Sensitivity analysis didn’t help. A practitioner’s critique of the Stern review

The subject of this note is (a) the “Technical Annex to postscript” of the Stern review, which presents a sensitivity analysis (SA) addressing the conclusions of Stern review itself as well as (b) the debate on Science between Nicholas Stern and William Nordhaus. The purpose of the Stern’s Annex is to defend with a SA a cost–benefit analysis (CBA) of climate change risk performed in the Stern review. The present note calls into question the SA performed by Stern. In fact when comparing existing SA practices with the work described in the Annex, it would appear that SA has been used improperly and that – had it been used properly – it would have falsified the analysis itself. The same conclusions apply to Nordhaus’ critique in that both authors pretend to describe the issue on terms of parameters and models which bear no tested relation to reality.