Did the Stern Review underestimate U.S. and global climate damages?

The authors argue that the Stern Review's estimates of climate damages in 2100—0.4% of GDP for the US and 2.2% for the world—were too conservative. By removing assumptions of nearly costless adaptation, lowering the temperature threshold for catastrophes, and increasing the damage function exponent, the authors' revised PAGE2002 model suggests damages could reach 2.6% of GDP for the US and 10.8% for the world by 2100 (at the 83rd percentile). They further note that sector-specific calculations for the US suggest even higher economic losses than the aggregate PAGE2002 model provides.

• The authors conclude that the Stern Review's damage estimates for 2100 were likely too low, specifically citing mean business-as-usual damages of 0.4 percent of GDP for the United States and 2.2 percent of GDP for the world.
• The Stern Review's use of PAGE2002 assumed an extremely high level of costless adaptation in high-income countries, eliminating 100 percent of economic damages for the first 2 degrees of warming and 90 percent for warming above 2 degrees.
• The authors argue that the Stern Review's parameters for climate catastrophes were too conservative, specifically the threshold temperature (most likely 5°C) and the rate at which catastrophe probability increases.
• The authors revised the PAGE2002 damage function exponent to weight higher damages more heavily, moving the 'most likely' value from 1.3 to 2.25.
• By applying a 'no adaptation' scenario, increasing catastrophe risk, and adjusting the damage exponent, the authors' 83rd percentile estimates for 2100 damages rise to 2.6 percent of GDP for the United States and 10.8 percent for the world.
• A separate sector-by-sector analysis of the US economy (covering hurricanes, residential real estate, energy, and water supply) projected annual damages of 1.8 percent of GDP by 2100, which is three times higher than the comparable aggregate economic damages in the PAGE2002 model.
• Despite the increased relative impact on OECD countries in the revised model, the authors find that damages remain more than twice as large relative to GDP in developing nations.

APA

Ackerman, F., Stanton, E. A., Hope, C., & Alberth, S. (2008). Did the Stern Review underestimate U.S. and global climate damages? Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/stern-review-us-global-climate-damages.pdf

Chicago

Ackerman, Frank, Elizabeth A. Stanton, Chris Hope, and Stephane Alberth. Did the Stern Review underestimate U.S. and global climate damages? Stockholm Environment Institute, 2008. https://www.sei.org/mediamanager/documents/Publications/Climate/stern-review-us-global-climate-damages.pdf.

Wikipedia

{{cite report |last1=Ackerman |first1=Frank |last2=Stanton |first2=Elizabeth A. |last3=Hope |first3=Chris |last4=Alberth |first4=Stephane |title=Did the Stern Review underestimate U.S. and global climate damages? |publisher=Stockholm Environment Institute |date=October 2008 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/stern-review-us-global-climate-damages.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ackerman2008did, author = {Ackerman, Frank and Stanton, Elizabeth A. and Hope, Chris and Alberth, Stephane}, title = {{Did the Stern Review underestimate U.S. and global climate damages?}}, institution = {Stockholm Environment Institute}, year = {2008}, month = oct, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/stern-review-us-global-climate-damages.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }