Stern Review on the Economics of Climate Change, Part II

Economic catastrophe if we don’t take action over global warming? Yes, according to the Guardian, reporting on the contents of the soon-to-be-released Stern Review.

Climate change could tilt the world's economy into the worst global recession in recent history, a report will warn next week.

Sir Nicholas Stern, a former chief economist with the World Bank, will warn that governments need to tackle the problem head-on by cutting emissions or face economic ruin. The findings, due to be released on Monday, will turn economic argument about global warming on its head by insisting that fighting global warming will save industrial nations money.

Seemed fairly obvious to me, if not the denialists. Internalizing external environmental costs often swings the balance in cost/benefit analyses and, hence, industry is not keen on the whole idea – less profit, you see. Stern is predicting the dreaded R-word; recession:

But Sir David King, the government's chief scientific adviser, yesterday gave the Guardian a preview of its main findings.

Speaking at a climate change conference in Birmingham, he said: "All of [Stern's] detailed modeling out to the year 2100 is going to indicate first of all that if we don't take global action we are going to see a massive downturn in global economies." He added: "If no action is taken we will be faced with the kind of downturn that has not been seen since the great depression and the two world wars." Sir David called the review "the most detailed economic analysis that I think has yet been conducted".

The review will highlight the threat of sea level rise. Sir David said: "If you look at sea level rises alone and the impact that will have on global economies where cities are becoming inundated by flooding ... this will cause the displacement of ... hundreds of millions of people."

Importantly, the economic costs of acting appear less than many (Bush, I’m looking at you) had feared.

Sir Nicholas will argue that tackling the problem may not prove as economically painful as some experts predict. Investment in low-carbon technologies could stimulate the global economy. Sir David said: "[Stern's] analysis, I think, will also surprise many people in terms of the relatively small cost of action."

The International Energy Agency predicts that $15 trillion (£8 trillion) of investment in new energy sources will be required over the next 15 years. "The massive investment programme that's ahead of us is an opportunity for us to move towards a zero carbon energy system. The investment process is going to act quite possibly in the opposite direction to an economic downturn," Sir David said.

What is the problem then? Well, it’s the rather difficult task of getting all countries to act together. Political consensus is required and since the bad bits are many election cycles away, what’s the motivation? Politicians don’t really deal in short-term spending for long-term gain.

He told the Rapid Climate Change conference, organised by the Natural Environment Research Council in Birmingham, that achieving global political consensus would be extremely difficult. "In my view this is the biggest challenge our global political system has ever been faced with. We've never been faced with a decision where collective decision making is required by all major countries." The timescale too is unprecedented. "Actions being asked of the political system today are only going to play through into mid-century and beyond. So for the first time we are asking a global political system to make decisions around risks to their populations that are well outside the time period of any election process."

Expect a ferocious counter attack from the shills. It’d be entertaining if the outcome wasn’t so important.

Part III coming soon – I’ll finally have a look over those submissions.