Sir Nicholas Stern (born 22 April 1946) is a British economist and academic. He was the Chief Economist and Senior Vice-President of the World Bank from 2000 to 2003, and is now a civil servant and government economic advisor in the United Kingdom.


He earned his Bachelor of Arts degree in mathematics at Peterhouse, Cambridge, and his Doctor of Philosophy in economics at Nuffield College, Oxford. He was a lecturer at Cambridge University from 1970 to 1977, and served as a Professor of Economics at the University of Warwick from 1978 to 1987. He taught from 1986 to 1993 at the London School of Economics, becoming the Sir John Hicks Professor of Economics, a role which he still occupies. 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.



Sir Nicholas Stern


Sir Nicholas Stern



After his time working for the World Bank, Stern was recruited by Chancellor of the Exchequer Gordon Brown to work for the British government where, in 2003, he became second permanent secretary at H.M. 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, he was, in July 2005, appointed to conduct reviews on the economics of climate change and also of development, which led to the publication of the Stern Review. He ceased to be a second permanent secretary at the Treasury though he retains the rank; the review team he heads is based in the Cabinet Office.


The Stern Review was released on 30 October 2006, and gained global media attention for Stern's conclusions on the potential impact of climate change, including the statement that "our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century."


Awards and recognition


Stern was elected as a Fellow of the British Academy in 1993; he is also an Honorary Fellow of the American Academy of Arts and Sciences.


In 2004 he was made a Knight Bachelor.  Stern was awarded an Honorary Doctor of Science degree by the University of Warwick in 2006.







A Stern Warning - The report: 'If we act now, we can avoid the very worst'

World economies do not have to suffer while we deal with climate change, said Sir Nicholas Stern


LONDON -- Unchecked global warming will devastate the world economy on the scale of the world wars and the Great Depression, a British government report said Monday, as the country launched a bid to convince doubters that environmentalism and economic growth can coincide.


Britain hired former Vice President Al Gore, who has emerged as a powerful environmental spokesman since his defeat in the 2000 presidential election, to advise the government on climate change -- a clear indication of Prime Minister Tony Blair's dissatisfaction with current U.S. policy.



THE economic wellbeing of Britain and the rest of the world depends on changing to a low-carbon global economy, the Government’s chief economist said in a report published yesterday.


Sir Nicholas Stern described climate change as the “greatest and widest-ranging market failure ever seen”, but said that action can and should be taken to avert the worst effects.


In The Economics of Climate Change, commissioned by the Treasury, Sir Nicholas said that the problem could be tackled without stunting economic growth.


He concluded that spending 1 per cent of gross domestic product each year on tackling climate change would save 5 to 20 per cent of GDP by the end of the century, but that Britain could not act alone — it required internationally agreed measures.


“The conclusion of the review is essentially optimistic,” said Sir Nicholas. “There is still time to avoid the worst impacts of climate change if we act now and act internationally. We can grow and be green.”


The report identified carbon pricing, including carbon-emissions trading worldwide and green taxes, improved low-carbon technology, energy efficiency and halting deforestation as the main methods of cutting greenhouse-gas emissions.


In his assessment of global warming Sir Nicholas, head of the Government Economic Service and the former chief economist at the World Bank, said that the “scientific evidence is now overwhelming” that climate change is under way and “presents very serious risks”.


He accepted that the world has warmed up half a degree since the Industrial Revolution and that a minimum of another half degree can be expected over the next few decades. He blamed man-made greenhouse gases such as carbon dioxide and methane. The level of greenhouse gases in the atmosphere is about 430 parts per million, compared with 280ppm before the Industrial Revolution.


The report said that the level will reach 550ppm by 2050 at the current rate of increase, but the levels are rising so fast that 550ppm “could be reached as early as 2035”.



Sir Nocholas Stern Chief Economist


Sir Nicholas Stern meeting world leaders



As levels increase, temperatures are expected to rise. A 550ppm level gives a 77-99 per cent chance of an increase above 2C (3.6F), and doing nothing about emissions gives a 50 per cent risk of a 5C rise by the end of the century.


“Such changes would transform the physical geography of the world,” the report states, with many millions, of people facing starvation, water shortages or homelessness.


The melting of glaciers would initially cause floods but would then leave a sixth of the world population facing water shortages. Sea rises would threaten cities, including London and New York, and a rise of 2C would put 15-40 per cent of wildlife at risk of extinction.


Falling crop yields could leave hundreds of millions of people, especially in Africa, at risk of starvation and, once temperatures have risen by 4C, “global food production is likely to be seriously affected”.


Scientists are clear, said Sir Nicholas, that the higher the temperature rise the worse the impact on people and economies will be. 


Developing countries are likely to be hit hardest, but developed nations will also suffer. The cost of flooding in Britain if temperatures rise 3C or more is estimated at up to 0.4 of GDP and in the US stronger hurricanes are expected to double the costs of wind damage.


With strong, deliberate policy choices it is possible to ‘decarbonise’ both developed and developing economies on the scale required for climate stabilisation, while maintaining economic growth in both.”


He ruled out limiting greenhouse-gas levels close to those of today because of the expense, but said that a level of 450-550ppm, causing temperatures to rise by 2-3C, was achievable and desirable environmentally and economically. However, he cautioned: “There is a high price to delay. Weak action in the next 10-20 years would put stabilisation even at 550ppm beyond reach — and this level is already associated with risks.”


Stabilisation at or below 550ppm would require global emissions to reach their peak in 10-20 years and then fall by 1-3 per cent every year, with global emissions in 2050 being 25 per cent of today’s level. By then the world economy is expected to be three or four times more valuable.


The cost of limiting greenhouse gases to a maximum of 550ppm is estimated at 1 per cent of GDP, which is described as “significant but manageable” while simultaneously offering business opportunities as the markets for low-carbon, high-efficiency goods and services expand and removing most of the risks associated with climate change.


The review team assessed the cost of combating climate change by comparing models for the development of low-carbon technologies with the alternative of “business as usual” — doing nothing — at the same time assessing the “system-wide effects” of changing to a low-carbon economy. Improved energy efficiency is highlighted as the biggest area where emissions can be reduced, with the bonus of saving companies money.



Sir Nicholas Stern on Global Warming


Sir Nicholas Stern on Global Warming and CO2



In the medium and long term, industry would have to turn to clean power, heat and transport technologies. The power sector would have to reduce carbon emissions by 60-75 per cent by 2050. Efficiency improvements in existing clean technology would be required to provide a competitive alternative to fossil fuels.


Coal and gas would still provide more than half the world’s power by 2050 and Sir Nicholas advocated carbon capture and storage to slash their emissions.


Preventing deforestation is highlighted as a cheap means of reducing emissions. Deforestation has increased world emissions by 18 per cent because trees and other plants store carbon. Wealthy nations should, the report says, compensate poorer logging nations for saving trees.


Sir Nicholas regards the 1 per cent GDP cost as small compared with the risks and costs of climate change. The development of business opportunities from new technology would be a significant compensation, with markets for low-carbon energy products expected to be worth £300 billion by 2050.


The damage being caused is calculated at £45 per tonne of carbon dioxide and, by comparing the cumulative costs against social costs, the world economy would save an estimated £1.3 trillion by the middle of the century if it limited greenhouse gases to 550ppm.


The report argues: “Innovation driven by strong policy will ultimately reduce the carbon intensity of our economies and consumers will then see reductions in the prices they pay as low-carbon technologies mature.” Tackling climate change would, the review said, require the introduction of carbon pricing and a range of green taxation schemes.


Among the measures involved would be the expansion of the European Union trading scheme so that it operated worldwide and included more sectors of the economy, including transport. By putting a price on carbon, people — as individuals and in their business roles — would be “faced with the full cost of their actions”.


Technological developments required huge investment and public spending on research had slumped since the 1980s, a trend that needed to be reversed to address climate change.


Changes in behaviour would also be needed and the report called for better information on energy efficiency to be given to the public, while new regulations would help to ensure similar changes from industry.


The Stern report concluded: “It is already very clear that the economic risks of inaction in the face of climate change are very severe. There are ways to reduce the risks. With the right incentives the private sector will respond and can deliver solutions. The stabilisation of greenhouse gas concentrations in the atmosphere is feasible at significant but manageable costs.


“Above all, reducing the risks of climate change requires collective action. It requires co-operation between countries. It requires a partnership between the public and private sector. It is still possible to avoid the worst impacts of climate change but it requires strong and urgent collective action. Delay would be costly and dangerous.”







Climate Change Bill





Section 1 – Principle aim of the Bill


The Prime Minister shall have the principle aim of restricting emissions of carbon dioxide in any year to the “annual target figure” for that year, for every year from 2010 to 2050.


The “annual target figure” for 2010 shall be 126 MtC (20 per cent below 1990 level) and for each succeeding year shall be reduced by 3 per cent.



Section 2 – Strategies and reports on achieving the principle aim


The Prime Minister shall publish, and may from time to time amend, a strategy to achieve the above aim, which shall include :

• Targets for each sector and policies to achieve those targets

• Analysis of the performance of past policies to reduce CO2

• Analysis of Government tax and spend on CO 2 emissions (including market mechanisms that don’t technically count as tax!) and how the polluter pays principle may be used to cut them.


It will also be the duty of the Prime Minister to ensure that the secondary sectoral targets set out in Schedule 1 are met.


The Prime Minister shall report annually (including in years before 2010) to Parliament on progress in implementing the strategy and any amendments proposed. Parliament shall debate and vote on whether to accept the report.


The figures in the report shall be verified by the National Audit Office.



Section 3 – process to be followed if targets are missed


If carbon dioxide emissions are greater than the target value the report above shall include :

• an analysis of which policies fell short and why

• additional policies (or extensions to existing policies) needed to reach target in future years.

If carbon dioxide emissions exceed the target by more than 5 per cent, the  committees who monitor departments responsible for climate change policy (transport, environment, industry, treasury, public accounts etc) can propose policies or changes to policies to cut CO2 emissions and can require that these proposals are debated and voted on by both Houses of Parliament.


If carbon dioxide emissions exceed the target by more than 10 per cent, the Prime Minister and any Secretary of State whose department has not met the sector targets for which they were responsible shall have his salary reduced by 10 per cent.



Section 4 – MPs duties to tackle climate change


Every MP shall publish an annual report to constituents (on a website or in a local paper) specifying :-


(a) any action they have taken to prevent climate change

(b) the ways in which they have acted to hold relevant Secretaries of State to account, including through their voting in Parliament



Schedule 1 – Secondary statutory targets


Secondary sectoral targets that shall be made statutory on Government are :-

• Domestic energy efficiency improvement of 20 per cent by 2020 from 2010 levels (White Paper).

• Non domestic energy efficiency improvement of 7.9 MtC by 2010 (energy efficiency

implementation plan) and an extra 4MtC by 2020

• Renewable electricity generation (10 per cent by 2010, 20 per cent by 2020),

• a specific target for microgeneration to be set pursuant to Section 82 of the Energy Act

• CHP target of 10Gw by 2010 (Manifesto and White Paper)



Explanatory Notes


Section 1 – principle aim of the Bill


Defines a path that carbon dioxide emissions must follow. The path starts at Labour’s manifesto commitment for a 20 per cent cut in 1990 levels by 2010, with annual cuts of 3 per cent each year through to 2050. (This is approx a 74 per cent cut on the current levels by 2050.) The clause makes achievement of this path a “principle aim” of the Prime Minister.



Section 2 – Strategies and reports on achieving the principle aim


Require the PM to publish a strategy on how the principle aim will be met, and gives him the power to amend this strategy as required. It also requires annual reporting by the PM on progress.



Section 3 – process to be followed if targets are missed


This clause comes into effect if there is a failure to keep to the defined path. The clause sets out a progressive response to failure, in recognition that the path is not likely to be a simple straight line, as something as random  as a particularly cold winter could cause a temporary rise in

CO2 emissions.


Therefore, if actual emissions are less than 5 per cent above the target, all that is required is for Government to announce the necessary policies to make up the shortfall in future.


If repeated failures or a particularly large failure in any one year leads to emissions exceeding the target level by 5 per cent-10 per cent, those Parliamentary Committees that scrutinise departments responsible for delivering CO2 cuts will be given the power to suggest additional policies, and require Parliament to vote on them. This could include those Select Committees scrutinising the environment department, the transport department, the Treasury (tax and spending will play a key role in cutting CO2 emissions), the trade/industry department, and the agriculture department.


In the case of severe failure of more than 10 per cent, the Secretaries of State responsible for delivering CO2 cuts would see their salaries cut by £5000. (Although this may be considered an unusual reprimand MPs have in the recent past had effectively had their salaries docked for misconduct by being suspended without pay from the Commons for a short period, and a standard opposition “censure” motion for Ministers usually includes a token salary cut).


These mechanisms are additive. In other words, in the case of a major failure, all three mechanisms operate, not merely the salary cut.



Section 4 – MPs duties to tackle climate change


Requires MPs to report on their actions annually to constituents.



Schedule 1 – Initial statutory targets


Makes key Government targets from policy documents such as the Climate Change White Paper legally binding – increasing the priority Ministers must give them. Different views on this have been expressed – see attached  paper for discussion.






Tony Blair speaking on Climate Change Green Bill


Tony Blair on Climate Change 





  1. Robert Peston (29 October 2006). "Report's stark warning on climate". BBC.

  2. "Climate change fight 'can't wait'". BBC. - video, executive summary and slide show.

  3. The British Academy (2006). British Academy Fellows Archive. Retrieved October 31, 2006.

  4. Press and Information Office - LSE (2006). News and Views: Volume Thirty-Four • Number Nine • 21 June 2004.

  5. University of Warwick (2006). University of Warwick Honorary Degrees announced for July 2006. Retrieved October 31, 2006.



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Guardian Unlimited - New Zealand Herald



Stern by name, stern by nature
Guardian Unlimited, UK
Those who know the diminutive Sir Nicholas Stern, Treasury and World ... the economics of climate change, Sir Nicholas has been ... proposing a rise in green taxes
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Times Online, UK 
... The measure of effective green levies must be twofold ... But Stern’s second serious contribution is to ... Sir Nicholas’s chief proposal is that governments work
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People & the Planet - Guardian Unlimited



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Global Warming Could Significantly Impact World Economy, Study ... NewsHour



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Radio New Zealand, New Zealand   ... The Prime Minister told Morning Report that New Zealand ... now accepts the need for green policies ... Sir Nicholas Stern says that with current trends, average global ...



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This is London, UK   ... as the Government launched the report of Sir Nicholas Stern's review of ... the way to large increases in green taxes ... Speaking at the report's launch in London, Mr ...



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