The document explores previous critiques to the Stern Review suggesting that Stern inflated his damage costs. Conversely to those critiques, this paper introduces a recent application of the PAGE2002 model used in the Stern Review concluding that Stern may have underestimated the US and global damages.
According to the authors, in this revision and reanalysis of the PAGE model, climate damages in 2100 may represent 2.6% of the US GDP and 10.8% of the global GDP under the no adaptation, increased catastrophe risk and increased damage exponent scenario. These values are much higher than those proposed in the Stern Review (i.e. 0.4% of the US GDP and 2.2% of the global GDP).
The document provides a novel economic analysis of mitigation options. Implications for developing country policy-makers:
the damage costs of climate change may be much bigger than those presented by Stern and some other authors
the GDP of developing country nations may be severely affected by climate change under the no adaptation, increased catastrophe risk and increased damage exponent scenario
steps proposed for progress to a global carbon market and carbon prices
mitigation costs might be significantly higher than thought, overall for developing countries.