First there was the Stern Review. Then came a slew of critiques, which were promptly followed by a defense by Simon Dietz and Stern himself in the same volume of the Review of Environmental Economics and Policy (REEP).
Now on to round four: All four original critics get another stab in the latest edition of REEP. Robert Mendelsohn concludes his section by stating that:
Economic theory and empirical facts teach us that climate policy should follow a moderate course. Mitigation should begin modestly but globally and gradually increase over time.
Not so fast.
The statement about economic theory is true in general: it's cheapest to start slow and ramp up mitigation over time. But it does not yet address the question of how much we should do in the first place.
Here's again where Weitzman comes in. He says that climate change is largely an insurance problem. It's not about a degree or two of warming. It's about potentially catastrophic events.
Treating climate change as an insurance problem prompts us to make deeper cuts now than traditional benefit-cost analysis would imply. So, in the words of Weitzman, Stern was right for the wrong reasons.
