The Stern Report
It’s been impossible to avoid the green debate in the media and political arena – the world it seems, is waking up to the very real dangers and consequences of climate change. One particular report from economist Nicholas Stern in November 2006 offered an alternative and vitally important twist to the debate.
The Stern Report put the effects of climate change into hard monetary terms, estimating how much it would cost to tackle climate change now, or how much the bill would be if we continue as we are and do not change our ways. Since the report was published, many of us have woken up to the harsh prognosis that changes in the climate and temperature could pose.Stern’s Key Findings:
- Greenhouse Gases Have Risen at an Unprecedented Level
Since the Industrial Revolution, levels of CO2, methane and other greenhouse gases have been significantly rising – and human activity is the main culprit for causing the rise. Left unchecked, this rise in greenhouse gases would almost certainly continue and lead to an increase in global temperatures
- Temperatures are Rising
Greenhouse gases are contributing towards the global change in temperatures. Stern estimates that, if unchecked, temperatures could rise by 5 degrees Celsius from pre-industrial levels. Though this sounds fairly small, the impact of such a rise is significant. Even a two degree rise equates to a situation where up to 40% of animal species would face extinction. An increase of three or four degrees could result in many millions more people being flooded. By the middle of the century 200 million may be permanently displaced due to rising sea levels, heavier floods and drought.
- Changes to Climate
As temperatures rise, so will more extreme weather conditions, according to Stern. Weather will become more unpredictable and seasons less defined. Both drought and flooding are more likely, and with wider effects. In the arctic extremities, the polar ice caps are melting, consequently leading to a global increase in sea levels. Meanwhile, the increase in global temperature is promoting more extreme weather such as hurricanes and storms.
- The Economics
So, how does Stern give these hard-hitting and wide-ranging changes into an economic argument? As he puts it: “The benefits of strong, early action considerably outweigh the costs.” Unabated, climate change could cost the world at least five per cent of Gross Domestic Product (GDP) each year; at worst case scenario, this could increase to over 20% of GDP. In contrast, Stern estimates that the cost of reducing emissions to a level that could help combat the long term effects of climate change would be just one per cent of global GDP. Creating a low-carbon economy could indeed eventually benefit the world economy by two-and-half trillion dollars a year.
The Future?Stern argues that because of the damage that’s already been done, what we do now to combat it will have only a limited effect on climate change in the first half of the century – but that the next 10-20 years is crucial in changing the path of climate change in the second half of the century.
Crucially, it’s the danger of not acting at all that’s paramount. Reflecting on the report, Prime Minister Tony Blair said: “This disaster is not set to happen in some science fiction future many years ahead, but in our lifetime. Investment now will pay us back many times in the future, not just environmentally but economically as well. For every £1 invested now we can save £5, or possibly more, by acting now.”
As a result of the Stern Report’s findings, the government is working with the World Bank to fund projects to fight climate change worldwide, and the Climate Change Bill is establishing statutory commitments to reducing the UK’s carbon emissions by 60% by 2050.