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Informing an Effective Response to Climate Change
FIGURE 4.1 The impact of climate change on global GDP per capita. SOURCE: Stern (2007).
has a medium (baseline) or high sensitivity to greenhouse gas emissions, (b) whether impacts are only those which can be monetized (market impacts) or whether non-market impacts such as loss of species are included, and (c) whether there is a risk of rapid climate change (risk of catastrophe) or if climate will change slowly. The graph also includes a shaded area that represents the probabilities (or chance) of impacts from a 5 to 95 percent level.
A conservative interpretation of this graph, a decision support tool in itself, might select the baseline climate, where only market impacts and the lower end of the probability of impact such that the loss of gross domestic product (GDP) in 2200 would be less than 5 percent. However, a decision maker who is worried about high climate sensitivity and the chance, however small, of serious impacts, would conclude that the costs could be as high as 35 percent of GDP per capita. The varying interpretations of such graphs and model outputs are one of the sources of disagreement about how to respond to climate change. In addition, when the Stern Review summarized the damages, future damages were not discounted, estimating them at up to 14.5 percent of future consumption. Conversely, those who consider it more rational to discount