The Stern report should be simply forgeotten. Everyone makes mistakes. It is simply not good work and you are better off doing your own research than defending crap like this. I’ll change my mind when the rest of the economics profession justifies Stern’s methodology (e.g ignoring opportunity costs) and routinely uses it.

Climate change might get worse. It might have costs. Doing nothing or engaging in growth promoting poloicies is preferable to the level of mitigation Stern infers we need.

As regards your comment “I also have doubts about the seriousness of the work. One person cannot write 200+ pages on a complex topic with any rigour in a few months.”

it’s far more applicable to Plimer whos produced a 500 page book mostly about topics where has no professional expertise, than to Stern who was working in his field of expertise and had a Treasury team and lots of outside modellers to help him.

http://www.timcurtin.com/images/The_DaVinci_Code_of_Climate_Change.pdf

Stern’s analysis, for all intents and purposes is completely and utterly whacky. It isn’t wrong, it is so bad it is useless.

He discounts using a “social discount rate”. He says that is what people are willing to pay – by using stated preference data. He does not use revealed preference data nor is there any correct procedure (choice analysis) to make the stated preference data valid. He uses scaled data and transfers this to dollar costing without any simulation or appropriate statistical technique. The figure Stern arrives at is below 2%.

Wether this is added to a cost of capital or not, it is vastly different to “usual” cost of capital figures we see. (The internal rate of return for university education and subsequent higher wages forgoing full time income for 3-4 years is 14.5% [17% if we didn't have to pay HECS-HELP]. The ASX returns roughly 14% on average since Australia had a capital market).

What Stern is saying is that global warming is so special that people are willing to pay more, so we can treat the social time preference and cost of capital differently. It may not be wrong – it might be Stern’s preference. But it isn’t appropriate to the analysis.

Given that this doesn’t cover the opportunity cost (remember those?) of the mitigation, from stated, not revealed preference data, this is highly suspect. At worst, you would subtract the social time preference from the cost of capital. But the deficit with either figure Stern uses is larger than this.

Stern also assumes a very low GDP growth figure, which is out of whack from the literature and known growth projections. Stern doesn’t explain why his theory about lower global growth is better. His assumption also bucks the trend without any explanation.

When these points as well as the potential for global GDP to rise significantly more with further trade liberalisation, Stern’s analysis is not based on realistic assumptions. It overstates revenues and underestimates costs and doesn’t even consider sensitivity analysis (of trade liberalisation).

I also have doubts about the seriousness of the work. One person cannot write 200+ pages on a complex topic with any rigour in a few months.

Don’t act on arbitrary information like we can’t wait for the science because then it will be too late, we must act now or perish. Keep conducting the science until we understand what is going on. If there is a problem then construct a rational course of action. Be exceptionally wary of people who want to develop AGW into a new religion and have people act on faith rather than facts, to push a political agenda that cant stand on it’s own merits.

I stated that there is evidence of considerable risk and we would be foolish to ignore that.

Well that’s not exactly right, JohnH as you said much more than that.

The rest of JC’s comments are complete distortions I what I stated.

So I distorted your quotes? Surely you’re not suggesting that, are you?

As I asked, please quantify your projections as to why we should act despite the fact that it is the long term and you yourself have claimed that making long term projections is basically a fraud (by quoting O’ Rourke).

JohnH — I agree that we are not going to be wiped out. Yet the fear-mongers keep talking this way. Their alarmism is used to scare people into accepting their preferred policies.

Of course we will have to adjust to future challenges. AGW is one of those. I think with the benefit of 20-20 hindsight we will realize that AGW wasn’t the “mother of all challenges” that the fear-mongers today suggest. We have lots of time, lots of money and an advancing technology. We can handle slightly higher water levels and a slightly warmer winter. No need to introduce panicked and poorly thought-out policies.

Nor did I say that it would be earth shattering. I stated that there is evidence of considerable risk and we would be foolish to ignore that. Remember, Peace in our Time!

The rest of JC’s comments are complete distortions I what I stated.

Which makes it doubluy odd why you’re here even discussing it then, no?

That’s ridiculous. I don’t even trust some peer reviewed research I read.

Then why did you say this:
I don’t care about Mark Hill’s analysis, if he can it published then I’ll read it, but if it just something he posts on a blog it aint worth nickels.

Frankly you’ve confused the hell out of me. Do you only trust your prejudice then?

There is no evidence for an alien invasion. Doh! What do you suggest we do Michael, just ignore the potential risk of AGW? What is your position?