science", and has shown that the Stern Review's estimate of the social cost of carbon (SCC) is an outlier in the economics literature.

Harvard economist Martin Weitzman has written that "the Stern Review consistently leans towards assumptions and formulations that emphasize optimistically-low expected costs of mitigation and pessimistically-high expected damages from greenhouse warming", that the documentation in the report is "elusive, frustrating, and ultimately unsatisfactory" and that "the key assumption that drives its strong conclusions is the mundane fact that a very low interest rate is postulated"." concerning the rate of pure time preference, Stern follows a decidedly-minority paternalistic view", and " a similar spirit of choosing extreme taste parameters, Stern selects as its base-case coefficient of relative risk aversion that is the lowest lower bound of just about any economist's best-guess range." Weitzman continues to argue that the Stern Review underestimated the risk of climate change and that, therefore, the Stern Review is "right for the wrong reasons", a conclusion shared by Yohe and Tol. Australian economists Paul Jensen and Elizabeth Webster also criticize the paternalism in the Stern Review, and link this to Britain's imperial past. Cambridge economist Partha Dasgupta calls Stern's combination of PTP-rate and rate of risk aversion "patently absurd", as this would imply a savings rate of 97.5%. The observed rate is around 15%.Berkeley economist Hal Varian shares Dasgupta's critique.

Terry Barker of the Tyndall Centre has written a paper (2008) supportive of the Review. Barker is critical of how some economists have applied cost-benefit analysis to climate change:

the Stern Review considers cost-benefit analysis as a marginal analysis inappropriately applied to a non-marginal multi-disciplinary systemic problem (p. 50). Both Stern (p. 163) and the IPCC Reports after 1995 take a multi-criteria approach rather than a narrowly monetary one and question cost-benefit analysis. This is one reason for the intemperate response from some traditional economists to the Stern Review

Eric Neumeyer of the LSE says that the Review missed an opportunity to argue for emission reductions based on the non-substitutable loss of natural capital. Dieter Helm of Oxford University is critical of the Review's analysis but accepts its conclusion of the urgent need to reduce emissions. Helm justifies this on the grounds that future damages to the environment will probably not be fully compensated for by increases in man-made capital. The draft report of the Garnaut Climate Change Review, a similar study conducted in Australia in 2008 by Ross Garnaut broadly endorsed the approach undertaken by Stern, but concluded, in the light of new information, that Stern had underestimated the severity of the problem and the extent of the cuts in emissions that were required to avoid dangerous climate change.

The Yale Symposium

In 2007, a symposium was held at Yale University on the Stern Review, with talks by several economists, including Nordhaus and Stern. In his talk, Nordhaus criticised the fact that the Stern Review had not been subject to a peer-review, and repeated earlier criticisms of the Review's discount rate.

William Cline, of the Peterson Institute, supported the Review's general conclusions, but was uncomfortable about how most (greater than 90%) of the Review's monetised damages of climate change occur after 2200. Cline noted that the Review's large cost-benefit ratio for mitigation policy allows room for these long-term costs to be reduced substantially but still pass a cost-benefit analysis.

Robert Mendelsohn, of Yale University, criticised of the way the cost-benefit analysis was done by the Stern Review team. Mendelsohn said that rather than finding an optimal policy, the Review presents a choice of policy versus no-policy. Jeffrey Sachs questioned some of the assumptions used in Nordhaus's economic model (DICE) of climate change. Sachs was supportive of Stern's cost estimates of climate change mitigation.

In response to these talks, Stern accepted Cline's comment about the weighting of future damages, and said that the weighting of these damages could be reduced by the increasing the size of the elasticity of marginal utility in the social discount rate. Stern mostly rejected the points raised by Nordhaus and Mendelsohn.

The costs of mitigation

Economists have different views over the cost estimates of climate change mitigation given in the Review. Paul Ekins of King's College London (2008) has said that Stern's central mitigation cost estimate is "reasonable", but economists Robert Mendelsohn and Dieter Helm say that the estimate is probably too low. Professor Emeritus of Economics at Pepperdine University George Reisman has said that "Any serious consideration of the proposals made in the Stern Review for radically reducing carbon technology and the accompanying calls for immediacy in enacting them makes clear in a further way how utterly impractical the environmentalist program for controlling global warming actually is. The fundamental impracticality of the program, of course, lies in its utterly destructive character."

In a response to a paper by members of the Stern Review team, John Weyant (2008) of Stanford University comments on how the cost estimate of mitigation used in the Review is based on idealized models. Weyant says that his own high short-run cost projection for stabilization, of possibly 10% GDP, "results primarily from institutional pessimism rather than technological pessimism".

Response to criticisms

The Stern Review team have responded to criticisms of the Review in a number of papers. In these papers, they reassert their view that early and strong action on climate change is necessary:

The case for strong and urgent action set out in the Review is based, first, on the severe risks that the science now identifies (together with the additional uncertainties that it points to but that are difficult to quantify) and, second, on the ethics of the responsibilities of existing generations in relation to succeeding generations. It is these two things that are crucial: risk and ethics. Different commentators may vary in their emphasis, but it is the two together that are crucial. Jettison either one and you will have a much reduced programme for action—and if you judge risks to be small and attach little significance to future generations you will not regard global warming as a problem. It is surprising that the earlier economic literature on climate change did not give risk and ethics the attention they so clearly deserve, and it is because we chose to make them central and explicit that we think we were right for the right reasons.

The implications of following a slow ‘policy ramp’, with meagre emission reductions over the next quarter of a century, would, on our reading of the evidence, be very risky indeed, yet this is implicit in the arguments of, for example, Nordhaus (2006) and Tol and Yohe (2006 and 2007). They do not seem ready to acknowledge the riskiness of the paths they suggest. Our conclusion, that global efforts should be directed at stabilising GHG concentrations in the range of 450 to 550 ppm CO₂e, is robust to a variety of considerations (Dietz et al., 2007). If our critics are prepared to allow GHG concentrations to rise to 650 ppm CO₂e, 750, or beyond, with significant associated risks of eventual temperature increases in excess of 5°C above pre-industrial levels (a transformation in global climate, taking it way beyond human experience, and making radical relocations of populations likely), then they should say so. They would have to explicitly argue that the risks brought about by such temperature changes are small, or confidently state that we can adapt to the huge changes in environment brought about by 5°C warming and that we can do so cheaply, or that we simply do not care about these risks and costs, because they are a problem for future generations.

Members of the Stern Review team have also given several talks that have covered criticisms of the Review. A talk given by Dimitri Zenghelis at the Tyndall Centre looked at criticisms of the Review and presented an overview of its main findings. In an official letter (2008), Joan Ruddock MP of the UK Government, dismisses the criticisms of the Review made by several economists, which, in her view, show "a fundamental misunderstanding of the role of formal, highly aggregated economic modelling in evaluating a policy issue".

Stern's later comments

In April 2008 Stern said that the severity of his findings were vindicated by the 2007 IPCC report and admitted that in the Stern Review, "We underestimated the risks we underestimated the damage associated with temperature increases and we underestimated the probabilities of temperature increases”. In June 2008, Stern said that because climate change is happening faster than predicted, the cost to reduce carbon would be even higher, of about 2% of GDP instead of the 1% in the original report.

See also

• Avoiding Dangerous Climate Change
• Economics of global warming
• Garnaut Climate Change Review
• Global warming controversy
• Green-collar job
• Politics of global warming
• World Energy Outlook

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61. Barker, T. (August 2008). "The economics of avoiding dangerous climate change. An editorial essay on The Stern Review". Climatic Change. 89 (3–4): 173–194. doi:10.1007/s10584-008-9433-x. Retrieved 2009-05-20.
62. Neumeyer, E. (2007). "A Missed Opportunity: The Stern Review On Climate Change Fails to Tackle the Issue of Non-Substitutable Loss of Natural Capital" (PDF). Global Environmental Change. 17 (3–4): 297–301. doi:10.1016/j.gloenvcha.2007.04.001. Retrieved September 5, 2009.
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71. "Stern takes bleaker view on warming". Financial Times.

Further reading

• "Special Topic: The Stern Review Debate". Climatic Change. 89 (3–4): 173–449. August, 2008. ISSN 1573-1480. Retrieved August 26, 2009. {{cite journal}}: Check date values in: |date= (help)
• Howarth, R.B. (April 2009). "Policy Brief No. 3: Discounting, Uncertainty, and Climate Change" (PDF). Economics for Equity and the Environment website. Retrieved 2009-05-20. {{cite web}}: External link in |publisher= (help)

External links

• Full text of the Stern Review, from HM Treasury
• The UK Government's Treasury web pages about the Stern review
• The Economics of Climate Change - The Stern Review
• Economist.zoom: How to value a grandchild, Dec 4th 2006
• Summary of key findings from the report
• "The Stern gang", linked index of resources.
• Videos:
  • The RIBA Trust Annual Lecture: Lord Stern (part of the International Dialogues: Architecture and Climate Change talks series)
  • The Economics of Climate Change: Risk, Ethics, and a Global Deal. Lecture given at Princeton University by Nicholas Stern, Jan 7th 2008
  • Climate Change: The Economics of and Prospects for a Global Deal. Lecture given at MIT by Nicholas Stern, Nov 19th 2007
  • Yale Symposium on the Stern Review, February 2007. Figures used in the Symposium are available here

In the media

• Nov 2, 2006, The Economist: Stern warning
• Nov 6, 2006, Der Spiegel: The Day the Climate Changed
• Jan 10, 2007, BBC: Chrysler Boss says Stern Report is based on dubious economics
• Jun 9, 2009, Allianz Knowledge: Stern Review Update An interview with Alex Bowen, senior economist on the Stern Review team