The report -- commissioned by Chancellor Gordon Brown -- predicts that rising global temperatures will cause costly floods and famines, as well as widespread destruction of plant and animal species and mass movement of people.
Stern's report indicates that 200 million people around the world could be permanently displaced by a 5.4 degree Fahrenheit rise in temperature from pre-industrial levels. Melting ice sheets would raise sea levels, affecting the homes of one in every 20 people, while 15 to 40 percent of species would face extinction, the report found.
The report -- considered the most comprehensive economic study of climate change to date -- argues that taking swift global action to reduce carbon emissions would cost 1 percent of global GDP per year. Conversely, waiting until the effects of global warming set in will cost 5 to 20 percent of GDP every year, Stern found.
The second half of Stern's report focused on the need for international agreements to reduce carbon emissions. Though Britain is leading the international fight against global warming, it contributes just 2 percent of global emissions. Stern emphasizes the need for large countries -- including India, China and the United States -- to agree to an international treaty to reduce emissions.
Stern recommends the creation of a global carbon-trading market, in which countries would set low emissions targets for themselves, and those nations that fail to meet their targets could buy credits from countries that meet or exceed their emissions goals. A carbon-trading market would force high-pollution countries to pay for their excess emissions, which would drive demand for low-carbon emissions technology.
Stern also recommends significantly increasing research funds for developing low-emissions technologies, as well as donating more resources to poor countries to help them compete in the carbon trading economy, which Stern believes will be worth $70 billion by 2010.
Chancellor Brown said he will accept Stern's recommendations on a global carbon-trading scheme, and will also take advice from former U.S. vice president Al Gore on environmental policy.
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