Lomborg-errors: "Cool it!"

The economics: the loss of a sensible dialogue
(including comments on the Stern Report)
 
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  Comments to pages 131 - 138 in Cool it.

GENERAL REMARKS

This chapter deals with the economics of future climate change. There are two main approaches to this issue.
One approach starts from the assertion that we can define a threshold above which climate change becomes really dangerous. It is customary to say, for instance, that if the manmade temperature increase exceeds 2° C, there is a large risk that we pass some "tipping points" where the climate suddenly enters into a new mode, with incalculable and possibly catastrophic consequences. Therefore, the task before us is to find the most cost-effective way to stay below a 2° C rise.
Another approach is to say that this is a question of optimization. We calculate how the damages rise with increasing carbon emissions, and we calculate how the costs of mitigation increase with increasing reductions of these emissions. Where the two curves meet, we have the optimal rate of mitigation. The adherents of this approach say that up to the level of a 2° C rise, the projected net damages from the warming are quite small; therefore they advocate that we have to go on to a greater degree of warming in order to obtain that the damages from global warming become as great at the costs of mitigation. Lomborg, and several prominent global warming economists, adhere to this view. They demand that economic analyses be carried out as an effort to optimize.
It seems that these two views cannot be reconciled, and that a conflict between them will always persist. One will rely on cost-effectiveness analysis, the other on cost-benefit analysis.
Global warming will cause of series of non-market impacts: the suffering of people that are victims to extreme weather, losses of human life, mass migrations due to shifts of climatic zones, eradication of some ecosystems and species, and loss of cultural heritage sites. In the cost-effectiveness approach, such impacts are considered by setting a limit above which the impacts become larger than we can accept.  In the cost-benefit approach, on the other hand,  such impacts can only be considered by attaching a monetary value to them. For instance, it becomes necessary to put a price on human lives and on endangered species. This opens vast possibililties for manipulation of the damage costs. It is a problem that many possible future damages are omitted from the calculations of costs. For instance, a study may calculate the effect of changes in average precipitation, but not the costs of more variable precipitation where droughts alternate with floods. The most serious flaw is that typically the value of a human life is set ten or even a hundred times higher for lives in a rich country than for lives in a poor country. As the damages will probably mostly hit poor countries, this makes the total cost of damages much smaller than if all lives were given the same price. This in turn may mean that in a cost-benefit analysis, large losses of human lives in poor countries will be accepted before the costs have become so large that mitigation will pay off. Such problematic procedures might give strong ethical arguments in the hands of those who reject cost-benefit analysis, but Lomborg is unaffected by these. In his presentation, everyone who does not accept his version of cost-benefit analysis is denounced.
   George Monbiot´s book "Heat" from 2006 is probably one of the best books on global warming ever written. It has a cost-effectiveness approach. Its point of departure is an overview of the many calamities that arise if manmade global warming exceeds 2° C. It calculates the amount of CO2 that may maximally be emitted by each citizen of the world under the assumption that all citizens would be allowed the same amount.  The result is that people in rich countries must reduce their present emissions by about 90  percent.  This will be very difficult, but Monbiot uses most of his book to show, sector for sector, how this may be done without destroying our standard of living. The only sector where a 90% cut is impossible, is the sector of aviation. On a trip by air from London to New York and back, every passenger produces roughly 1.2 tonnes of CO2, which is the same quantity we will each be allowed to emit in a whole year once a 90 percent cut in emissions has been made. A 90 percent cut in emissions from aviation is only possible by reducing the number of flights by 90%. At this point, a reduction in standard of living is inevitable. In nearly all other sectors, the very concrete and detailed information in Monbiot´s book shows how the reductions are possible, provided that we accept certain controversial methods such as underground carbon storage. Monbiot does not try to evade any difficult questions by being overly pessimistic or optimistic or by neglecting them. He attacks every problem head-on, discussing prices, future technological progress etc.
    Monbiot directly criticises Lomborg. With relevant arguments, he criticises the idea behind the Copenhagen Consensus concept, and he criticises the estimates of global climate damages advanced by Lomborg. Maybe for this reason, Lomborg does everything he can to denounce Monbiot´s book. He uses two pages to do this, painting a picture of Monbiot´s book that is simply a vicious lie, and deliberately using subtle psychological tricks to give the book a bad reputaiton and deprive the audience of any motivation to ever see Monbiots book - thus preventing his lies about the book to be revealed (this is especially so in the British version of Cool it!). As an antidote against this, I will strongly recommend everybody to get a copy of Monbiot´s book and read it.
    Next, Lomborg attacks the Stern Review on the Economics of Climate Change, which was produced on behalf of the British Government and published in October 2006. The Stern Review does not really make a cost-benefit analysis of climate change. The analysis is more like a cost-effectiveness study which, like Monbiot´s book, takes as a point of departure that manmade warming must not exceed 2° C. It deviates from Monbiot´s approach in that it attempts to put money values on non-market impacts - that was part of the commission formulated by the government that it should do so. It includes many damages that are rarely included by other studies, and so its estimates of the total damages incurred by global warming are unusually large, whereas the estimates of mitigation costs are moderate. An important feature is that the Stern Review applies a relatively low rate of discount; this is explained in detail on the Lomborg-errors page on discount rates. The low discount rate causes the estimate of damage costs to be large. This is neither right nor wrong - the choice of discount rate can only be subjective, and within reasonable limits, there are no wrong choices. Altogether, the Stern Review makes a strong case that mitigation is cheaper than letting global warming happen. This is directly contrary to what Lomborg claims, and his criticism of the Stern Review is, as you might anticipate, quite harsh. It is true that the Stern Review has a number of flaws, but it has also many virtues and should not be discarded, as Lomborg wants us to.
    It is ironic that the title of this chapter says "The loss of a sensible dialogue". Nobody does as much to spoil the dialogue as Lomborg - by distorting and misrepresenting the contents of others´ books, insisting that the precise version of cost-benefit analysis that he advances is the only acceptable approach, and denouncing everybody that does not agree with him. Monbiot´s book, on the other hand, shows in a very concrete way what problems we are facing and may make a very good point of departure for discussing and implementing climate mitigation. Stern´s review has led to intensive discussions in the scientific literature and has served to reveal where there are severe flaws in the econonomists´ handling of issues that stretch over very long time periods, thus hopefully paving the way for better approaches in the future (see especially the following issues of World Economics:  2006:  7(2) and 7(4). 2007:  8(1) and 8(2) ).


Flaws on particular pages in Lomborgs text:

(COMMENT)
Page 132:  ". . (IPCC) report at up to 3 percent of GDP by 2030 . . . "  Comment: The source says between 0.2% and 3%.

FLAW
Page 132:  ". . . several commentators said this amount - more than $ 1.5 trillion annually . . - was `negligible´. "  Flaw: No, that is not in full accordance with Lomborg´s source. The source said that GDP growth will be slowed by up to 0.12% a year by 2030, and this is what is called `negligible´.

MONBIOT´S "HEAT"

(COMMENT)
Page 132-133:  ". . a book on how every facet of global warming is calamitous . . . "  Comment: Although this presentation of the book is not directly wrong, it gives a false impression of the book. The book is not "on how every facet is calamitous . . "; it represents an overview over those calamities that may appear, in order to motivate the limit of 2° C warming. The `calamities´ are essentially presented in good accordance with scientific evidence. Rather few pages of the book are reserved for this, after which the mainpart of the book is on how we may reach the target. The correct quote from the book is ". . . unrestrained climate change threatens the conditions which make human life possible . . "

FLAW
Page 133 top: "Climate change will simply destroy the conditions that make human life possible. "  Flaw: The correct quote from the book is ". . . unrestrained climate change threatens the conditions which make human life possible . . ". Lomborg has left out the word `unrestrained´ and exchanged `threatens´ with a much more drastic wording.

(COMMENT)
Page 133 top:  "He concludes that climate change is the project we must put before all others."  Comment: The quote is correct. What Monbiot says is essentially that any exceeding of the 2° C limit is unacceptable, and must be avoided at any means. This leads logically to a cost-effectiveness analysis: what means are the cheapest, given the target? As stated above, it seems to provoque Lomborg when someone wants a cost-effectiveness analysis rather than a cost-benefit analysis.

ERROR
Page 192 top: " . . . cutting OECD member emissions by 96 percent come 2030. . . " Error: This is directly wrong. Monbiot does not estimate this. Throughout his book, Monbiot talks about that the rich countries will have to reduce their CO2 emissions by about 90 percent by the year 2030. The United Kingdom, for example, would need to reduce its emissions by 87 percent. The average energy-related emission per OECD citizen was in 2002 3.2 tC (11.7 t CO2) , according to the World Resources Institute (WRI), and according to Lomborg´s source, IEA, the energy-related emission per OECD citizen was in 2004 3.0 tC (11.0 t CO2). The allowance per citizen would be 0.33 tC in 2030, i.e. the average cut for all OECD citizens would be about 89 %. So Monbiot´s calculation is correct. Lomborg´s calculation, on the other hand, is clearly erroneous. He  postulates that today OECD emits 7.1 GtC , but checking his source for this figure reveals that this applies to the emissions from the whole planet, of which emissions from OECD make out only about half.
Furthermore, Lomborg chooses to calculate the reduction in percent of hypothetical future emssions in a business-as-usual scenario, whereas Monbiot´s figure is explicitly a reduction relative to today´s emissions. On this flawed basis Lomborg frankly claims that Monbiot has got the figures wrong, and that when Monbiot says he wants a cut of 90 percent, he actually means 96 percent. And in his main text on page 133, Lomborg even conceals that he has changed Monbiot´s figure and directly postulates that Monbiot´s own estimates are 96 %. A cut of 96 % is much more than a cut of 90 %, and would be extremely difficult, if not impossible. To postulate that Monbiot argues for a 96% cut is to denounce him on the basis of something he did not say. What we see here, is a vicious deliberate lie about Monbiot in order to denounce him.

FLAW
Page 133 top: ". . . essentially shutting down our current fossil fuel driven economy. "  Flaw: This is a misleading dramatization. Carbon storage, increased energy efficiency, and replacement of fossil fuels with renewables, is not shutting down the economy. Lomborg does not bring any evidence that our current economy is driven by fossil fuels and would collapse without these.

ERROR
Page 133 top: "He is vague on the total costs . . . " Error: This is a lie. He is not vague on total costs. But he criticises Lomborg rightly for presenting amounts with an absurd degree of precision, with up to five significant digits, when even the sign of the amount (positive or negative) is uncertain. He mentions the extreme upper end and lower end of the estimates, and says "In between these extremes, you can take your pick", and goes on to cite for instance an estimate advanced by the European Commission, which estimates the cost for stabilisation at 550 ppm to be somewhere between $1 and $8 trillion. If it is to be `vague´ to present a range of uncertainty like this, then it is a virtue to be `vague´, rather than adhering to the absurd and preposterous degree of precision in which Lomborg excels.

ERROR
Page 133 top: " . . . but assures us that they won´t lead to an economic collapse." Error: This is an erroneous quote from the book. Monbiot (p. 52) tells about increases in the price of natural gas in UK that happened recently, and his text continues with: "The new gas prices have caused some pain, but they have not led to economic collapse."

FLAW

Page 133: ". . . whether the benefits . . . outweigh the costs . . The economists tell us absolutely not. "  Flaw: The phrase `the economists´ is too general; for instance, Nick Stern, who is an economist, tells us otherwise.  The mainstream opinion - e.g. in the IPCC reports - is that the amounts can hardly be estimated with confidence, so there is not the degree of certainty indicated by the word `absolutely´ .

ERROR
Page 133: " Monbiot says that he will not participate in such a dialogue." Error: Monbiot says the opposite. To cite from his page 51: "This does not relieve me, however, of the need to work out how much the proposals in this book might cost."

FLAW
Note to page 133: "He also says that he could find lots of other arguments against me, but unfortunately he chose not to produce them. "  Flaw: What Monbiot actually says is that he could seek to counter Lomborg´s case, as many economists have done. But he will not use money as the value parameter, because that is amoral. Still, Monbiot does discuss the economical aspects, especially on his page 52. "I could claim that my proposals would cost a total of $10 trillion, or 20 or 30, or I could create the impression that I knew exactly what was going to happen, by telling you that they will cost $14.739 trillion. But . . because the assumptions range so widely as to render each other almost meaningless, any single figure I offered would be an arbitrary one." In this piece of text he does actually find arguments against Lomborg - and these arguments are very relevant and to the point. He expresses exactly one of the main flaws in Lomborg´s whole presentation. But Lomborg cannot or will not see the justified criticism. The figure $14.739 is an ironic criticism of Lomborg, but he probably does not grasp that.

FLAW
Page 133 bottom: "This is a weak argument "  Flaw: No, that is a strong argument. Ask the man on the street if it is OK to calculate the monetary value of climate damages by attaching a monetary value to human lives, and different values to lives in different parts of the world. I guess that more than 50 percent of the people in the street would answer that that is not OK.

FLAW
Page 133 bottom: "The argument of Monbiot . . . is exactly one long discourse trying to capture the value of everything . . ."  Flaw: No, it is not. It seems that Lomborg has only read small parts of the book.

ERROR
Page 133 bottom: " He tells us that we should throw our weight behind a generational challenge of cutting carbon emissions 96 percent in twenty-three years." Error: No, he does not. He talks about 90%, not 96%.

FLAW
Page 133-134: "But that weight, that effort . . . can then not be used in dealing with the world´s many other challenges, such as HIV . . . "  Flaw: Lomborg is not right here. If we define a carbon allowance per world citizen, like Monbiot describes, and if poor people in the Third World do not fully exploit their allowances, then they will be able to sell their allowances to rich people, whereby money will be transferred to the Third World.

FLAW
Page 134: " . . . it is crucial that we maintain our objectivity, and the economic approach helps us to do so. "  Flaw: This is not true, or not fully true. Economic estimates of the type presented by Lomborg are not objective.

(COMMENT)
Page 134: ". . . even a complete halt to flying, at great cost, would do very little good for an Ethiopian."  Comment: Lomborg uses this kind of argument very often: He picks out one item in the whole budget and tells us how little that item contributes. Actually, if aviation is going to make out 5% of the global climate impact, this is a very, very large figure. And it must of course be seen in a greater context of mitigation measures.

(COMMENT)
Page 134 bottom: ". . . you have spent too much time with your calculator and not enough with human beings . . ."  Comment: Lomborg quotes this a bit out of context. Monbiot talks about the estimate of climate damages all over the world, citing Lomborg´s preferred figure, and says: "Could such costs . . . really be deemed to amount to $4,820 trillion, give or take the odd dollar? If you believe the answer is yes, than I charge that you have spent too much time with your calculator and not enough with human beings ." And he continues about valuing human lives: "Their figures were not just wrong; they were meaningless."

FLAW
Page 135 top: " . . . each time Monbiot helps one . . . "  Flaw: If Monbiot had suggested a halt to flying, and nothing else, in order to help people in Ethiopia, then Lomborg´s argumentation would have been valid. But Monbiot suggests a 90% cut in carbon emissions from all sectors of society in the rich world, thereby securing a tempearture rise of maximally 2° C. That might possibly secure millions of Ethiopians.

FLAW
Page 194 bottom: "  . . . but the reductions suggested have been modest."  Flaw: The quote is misleading. It refers to page 298 of the Stern Review, where the text reads: "In some cases  . . . these studies recommend that greenhouse gas emissions be reduced . . . but the reductions suggested have been modest. . . . However, the optimal amount of mitigation may in fact be greater than these studies have suggested." The text then goes on to explain that modest reductions result from the assumption that there will be no greater shift in the economic or technological systems, whereas assumptions of major shifts, e.g. shifts based more on renewable energy sources, may lead to much larger reductions being economically optimal.


THE STERN REVIEW


(COMMENT)

Page 135:  ". . summed up rather nicely by the New York Times .  . . "  Comment: Lomborg quotes from an article in the New York Times printed the same day as the Stern Report was published. The article tries to highlight and exaggerate the most sensational parts of the message, as newspaper articles usually do. The authors of the Stern Report can of course not have any responsibility for what newspapers write. For instance, the Stern Report says that more people may become exposed to malaria, but does not speak of skyrocketing malaria rates. So Lomborg´s term, "summed up rather nicely", is misleading. The same goes for the following passage on the announcement of a British television programme. Actually, the Stern Report does not say that the poor will get even poorer.

FLAW
Page 136 top: "  Virtually everyone has come away with. . . that the benefit . . . is 20 percent  . . ."  Flaw: Lomborg postulates that virtually everyone has forgotten the smaller figure of 5% and focuses on the higher figure of 20%. This is not true. Those commenting on the report have most often stressed that the figure of 20 % is at the upper range of the estimate and do not forget to cite the figure of 5%.

ERROR OF BIAS
Page 136: " . . a raft of academic papers . . . all strongly criticizing Stern. . . ". Error: Lomborg presents in his note a long list of papers that allegedly strongly criticize Stern. Nearly all these papers have been written extremely rapidly after the publication of the Stern Review on October 30th 2006; many of the papers are from the October-December 2006 issue of World Economics, and we know that some contributions were written within hours, not days, of publication of the Stern Review. So the remarks in these papers are not the result of thorough evaluation of the details of the Stern Review, but rather opinions that existed in advance. The paper by Carter at al. is coauthored by Richard Lindzen who is known to receive payments from oil companies, and this paper postulates that the temperature rise observed could by due to natural variability rather than human activity. So it criticises the Stern Review for making statements that agree with the IPCC reports. The paper uses words like "deeply flawed" and "neither balanced nor credible", which actually fit better to their own paper than to the Stern Review. Others of the quick-launch papers cited by Lomborg are less flawed. The paper by Tol & Yohe uses the term "substandard analysis" on their page 233 about an issue where they have later admitted that they were wrong in their criticism; and the paper by Tol & Yohe says in the introduction about the Stern Revies that "Naturally, we agree with some of its conclusions, including the fundamental insight that there is an economic case for climate policy now, and that the cost of any climate policy increases with delay . . " (why did Lomborg not cite that passage?). And the paper by Weitzman, referred to by Lomborg in his list of critical papers, but strangely missing from his literature list, is even more positive to the Stern Review; it says: "Anyone wanting to get a good feel for the basic issues of global climate change could profitably browse thorugh this report, which covers well its multiple facets in a reader-friendly format. The Reveiw contains much of value and interest aside from its cost-benefit analysis of mitigation policies, although that is naturally the part which most grabs the attention of economists."
To this may be added some endorsements that Lomborg completely disregards. Four Nobel Laureates in economics have endorsed the Review with words like this:
"calm, reasonable, carefully argued approach" (Robert Solow)
"The world would be foolish to neglect this . . " (Amartya Sen)
"the most thorough and rigorous analysis to date" (Joseph Stiglitz)
"It deserves the widest circulation" (James Mirrlees).
Source for these quotes: this link, box 1.1.
When Lomborg writes "all strongly criticizing . . ", this is definitely wrong.

FLAW
Page 136: " 1. The review´s presentation of the science is massively exaggerated toward scary scenarios. . . " Flaw:  The whole discussion of issue 1 is based on the paper by Carter et al. (2006). For a balanced presentation, Lomborg should have referred to the arguments from both sides, that is he should have included the later replies to Carter et al., especially Anderson (2007), World economics 8(1): 211-219, and Mitchell et al. (2007): World economics 8(1): 221-228. (See also later debate in issue 8(2) of the same journal). Carter et al. (2006) is in itself an extremely biased paper, which does not accept that there is any certainty about a manmade global warming, and maintains that one should also be aware of possible global cooling. So when the Stern Review for instance describes the danger that the inland ice on Greenland could start melting, this is called an "alarmist" view, although more and more evidence points in the direction that such a net melting of the Greenland ice is already underway. Carter et al. also argue that the atmosphere could be much less sensitive to a rise in CO2 than supposed by Stern because of negative feedback from the socalled iris effect. The iris effect was invented by Richard Lindzen, one of the coauthors of the Carter et al. paper, who is known to be supported generously by the oil industries. Nearly all other scientists reject the relevance of the iris effect; on this and many other issues, the Stern Review is much closer to the mainstream opinions than are Carter et al. All in all, the Stern Review is certainly not more extremist than Carter et al.
That said, it must be admitted that the Stern Review is somewhat biased towards scary scenarios. There is partially a good reason for this - we have to make some sort of insurance against the worst possible outcome, just as one may install a burglar alarm even though one believes that the chance of burglary is small. The Stern Review´s presentation on the risk for increased exposition in Africa to malaria is an example of bias towards bad outcomes. The critics rightfully point out that malaria may be combated if only society is wealthy enough, that it is functionally eliminated once annual per capita income surpasses c. $3,000, and that even the poorest African countries are expected to climb above that level during this century. The Stern coworkers reply to this that they speak only of an increased exposition to malaria, not an increased incidence of malaria. At this point, one may cite the statement that Africa has "an unforgiving climate which encourages a disporportionate level of diseases like malaria and measles" and that "the earlier gains that were made against malaria . .  have been lost" (Sharma, World Economics 8(1): 252). An increased exposition will, other things being equal, hamper economic growth and thus hamper just what is necessary to combat the disease. These obstacles are likely to be overcome, but it might be right to point out that increased exposition to malaria may slow economic growth. Is it alarmist to point this out?

(COMMENT)
Page 136 bottom: " 2. The damages from climate change (and the benefits of action) are vastly inflated. " Comment: It is true that in the Stern Review, the damages from climate change are set at much higher levels than in most other studies. There are several reasons for this, some of which may be justified, and others maybe not. Stern computes something called "balanced growth equivalents", and these produce an overall figure for economic loss due to climate impacts, with the strange property that the overall loss, in percent of world GDP,  is larger than the loss anywhere along the studied time course.  This is because  it includes  a "present value" of losses which will  be incurred in the very distant future, e.g. around the year 2800. This is criticised in detail by Nordhaus (2007): Journal of economic literature 45(3): 686-702, and this part of the criticism is probably justified.

(COMMENT)
Page 136 bottom: ". .  the Stern Review does not present new data, or even a new model". Comment: No, because that was not the aim. It is called "review" because it reviews already existing data.  <

(COMMENT)
Page 136 bottom: "How can it then find conclusions that are completely outside the standard range?" Comment: It can so because it differs from standard analyses in that it includes the effect of variability around the mean outcome, for instance the risk for catastrophes. This is legitimate and relevant, because the largest economic impacts may be from unusual events (e.g. large floodings due to extraordinary rain storms) rather than average situations (an increase in average precipitation). In addition it includes non-market impacts (e.g. species extinctions), which most analyses do not.

FLAW
Page 136-137: " It turns out that the Review has counted damages several times. . . ."  Flaw: This criticism was raised by Tol & Yohe (2006, p. 238), who claimed that risk is counted twice. However, this was refuted be the Stern team, and in the end, Tol & Yohe admitted that this criticism was probably not justified, saying: "It seems, therefore, that the Stern Review did not double-count catastrophic risk; . . " (Tol & Yohe (2007), World Economics 8(2) p. 157).

(COMMENT)
Page 137 top: " . . . the review changed a key parameter in all cost-benefit analyses to a value that gives huge damage."  Comment: Lomborg does not explain to his reader that this `key parameter´ is the discount rate. The value chosen for  the discount rate is crucial to what results come out of calculations and model runs.  There is some misunderstanding that Stern has set the discount rate at the extremely low level of 0.1 %, which gives an enormous weight to damages in the distant future. Actually Stern´s discount rate includes two parts, and the overall rate is about 1.4 % (see the Lomborg-errors page on discount rates). Even this rate is somewhat low, but nearly the same as the rate used e.g. by W. Cline in his paper to the Copenhagen Consensus. As explained in the page on discount rates, there is not one true rate - the choice of rate is subjective, and it may be relevant to have different rates for different assets. Lomborg´s phrase "decided to change a key parameter" is slightly misleading, because the word "change" falsely suggests that there exists an original, "true" value.

(COMMENT)
Page 137 top: "Oddly, it forgets to use this parameter for the costs below . . ."  Comment: This is not quite true, but it is not very clear how the Stern team has treated the discounting of mitigation costs. There is a sort of explanation on page 150 in Dietz et al. (2007): World economics 8(1): 121-168, where they state that their estimate is not materially affected by the choice of discounting assumptions, and they state that there "is no inconsistency in comparing costs over the next 100 years with impacts occurring in the more distant future." The treatment of the data is similar to the treatment in the fourth assesment report of IPCC, and any criticism applies therefore not only to Stern, but also to the customary approach among most scientists. Still, the approach in the Stern Review is somewhat confusing and not easily understandable.

FLAW

Page 137 top: ". . . it would suggest that we should today save 97.5 percent of our GDP for future generations."  Flaw: Although it is correct that professor of economics Partha Dasgupta has raised this criticism, the criticism is not justified. As explained by  Brad DeLong, Dasgupta makes a mistake - which, in DeLong´s words, is "a rare, rare event". The mistake is that Dasgupta forgets that growth could come not only from saving, but also from technological advance, as explained in the link. One may also formulate the mistake in a different way: Dasgupta sets the social rate of return on investments equal to the social discount rate, which it needs not be.

(COMMENT)
Page 137: ". . . nuclear power."  Comment: There is no obvious reason to believe that appraisal optimism regarding nuclear power also applies to renewables.

ERROR
Page 137: " It implausibly expects renewable costs to drop six-fold by 2050" Error: The Stern Review does not expect that. Box 9.3 of the review estimates that the costs of some renewable energy sources may drop to one half or one third, but not less than that. Lomborg´s source, Mendelsohn, said that a critical linchpin of the Stern Report is that technical change will drive down the cost of abatement six-fold by 2050. What is understood by `technical change´? First of all increased energy efficiency in the use of fossil fuels, and furthermore a large amount of carbon storage. The Stern Review cites an IEA study which demonstrates that the world by 2020 may save money by implementing technologies that reduce carbon emissions by 6 Mt C. That is, the scope for cutting emissions and at the same time save money is very large (which Lomborg stubbornly denies).  Such money-saving technologies are a large part of the explanation why technological change may drive down the cost of abatement.

FLAW
Page 137: " This means that the difference between the peer-reviewed literature and the non-peer-reviewed Stern report is massive. . ."  Flaw: Lomborg´s source for this is especially Tol&Yohe (2006). He should have been mentioned that the criticism from Tol&Yohe has been countered by Andersen (2007): World Economics 8(1): 211-219.
There are two parts of the criticism. The first is that in the Stern Review, the damages are larger than elsewhere. There are several clear resons for this. First, the Stern Review includes more damages than most other studies. It includes not only damages due to average scenarios, but also the risk for plausible but less likely catastrophic scenarios, and it includes non-market impacts (e.g. species extinctions). Second, the main reason for the discrepancy from most other studies is that the Stern Review applies a relatively low discount rate. The choice of discount rate is subjective, and within reasonable bounds, one rate is not more correct or incorrect than the other. Therefore, the damage estimates in the Stern Review are not "wrong" or "faulty", they are just the result of a different, but equally valid, approach.
The second part of the criticism is that in the Stern Review, the costs of mitigation are lower than elsewhere. However, Anderson states in his rebuttal (see above) that this is not true. Actually, the Stern Review´s Figure 10.1 on page 242 presents a lot of estimates from the literature, and for the same degree of emissions reduction as in the Stern Review, the estimates range from minus 4% to plus 7% of global GDP. Weeding out estimates based on controversial assumptions, the estimate range narrows to minus 2% to plus 4%, which agrees very well with the analysis of the Stern Review itself. So there is no flaw or bias here.
It is of course important to study what makes the various estimates differ so greatly. This is discussed in Chapters 9 and 10 in the Stern Review. For instance, Table 9.3 is illustrative. It tells that the most pessimistic and most optimistic scenarios ragerding technological development differ by 4.3 percentage points of GDP - a vast difference. Most studies that yield high costs are studies that assume that we simply have to cut some activities in order to reduce the use of fossil fuels, disregarding the possibility that we could switch to renewable energy sources and continue with these activities. Another important point is the future price level of fossil fuels. If one assumes high prices for oil and coal, then it will not be expensive to switch to renewable energy sources - it may even mean that we save money. If, on the other hand, one assumes low prices for oil and coal, then it will be much more expensive to use renewables instead of fossil fuels. Many studies have been rather optimistic regarding oil and coal prices, considering the increases in price that have already taken place since the studies were made. A fourth item is whether one may or may not include recycling of the revenue from a carbon tax - see the text on double dividend for page 308 left here on Lomborg-errors.
In summary, there are no clear flaws in the Stern Review´s presentation of damages and mitigation costs. On the contrary, mitigation costs are treated in much more detail and much more authoritatively than in Lomborg´s books. The criticism of the Stern Review on this central point is therefore not justified, and at least Lomborg should have referred to the rebuttal by Anderson.

(COMMENT)
Page 138 top: " Nature tells us that the UK government has tried to recruit other researchers to make this study . . . " Comment: The director of the British center for climate change research says to Nature that he declined to take the task upon him, because he does not feel it´s a question that researchers can answer - for instance he would not be able to estimate the economic cost of species extinctions. But he adds that Stern´s team seems to have done a good job (accidentally, Lomborg fails to cite this last remark).

FLAW
Page 138 top: "  . . . presumably angling for the same politically convenient outcome."  Flaw: The Nature article does not say that. Instead, it cites one of Stern´s coworkers who says that the involvement of civil servants does not justify the "dangerous and incorrect"  allegation that the report is politicized: "There was never any political pressure to produce high numbers."

FLAW
Page 197 and note 1012: "  . . . the fact that all peer-reviewed economic analyses show we should only reduce CO2 emissions moderately."  Flaw: This is not true. A rebuttal of this statement is found in Anderson (2007): World Economics 8(1): 211-219. The Stern Review presents in its Figure 10.1. a wide range of cost estimates from peer-reviewed literature, and these span the same range as the cost estimates of Stern´s own analysis. Lomborg´s statement is a quote from page 298 of the Stern Review, where the text reads: "In some cases  . . . these studies recommend that greenhouse gas emissions be reduced . . . but the reductions suggested have been modest. . . . However, the optimal amount of mitigation may in fact be greater than these studies have suggested." The text then goes on to explain that modest reductions result from the assumption that there will be no greater shift in the economic or technological systems, whereas assumptions of major shifts, e.g. shifts based more on renewable energy sources, may lead to much larger reductions being economically optimal.