Kenneth J Arrow on Climate Change Policy

In this article, Kenneth Arrow conducts sensitivity of Stern's benefit-cost calculation of climate change in response to use of discount rate and argues in favor of policy action to combate climate change. He finds that even with high discount rate of upto 8.5% would result in higher benefit than policy cost of climate action and endorses Stern's claim which call for immediate action to combate climate change. Climate change policy report recently released by UK government and directed by Stern avoids using discount rate to evaluate the economics of climate change for which Stern has attracted a lot of criticisms from economists. Simple but powerful arguments! Article can be downloaded at: http://www.bepress.com/ev/vol4/iss3/art2