Sustainable finance in the Stern review
La finance durable du rapport Stern
Résumé
The Stem Review introduces very interesting tools from the theory of finance into the valuation of environmental investments. Stem measures the uncertain impact of climate change on intergenerational welfare as equivalent to an immediate and permanent drop in between 5% and 20% of aggregate consumption. However, a more realistic calibration of the households' attitude towards risk and time suggests that this valuation lies in the neighbourhood of the lower bound of this interval. Notice that this impact can equivalently be expressed as an immediate and permanent drop by 0.1% of the growth rate of aggregate consumption.