He was a lecturer at the University of Oxford from 1970 to 1977[7][8] and served as a professor of economics at the University of Warwick from 1978 to 1987. From 1986 to 1993 he taught at the London School of Economics, becoming the Sir John Hicks Professor of Economics. From 1994 until 1999 he was the Chief Economist and Special Counsellor to the President of the European Bank for Reconstruction and Development. His research focused on economic development and growth, and he also wrote books on Kenya and the Green Revolution in India. Since 1999, he has been a member of the International Advisory Council of the Center for Social and Economic Research (CASE). From 1999 until 2000 Stern was Chairman of the consultancy London Economics founded by John Kay.
From 2000 to 2003 he was the Chief Economist and Senior Vice-president of the World Bank. Stern was then recruited by Gordon Brown, then Chancellor of the Exchequer, to work for the British government where, in 2003, he became second permanent secretary at HM Treasury, initially with responsibility for public finances, and head of the Government Economic Service. Having also been Director of Policy and Research for the Commission for Africa, in July 2005 he was appointed to conduct reviews on the economics of climate change and also of development, which led to the publication of the Stern Review. At the time, he ceased to be a second permanent secretary at the Treasury, though he retained the rank until retirement in 2007; the review team he headed was based in the Cabinet Office. It was reported that Stern's time at the Treasury was marked by tensions with his boss, Gordon Brown:[9]
... several Whitehall sources told The Times that Mr Brown did not like some of the advice he received from Sir Nicholas, including some "home truths" about long-term trends in the economy and he never broke into the chancellor's tight-knit inner circle. ... He subsequently lacked a real role and spent most of his time working on major international reports on global warming and alleviating poverty in Africa. His doom-laden report on the risks of failing to address climate change, published in October, caused tensions within the Government by triggering a debate on environmental taxes and leading to calls for big policy changes.
The Stern Review (2005—2006)
The Stern Review Report on the Economics of Climate Change was produced by a team led by Stern at HM Treasury, and was released in October 2006. In the review, climate change is described as an economic externality, which is a type of market failure. Stern has subsequently referred to the climate change externality as the largest ever market failure:
Climate change is a result of the greatest market failure the world has seen. The evidence on the seriousness of the risks from inaction or delayed action is now overwhelming ... The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay[10]
Regulation, carbon taxes and carbon trading, along with pollution permits and property rights, are recommended to reduce greenhouse gas emissions. It is argued that the world economy can lower its greenhouse gas emissions at a significant but manageable cost. The review concludes that immediate reductions of greenhouse gas emissions are necessary to reduce the worst risks of climate change. The review's conclusions were widely reported in the press. Stern's relatively large cost estimates of 'business-as-usual' climate change damages received particular attention.[11][12] These are the estimated damages that might occur should no further effort be made to cut greenhouse gas emissions.
There has been a mixed reaction to the Stern Review from economists. Several economists have been critical of the review,[13][14] for example, a paper by Byatt et al. (2006) describes the review as "deeply flawed".[15] Some have supported the Review,[16][17][18] while others have argued that Stern's conclusions are reasonable, even if the method by which he reached them is incorrect.[19] The Stern Review team has responded to criticisms of the review in several papers.[20] Stern has also gone on to say that he underestimated the risks of climate change in the Stern Review.[21]
Stern's approach to discounting has been debated amongst economists. The discount rate allows economic effects occurring at different times to be compared. Stern used a discount rate in his calculation of the effects of "business-as-usual" climate change damages. A high discount rate reduces the calculated benefit of reducing greenhouse gas emissions. Using too low a discount rate wastes resources because it will result in too much investment in cutting emissions (Arrow et al., 1996, p. 130).[22] Too high a discount rate will have the opposite effect, and lead to under-investment in cutting emissions. Most studies on the damages of climate change use a higher discount rate than that used in the Stern Review. Some economists support Stern's choice of discount rate (Cline, 2008;[23] Shah, 2008[18] Heal, 2008)[24] while others are critical (Yohe and Tol, 2008;[25] Nordhaus, 2007).[26]
In a speech given in 2007 at the Australian National Press Club, Stern called for one per cent of gross global product to be employed in global warming-related environmental measures.[28] He also joined the Cool Earth advisory board. In 2009, Stern linked recovery from the global economic crisis with an effective response to climate change.[29][30] His book, Blueprint for a Safer Planet, was published in April 2009.
In 2009, he published the non-fiction literary work, The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity.[34] The book examines climate change from an economist's perspective, and outlines the necessary steps toward achieving global economic growth while managing climate change. In 2009, he also became a member of the International Advisory Council of the Chinese sovereign wealth fundChina Investment Corporation.[35]
Where we can, we have to go to zero carbon, because of a growing population and a rising middle class in developing countries which wants the same standard of living the developed world already enjoys. GHGs must be cut by at least 50% around the world by 2050, with the rich, developed countries cutting by 80%, compared to 1990 levels. We are at the beginning of a technical revolution of the magnitude of the railway, the motor car ... The economic crisis is an opportunity to lay the foundation for the future ... You can tell a very positive story here.[39]
In November 2015 he was commissioned by the UK Minister of Universities and Science, Jo Johnson, to chair a review of the Research Excellence Framework (REF) that is used in assessing the research performance of universities and research institutes in the UK. The report was published in July 2016.[40]
In October2021, Stern released a working paper stating that economists had grossly undervalued young lives in relation to the climate crisis.[41] The manuscript is due to be published in the Economic Journal of the Royal Economic Society.[42]
In 2009, Stern was also awarded the Blue Planet Prize for his contributions to research on global environmental problems.[56]
Stern participated in one of the showings of The Age of Stupid at the RSA. At the after-showing webcast panel discussion[57] was director Franny Armstrong, journalist George Monbiot, and the Met Office head of climate impacts Richard Betts. In 2009 Nicholas Stern lent his support to the 10:10 project, a movement encouraging people to take positive action on climate change by reducing their carbon emissions.[58]
Stern received the 2010 BBVA Foundation Frontiers of Knowledge Award in the category of Climate Change for his "pioneering report [that] shaped and focused the discourse on the economics of climate change" and provided "a unique and robust basis for decision-making."[59]
On 11 December 2013, Stern was awarded the 2013 Stephen H. Schneider Award for Outstanding Climate Science Communication by Climate One at The Commonwealth Club in San Francisco, California.[60]
Stern is the son of the late Bert Stern and Marion Stern and nephew of Donald Swann—half of the Flanders and Swann partnership. Richard Stern, former vice-president of the World Bank, and Brian E Stern, former vice-president of Xerox Corporation, are his brothers, and his sister is Naomi Opalinska.[citation needed]
Works
A Strategy for Development, World Bank Publications, 2002 (ISBN978-0821349809).
A Blueprint for a Safer Planet: How to Manage Climate Change and Create a New Era of Progress and Prosperity, Bodley Head, PublicAffairs, 2009 (ISBN978-1-84792-037-9).
The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity, 2009 (ISBN978-1586486693).
Why Are We Waiting? The Logic, Urgency, and Promise of Tackling Climate Change, MIT Press, 2015 (ISBN9780262029186).
^Atkinson, A. B.; Stern, Nicholas Herbert (1974). "Pigou, Taxation and Public Goods". The Review of Economic Studies. 41 (1): 119. doi:10.2307/2296403. JSTOR2296403.
^Tol, R.S.J. and G.Yohe (2006). "A Review of the Stern Review". World Economics. 7 (4): 233–50.
^Nordhaus, W. D. (2007). "A Review of the Stern Review on the Economics of Climate". Journal of Economic Literature. 45 (3): 686–702. doi:10.1257/jel.45.3.686.
^Cline, W. (5 January 2008). "Comments on the Stern Review". Peter G. Peterson Institute for International Economics. Archived from the original on 24 December 2009. Retrieved 20 May 2009.
