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Now or never?

By David Adam
THE GUARDIAN, LONDON
Sunday, Mar 25, 2007, Page 18

Nicholas Stern's report has pushed climate change up the political and public agendas. PHOTO: AP

For a man who likes to warn of impending financial meltdown because of global warming, Nicholas Stern has a gigantic carbon footprint. The soon-to-be former head of the UK Government Economic Service has criss-crossed the globe in recent months, to share the bad news — climate change could bring a worldwide economic downturn comparable to the great depression or the two world wars. After trips to Brussels, Washington DC, Japan, China, India and South Africa, next week he is scheduled to leave on the final leg of his end-of-world tour, taking in Indonesia, Australia and California.

Stern has been given much of the credit for the fact that global warming now tops the public and political agendas. His review last October was hailed by British Prime Minister Tony Blair as the most important document to land on his desk, and no discussion of climate change is complete without a reference to Stern's conclusion — that it is cheaper to tackle the issue than to wait and deal with the consequences.

"[The report is] about providing an analytical basis for policy, while at the same time trying to be specific about policy."

--- Nicholas Stern, economist

But there has also been criticism. William Nordhaus, the esteemed Yale University professor of economics, said Stern's unambiguous conclusions brought to mind the one-handed economist demanded by former US president Harry Truman, who complained that they would always say on the one hand this and the other hand that.

The review's support for action to curb greenhouse gas emissions, just as the government is pushing for domestic and international measures to do just that, has even been labeled as another dodgy dossier.

For either a green prophet of doom or a shady conspirator, Stern seems relaxed. He admits that he flies too much and has yet to replace all the light bulbs in his house with low energy versions. If all the attention has gone to his head, he does not show it.

He is reluctant to take credit for the current focus on environmental matters. "Others have made their contribution and I hope we made ours," he says. That contribution, running to almost 700 pages, said the expected increase in extreme weather, with the associated — and expensive — problems of agricultural failure, water scarcity, disease and mass migration, means global warming could swallow up to 20 percent of the world's GDP. The cost of addressing the problem, it said, could be limited to about one percent of GDP, provided it starts on a serious scale within 10 to 20 years.

Breaking New Ground

The simplicity of this headline finding cut through the complications and caveats (the report itself warns the figures should not be taken too literally) and shifted the debate into new territory, at least in the UK. Although the report was written mainly for an international audience, it remains to be seen whether it, and Stern's globetrotting, will kick start the stalled negotiations on a successor to the Kyoto Protocol. He says: "Everywhere we went, people have been engaged in the discussion, which is very healthy. Now everybody has to find their own way to what they conclude from that."

The review has its roots in the 2005 G8 summit at Gleneagles, Scotland. Stern says: "There were two subjects, Africa and climate change. The previous year I'd written a report for the Commission for Africa. We got quite a long way on Africa and [UK finance minister] Gordon [Brown] felt this was very much on the basis of serious, careful analysis."

Brown asked Stern to perform a similar analysis to push forward the international effort on global warming. "Not to look for consensus, but to establish some of the basic issues and conclusions."

Chief among those is that a failure to cut emissions will be devastating. Critics such as Richard Tol of the Economic and Social Research Institute in Dublin complain that the report's conclusions are "alarmist and incompetent" and argue that it should be seen as a political document, not an impartial assessment of existing knowledge.

Stern says: "It's about providing an analytical basis for policy, while at the same time trying to be specific about policy. It's not a political document in the sense of making a narrow party case or a narrow case for a particular position. It's false to suggest there was any view on the way this should come out at the beginning."

Critics have focused on the way the report treats future generations, which will be most affected by decisions we make today because it takes time for the heat trapped by our carbon emissions to build up. Much of what is going to happen over the next 30 or 40 years is already determined.

Swords Drawn

So the policy decisions we take now in terms of reducing emissions will have implications in 50, 100 or 150 years. Stern believes the damage future generations will suffer at our hands is greater than generally perceived. Other economists, including Nordhaus, disagreed and an academic bun fight ensued.

Stern says: "Many other economists have taken [our] position so we're not peculiar in this at all." Some climate change skeptics tried to portray these disagreements as undermining the case for action. In fact, even the most strident of his academic tormentors also stressed the need to reduce emissions.

Stern says his team also took a different approach in the way they treated the scientific evidence. Rather than just working with the most likely scenarios, they took into account the smaller chances of far more severe events unfolding. And those events tend to be the most expensive. "You take into account the different probabilities and what kind of damages could follow," he says. "And at each stage where you've got a 'could,' you've got a probability distribution. So you have to build that into the story. We're starting to be able to do that."

One example is something called climate sensitivity — a measure of how much the atmosphere will warm. Most climate scientists assume that, if the concentration of carbon dioxide reaches double what it was before the industrial revolution, we would see an average rise of 3oC. But some have claimed the climate is much more sensitive, and temperatures under those circumstances could increase by 6oC, perhaps more. It's a small chance, but Stern has considered it.

He has also considered studies that warn of positive feedbacks in the climate system, where increasing temperatures force more greenhouse gases from natural sources such as the oceans and soils into the atmosphere. These processes are poorly understood but could accelerate global warming.

He calls this approach the economics of risk that, he says, "puts greater weight on downsides than upsides, because people are averse to risks."

Stern's legacy seems straightforward. If last year proves to be the year that the debate on global warming decisively shifted from whether it was real to what we should do about it, then future generations will give thanks. If not, his review will stand as a symbol of our folly.

Which does Stern predict? "I'm probably a little more optimistic now because I think we can do a great deal at an acceptable cost to reduce the risks." And will we? "I don't know. I hope so."

To read the Stern report log on to
www.hm-treasury.gov.uk/independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm
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