The Stern Review although concerned with the ultimate global topic of climate change is firstly an economic review. That this is the case and moreover that it has prompted such response is strong evidence for the dominance of economics in the world today. Certainly western Governments respond to economics quite differently than to science or technology or environmental issues, indeed they tend to define their role and activities and monitor their progress and success in essentially economic terms.

To date environmental issues, no matter how seemingly calamitous have generally prompted limited and unilateral responses and in this sense the Stern Review whatever might be thought of it, elicited serious governmental consideration across the globe. In part this is down to timing, with the potential response coloured by the global war on terror, the related push for democratisation and the conversions to market economies of hitherto “command” economies like North Korea, former USSR and China. Indeed democracy and market economy are seen as fundamentally related.

In terms of the Stern Review, two elements, risk and cost are the key economic aspects and have enabled the notions that climate change MUST cause action (inaction is not an option) AND that with costs (which can be minimised with the right action) will also come opportunities. This is an important difference of slant compared with the environmentalist’s doom and gloom scenario and acts as both stick and carrot for governments AND business. For governments it also offers rationale and reduced blame for introducing taxes and new legislation e.g. increased air tax or new European emissions legislation for car manufacture.

A key development which Stern promotes and which links economics and climate change is carbon trading (see separate section) .Moreover the business opportunities which climate change offer are clearly illustrated if one looks at the share price performance of e.g. Climate Exchange PLC, one of the new companies dealing with carbon trading.