It is fitting that Nicholas Stern, a British civil servant and former chief economist at the World Bank, should have presented his report on the economics of climate change at the Royal Society in London. For it was in a speech to the Royal Society 18 years ago, that Margaret Thatcher, then Britain's prime minister, became the first world leader to call for serious attention to be paid to the possibility of global warming.

That famous speech, although addressing science, was at heart political; so, in many ways, is Stern's review. It articulates a consensus on the need for action that Britain, thanks in part to Thatcher's remarks, has had longer to develop than many other nations. Its political nature should not, however, be seen as a flaw. Climate change is a matter of political choices, and the discussions that surround it must be political. Stern's review is an important contribution to that discussion (see pages 6–7).

Stern's review, which was commissioned by Gordon Brown, currently Britain's chancellor of the exchequer and in all likelihood its next prime minister, is almost as striking in its assumptions as in its conclusions. It insists, contrary to some utopian activists, that adverse consequences of climate change are unavoidable. In its choice of targets and assumptions, it tacitly supports the idea that the most feasible goal is one of stabilizing the level of greenhouse gas at roughly twice the pre-industrial carbon dioxide level. Following through on the logic of this, Stern's review has almost as much to say about the economics of adapting to climate change as about the economics of mitigating it.

The investment needed to control climate change is small compared with the costs of allowing it to continue unabated.

On mitigation, Stern concludes that the investment needed to control climate change is small compared with the costs of allowing it to continue unabated. The estimates of those costs are stated with more confidence than they would be in the scientific literature, and the review should not be taken as the last word on this. But the robust message is that the costs of mitigation, although vast, are manageable if efficient policies to put a price on carbon emissions are spread around the globe. The European emissions trading scheme might provide a nucleus for such pricing, although there are other possibilities.

The review also stresses the value of subsidies to help clean technologies establish themselves in the marketplace, and the importance of doubling research spending on energy issues. On both matters, its content should be noted by the people of California, who next week vote on Proposition 87, an initiative to establish a fund of $4 billion (£2.1 billion) to spend on such support and research. A pre-allocated fund is not the ideal way to approach these issues, but it is the one on offer. Establishing it should help the development of clean technologies in California, and allow the state's citizens to declare their desire to move away from fossil-fuel dependency. It would therefore be a good proposition to pass.