Economist Lord Nicholas Stern discusses why traditional economics fail to capture the magnitude of threat presented by climate change, and how the discipline must adapt.

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In 2006 climate economist Nicholas Stern published the Stern Review on the Economics of Climate Change, a report that offered the first systematic examination of the costs of addressing climate change and impacts on the global economy. The report marked a fundamental shift away from climate change being viewed primarily as an issue of science, to also being one of economics.

Fifteen years later Stern looks back on that seminal report to examine how economics, and markets, have failed to grapple with the unprecedented risks posed by a changing climate, and how the profession must change to guide policy toward rapid decarbonization on a global scale. Stern’s recording took place during his visit to the Kleinman Center for Energy Policy on April 19, where he received the center’s Carnot Prize for distinguished contributions to energy policy.

Nicholas Stern is IG Patel Professor of Economics and Government at the London School of Economics, and Chair of the Grantham Research Institute on Climate Change and the Environment. 

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