Scientists describe the scale of the risks from unmanaged climate change as potentially immense. However, the scientific models, because they omit key factors that are hard to capture precisely, appear to substantially underestimate these risks. Many economic models add further gross underassessment of risk because the assumptions built into the economic modeling on growth, damages and risks, come close to assuming directly that the impacts and costs will be modest and close to excluding the possibility of catastrophic outcomes. A new generation of models is needed in all three of climate science, impact and economics with a still stronger focus on lives and livelihoods, including the risks of large-scale migration and conflicts. (JEL C51, Q54, Q58)

Policy problems require the specification of government choice variables, which may be prices or quantities, and the representation of preferences e.g. direct utility or distance functions. The purpose of this note is to provide an appropriate framework for switches between different descriptions of the optimization problem. We first assemble the relevant results on the matrices (Slutsky, Hessian and Antonelli) which arise in the different formulations. We then use the results to show the relationships between various analyses in the literature and finally point out how the results, whilst formally equivalent can lead to different emphases and interpretations (or misinterpretations).

Avinash Dixit, James Mirrlees, Nicholas Stern; Optimum Saving with Economies of Scale12, The Review of Economic Studies, Volume 42, Issue 3, 1 July 1975, Pages

The Future of the IMF and World Bank: Panel Discussion by Stanley Fischer, Allan H. Meltzer, Jeffrey D. Sachs and Nicholas Stern. Published in volume 93, issue 2, pages 45-50 of American Economic Review, May 2003