Read this indepth review by Stockholm Environment Institute of new developments in climate economics and science since the Stern Review (2006) and the Intergovernmental Panel on Climate Change’s Fourth Assessment Report (2007).

Climate policy addresses a global problem, with costs and benefits distributed unevenly around the world. Questions of efficiency and equity are central to the allocation of costs; they are typically handled either by modeling optimal policies based on economic efficiency, or by setting standards that embody principles of equity.

At present, without climate change, the Southwest is relying on the unsustainable withdrawal of groundwater reserves to meet today?s demand; those reserves will be drained over the next century as population and incomes grow. With climate change, the Southwest water crisis will grow far worse.

The social cost of carbon (SCC), defined as the estimated price of the damages caused by each additional ton of carbon dioxide (CO2) released into the atmosphere, is the volume dial on government regulations affecting greenhouse gases: The higher the SCC is set, the more stringent the regulatory standards.

Climate change creates a crisis for economic development, which has historically been synonymous with high-carbon growth. It is essential for the world economy to make a rapid transition to a new, low-carbon style of growth.

Stopping global warming and protecting the earth

The interaction of climate and development threatens to create a paradox: economic development could accelerate climate change, which in turn could block further development, locking the world into existing patterns of inequality as the natural environment deteriorates. The solution to this paradox is far from obvious.

The climate policy debate has advanced from science to economics, with a growing focus on creating carbon markets and getting the prices right. This is necessary but far from sufficient for an effective and equitable response to the climate challenge.

Global warming comes with a big price tag for every country around the world. The 80 percent reduction in U.S. emissions that will be needed to lead international action to stop climate change may not come cheaply, but the cost of failing to act will be much greater. New research shows that if present trends continue, the total cost of global warming will be as high as 3.6 percent of gross domestic product (GDP). Four global warming impacts alone