Critique of Stern Review

A wide-ranging critique of the Stern Review (SR) has now been published in World Economics, the UK Journal for Current Economic Analysis www.world economics-journal.com). This Critique, which has both a scientific and economic dimension, has been compiled by well qualified scientists and economists from various countries. They state that they represent no interests and to have neither sought nor received any financial or institutional support. Former OECD chief economist, Professor David Henderson, who has played a leading part in bringing the Critique to fruition, will be lecturing on it in Australia (and NZ) next month and in March.

The Critique’s general conclusion is that the SR is “flawed to a degree that makes it unsuitable for use in setting policy”. But a fair reading of the Critique would conclude that a considerable understatement: if accepted, its assessments of specific issues in SR leave that analysis with little credibility. The Critique’s scientific section, for example, concludes that “contrary research is consistently ignored, as are basic observational facts showing that alarm is unwarranted”.

Following are my selection of the Critique’s comments/conclusions on specific issues, including in some cases my own interpretive comments, relevant to its general conclusion:

* Climate prediction is not a mature science. It is newly emerged from the science of weather forecasting. Yet SR asserts “the scientific evidence is now overwhelming: climate change presents very serious global risks, and it demands an urgent global response.” This - and some other SR assertions - seem to go considerably beyond even the last published Assessment Report of the International Panel on Climate Change and –as it appears- the latest analysis in the forthcoming successor Report(s) from the Panel.

* Relevant is the last published IPCC assessment that the “level of scientific understanding” of nine out of twelve identified climate forcings is “low” or “very low” - and its highlighting of the limitations and short history of climate models.

* Since that assessment, conclusions of major scientific papers include that the climate forcing of methane has been underestimated by almost half, that half the warming over the twentieth century might be explained by solar changes, that cosmic rays could have a large effect on climate, and that the role of aerosols is more important than that of greenhouse gases. In short, considerable substantive analysis suggests the latter may have been of minor influence in the relatively small warming since 1965.

* The Critique points out that ‘global average temperature’ statistics since 1860, computed from near-surface thermometer measurements, show the “late twentieth-century warming is similar in both amount and rate to an earlier (natural) warming between 1905 and 1940”. And, that comparisons over longer time spans, using local proxy datasets, “show recent warming occurred at a similar rate, but was of lesser magnitude, than the earlier, millennial warmings associated with the Mediaeval, Roman and Minoan warm periods”.

* SR does acknowledge there are “major doubts” about the so-called ‘hockey stick’ analysis used in the last IPCC report. This purports to show nine centuries of near constant global temperatures, followed by a dramatic rise in the twentieth century. Two recent US expert reports invalidate that analysis because of a combination of defective statistical methods and inclusion of unreliable temperature proxies using bristle pine tree-rings.

* SR’s confidence that greenhouse gases will likely cause major, deleterious climate change appears largely based on a single Hadley Centre (UK) paper. However, to simulate observed trends in global mean surface temperature, about two-thirds of assessed anthropogenic greenhouse forcing had to be eliminated from the modelling i.e. it would be difficult to claim that the “model” is, in fact, a model!

* SR does not mention other plausible explanations of recent warming by professional analysts. These include local heating from urbanization/industrialization and longer-term geological analysis suggesting minimal impacts from greenhouse gas forcing – let alone that analysis’ predictions of cooling over the next few decades i.e. the science is far from settled. Note that, historically, there are several examples of so-called scientific consensuses being proved wrong.

* SR assumes that future increments of carbon dioxide will have substantially greater effects than those in the past. This is “contrary to all empirical and physical reasoning”. In any event, historical changes in CO2 emissions do not correspond with comparable changes in temperature and vice-versa eg the temperature increase between 1905 and 1940 occurred before greatly increased industrial emissions; and temperatures between 1940 and 1965 fell even though emissions increased rapidly.

* The only future scenarios of impacts of possible climate change portrayed by SR are biased in that they focus on worst case outcomes eg the SR base case includes an unrealistically high projection of global population in 2100 at 15 billion. Moreover, the scenarios assume either that there will be no counter-response if climate change does occur or that only existing technology will be used for counter-measures.

* The Critique says that “it is conceivable, indeed probable, that at low to moderate levels of climate change, the overall pressure on biodiversity, ecosystems and species would on balance be lower”. But although SR acknowledges “there is a great deal of uncertainty” about estimates of the effects of climate change on ecosystems and extinction risks, it provides a “worse-than-worse-case scenario, based on a naïve and one-sided appeal to the literature”. This is, moreover, based on a single study.

* SR exaggerates possible adverse water outcomes in some regions by ignoring possible adaptation with either existing or new technologies.

* Although SR suggests the possibility of irreversible melting of the Greenland ice sheet, other analysts differ as to whether that sheet has been increasing or decreasing. Moreover, although temperature around the Greenland coast has increased, it is still lower than in 1940. Similarly, SR does not mention that temperatures in the Arctic are only as warm now as they were in the 1930s or that the Antarctic ice sheet is growing.

* SR estimates of possible adverse health effects of climate change rely on an analysis that, while acknowledging the uncertainties and need for careful monitoring, appears to assume such effects. Similarly, projections of disease projections take no account of “future changes in technology and increases in adaptive capacities of developing nations as they become richer” eg malaria can be eliminated/controlled in warm climates.

* The Critique says that “it is very broadly agreed that specific weather events cannot be ascribed to global climate changes” and points out that the last IPCC report was in general accord with this, as were analyses of the frequency of floods in Germany and of droughts in the US. Yet, in reacting to criticism pre SR, Stern himself gave the opposite impression by asserting, without quoting evidence, that “the world has been experiencing more extreme weather events.”

* SR “relied for advice on a small number of people and organizations that have a long history of unbalanced alarmism on the global warming issue”. Further, it did not require the full disclosure of all data/statistical techniques in advice or publications used by it. This despite attempts by the main hockey stick analyst to block attempts at verification and a refusal by the author of SR’s global temperature series to allow external examination because “Why should I make the data available to you, when your aim is to try and find something wrong with it?” Moreover, the defence that the peer review system has been used is not a safeguard: it is apparent that colleagues with similar views tend to do the reviews!

* On possible economic impacts of global warming, the SR “message” is that, unless major action is started now and continued over coming decades, “the overall costs will be equivalent to losing at least 5% of global GDP each year, now and forever”. The Critique, however, argues that the analyses used by SR to justify this conclusion “systematically overstate[s] projected costs of climate change, partly though by no means wholly as a result of its failure to acknowledge the scope for long-term adaptation to possible global warming”.

* In short, even if it was accepted that considerable global warming would occur unless major counter-vailing action is started now, there are ways of adapting life to cope with such warming without serious damage to economic growth. Adaptation is all the more likely, and possible, given that levels of GDP per head will be much higher, including in developing countries, before serious damage from any such warming would likely occur.

Thus, the case for the present generation incurring large costs in order to reduce possible costs to future generations is not made. Indeed, as one analyst has observed, it is “patently absurd” that SR effectively proposes that the present generation, including the poor, must savagely cut its rate of consumption to “save” what will be a much richer future generation.

* The fact that SR does not reject generally accepted projections of (higher) GDP per head makes even more serious its failure to acknowledge the adaptation potential. Note also that, although SR estimates major economic damage from “extreme weather”, as well as undefined and conjectural “social and political instability” and “knock-on effects”, the main economic damage from global warming would likely be mainly to primary producing countries.

* The Critique also argues that SR underestimates the likely cost - including to the world’s poor - of the large global mitigation program that it calls for. Thus, whereas SR assumes technological advances will reduce costs of alternative energy and other mitigation effects (implying only limited adverse effects on economic growth), it assumes only limited technological advances to deal with adaptation to global warming. Yet the application of technological advances to deal with mitigation would depend heavily on governments taking action whereas adaptation would be primarily dependent on responses to demands from the market i.e. from the people (but, as the ten economists point out, SR “makes no mention of the possibility of government failure”, particularly at international level). In any event, if technological advances would allow much of the handling of mitigation, why not wait for their development rather than rush in now?

* The economic section of Critique concludes that “so far from being an authoritative guide to the economics of climate change, the Review is deeply flawed. It does not provide a basis for informed and responsible policies”.