In Europe, Sir Nicholas Stern’s Economics of Climate Change report has by now become the “bible” of climate policy. Stern’s conclusion that the cost to the world economy for dealing with climate change would be 1% of the global GDP whereas the cost of NOT dealing with it would be as high as 5% and in the worst case even 20% of global GDP is now accepted wisdom for all political climate leaders.
But several excellent economists have heavily attacked Stern’s figures (see Wikipedia for an overview) and now “Heat” author Georg Monbiot has added his comments to the anti-Stern “camp”.
First, Monbiot accuses Stern for accepting a target for atmospheric concentrations of greenhouse gases of 550 parts per million (in carbon dioxide equivalents) although Stern knows “that this concentration would produce ‘at least a 77 per cent chance—and perhaps up to a 99 per cent chance, depending on the climate model used—of a global average temperature rise exceeding 2°C.’. For Monbiot (as for the EU) the target should remain 2° C.
Secondly, Monbiot criticises Stern’s methodology of putting a price on “the destruction of ecosystems and human communities; the displacement of people from their homes; disease and death”. By using a formula which measures “reduction of consumption”, Stern concludes “that the dollar losses from failing to prevent a high degree of global warming outweigh the dollar savings arising from not taking action. It therefore makes economic sense to try to prevent runaway climate change. But what if the result had been different? What if he had discovered that the profits accruing from burning more fossil fuels exceeded the social cost of carbon? We would then find that it makes economic sense to kill people“.Author : Willy De Backer