Climate Change Threatens World Economy
Climate Change Action is Needed Now -- Here's the Plan

March 9, 2007

Climate Change
Threatens World Economy

Robert Peston / BBC World News

The Stern Report, an independent review commissioned by Britain's Chancellor of the Exchequer, has warned of the devastating impact of climate change on the global economy. (Excerpted from BBC report.)

Sir Nicholas Stern's start point is economic modeling showing that a scenario of 2-3 degrees of warming would lead to a permanent loss of up to 3% in global world output, compared to what would have happened without climate change. But he says those estimates are too low. He believes 5-6 degrees of warming is a "real possibility" for the next century.

He estimates that "business as usual" would lead to a permanent reduction in global per-capita consumption of at least 5%. But, that estimate does not include the financial cost of the direct impact on human health and the environment, or the disproportionate costs on poor regions of the world.

He believes it is practical to aim for a stabilization of greenhouse gas levels in the atmosphere of 500 to 550 parts per million of carbon dioxide equivalent by 2050 -- double pre-industrial levels.

Carbon dioxide stands at about 380ppm, but Sir Nicholas has used the higher figure of 430, which incorporates other greenhouse gases such as methane. But even stabilizing at that level will probably mean significant climate change.

Even to stabilize at that level, emissions per unit of gross domestic product (GDP) would need to be cut by an average of three-quarters by 2050 -- a frightening statistic.

As well as decarbonizing the power sector by 60%-70%, there will also have to be an end to deforestation. Emissions from deforestation are estimated at more than 18% of global emissions, more than transport.

The costs of these changes should be around 1% of global GDP by 2050 -- in other words the world would be 1% poorer than we would otherwise have been, which would be significant but far from prohibitive.

To be clear, this does not mean we would be 1% poorer than we are today, but that global growth will be slower. The way to look at this 1% is as an investment. Because the costs of not taking this action are mind-bogglingly large.

The Economics of Climate Change
The Stern Review / Executive Summary

The scientific evidence is now overwhelming: climate change presents very serious global risks, and it demands an urgent global response.

Climate change presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen. The economic analysis must therefore be global, deal with long time horizons, have the economics of risk and uncertainty at center stage, and examine the possibility of major, non-marginal change. To meet these requirements, the Review draws on ideas and techniques from most of the important areas of economics, including many recent advances.

The benefits of strong, early action on climate change outweigh the costs. What we do in the next 10 or 20 years can have a profound effect on the climate in the second half of this century and in the next.

Our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century. And it will be difficult or impossible to reverse these changes. The earlier effective action is taken, the less costly it will be.

Measures to help people adapt to it are essential. And the less mitigation we do now, the greater the difficulty of continuing to adapt in future.

Greenhouse-gas Emissions in 2000
  • Power (24%)
  • Transport (14%)
  • Buildings (8%)
  • Industry (14%)
  • Other energy related (5%)
  • Waste (3%)
  • Agriculture (14%)
  • Land use (18%)

    Climate change threatens access to water, food production, health, and use of land and the environment. The Earth will be committed to several degrees more warming if emissions continue to grow. Warming will have many severe impacts:

  • Melting glaciers will initially increase flood risk and then strongly reduce water supplies, eventually threatening one-sixth of the world's population, predominantly in the Indian sub-continent, parts of China, and the Andes in South America.

  • Declining crop yields, especially in Africa, could leave hundreds of millions without the ability to produce or purchase sufficient food. At mid to high latitudes, crop yields may increase for moderate temperature rises (2 -- 3°C), but then decline with greater amounts of warming. At 4 ºC and above, global food production is likely to be seriously affected.

  • In higher latitudes, cold-related deaths will decrease. But climate change will increase worldwide deaths from malnutrition and heat stress. Vector-borne diseases such as malaria and dengue fever could become more widespread if effective control measures are not in place.

  • Rising sea levels will result in tens to hundreds of millions more people flooded each year with warming of 3 or 4°C. By the middle of the century, 200 million people may become permanently displaced due to rising sea levels, heavier floods, and more intense droughts.

  • Ecosystems will be particularly vulnerable to climate change, with around 15 -- 40% of species potentially facing extinction after only 2°C of warming. Ocean acidification, a direct result of rising CO2 levels, will have major effects on marine ecosystems, with possible adverse consequences on fish stocks.

    The Costs of Climate Change
    Based on simple extrapolations, costs of extreme weather (storms, hurricanes, typhoons, floods, droughts, and heat waves) could reach 0.5-1% of world GDP per annum by the middle of the century, and will keep rising if the world continues to warm.

  • A 5 or 10% increase in hurricane wind speed, linked to rising sea temperatures, is predicted approximately to double annual damage costs, in the USA.

  • In the UK, annual flood losses alone could increase from 0.1% of GDP today to 0.2 -- 0.4% of GDP once the increase in global average temperatures reaches 3 or 4°C.

  • Heat waves like that experienced in 2003 in Europe, when 35,000 people died and agricultural losses reached $15 billion, will be commonplace by the middle of the century.

    Much (but not all) of the risk can be reduced through a strong mitigation policy, and we argue that this can be achieved at a far lower cost than those calculated for the impacts. In this sense, mitigation is a highly productive investment.

    There is still time to avoid the worst impacts of climate change if strong collective action starts now. The policy tools exist to create the incentives required to change investment patterns and move the global economy onto a low-carbon path. This must go hand-in-hand with increased action to adapt to the impacts of the climate change that can no longer be avoided.

    Climate Change Action is Needed Now
    -- Here's the Plan

    George Monbiot / The Guardian

  • George Monbiot
    It is a testament to the power of money that Nicholas Stern's report should have swung the argument for drastic action, even before anyone has finished reading it. He appears to have demonstrated what many of us suspected: that it would cost much less to prevent runaway climate change than to seek to live with it.

    Useful as this finding is, I hope it doesn't mean that the debate will now concentrate on money. The principal costs of climate change will be measured in lives, not pounds.

    If we're to have a high chance of preventing global temperatures from rising by 2 °C (3.6 °F) above pre-industrial levels, we need, in the rich nations, a 90% reduction in greenhouse-gas emissions by 2030. The greater part of the cut has to be made at the beginning of this period....

    So how do we do it without bringing civilization crashing down? Here is a plan for drastic but affordable action that the government could take. It goes much further than the proposals discussed by Tony Blair and Gordon Brown -- for the reason that this is what the science demands.

    1. Set a target for reducing greenhouse-gas emissions based on the latest science. The government is using outdated figures, aiming for a 60% reduction by 2050. Even the annual 3% cut proposed in the early day motion calling for a new climate change bill does not go far enough.
    Timescale: immediately.

    2. Use that target to set an annual carbon cap, which falls on the ski-jump trajectory. Then use the cap to set a personal carbon ration. Every citizen is given a free annual quota of carbon dioxide. He or she spends it by buying gas and electricity, petrol and train and plane tickets. If they run out, they must buy the rest from someone who has used less than his or her quota.

    This accounts for about 40% of the carbon dioxide we produce. The remainder is auctioned off to companies. It's a simpler and fairer approach than either green taxation or the EU's emissions trading scheme, and it also provides people with a powerful incentive to demand low-carbon technologies.
    Timescale: a full scheme in place by January 2009.

    3. Introduce a new set of building regulations, with three objectives.
    - A. Imposing strict energy-efficiency requirements on all major refurbishments (costing £3,000 or more).
    Timescale: in force by June 2007.
    - B. Obliging landlords to bring their houses up to high energy-efficiency standards before they can rent them out.
    Timescale: to cover all new rentals from January 2008.
    - C. Ensuring that all new homes in the UK are built to the German Passivhaus standard (which requires no heating system).
    Timescale: in force by 2012.

    4. Ban the sale of incandescent lightbulbs, patio heaters, garden floodlights and other wasteful and unnecessary technologies. Introduce a stiff "fee-bate" system for all electronic goods sold in the UK, with the least efficient taxed heavily and the most efficient receiving tax discounts. Every year the standards in each category rise.
    Timescale: fully implemented by November 2007.

    5. Redeploy money now earmarked for new nuclear missiles towards a massive investment in energy generation and distribution. Two schemes in particular require government support to make them commercially viable: very large wind farms, many miles offshore, connected to the grid with high-voltage direct-current cables; and a hydrogen pipeline network to take over from the natural gas grid as the primary means of delivering fuel for home heating.
    Timescale: both programs commence at the end of 2007 and are completed by 2018.

    6. Promote the development of a new national coach network. City-centre coach stations are shut down and moved to motorway junctions. Urban public transport networks are extended to meet them. The coaches travel on dedicated lanes and never leave the motorways. Journeys by public transport then become as fast as journeys by car, while saving 90% of emissions. It is self-financing, through the sale of the land now used for coach stations.
    Timescale: commences in 2008; completed by 2020.

    7. Oblige all chains of filling stations to supply leasable electric car batteries. This provides electric cars with unlimited mileage: as the battery runs down, you pull into a forecourt; a crane lifts it out and drops in a fresh one. The batteries are charged overnight with surplus electricity from offshore wind farms.
    Timescale: fully operational by 2011.

    8. Abandon the road-building and road-widening program, and spend the money on tackling climate change. The government has earmarked £11.4bn for road expansion. It claims to be allocating just £545m a year to "spending policies that tackle climate change."
    Timescale: immediately.

    9. Freeze and then reduce UK airport capacity. While capacity remains high there will be constant upward pressure on any scheme the government introduces to limit flights. We need a freeze on all new airport construction and the introduction of a national quota for landing slots, to be reduced by 90% by 2030.
    Timescale: immediately.

    10. Legislate for the closure of all out-of-town superstores, and their replacement with a warehouse and delivery system. Shops use a staggering amount of energy (six times as much electricity per square meter as factories, for example), and major reductions are hard to achieve: Tesco's "state of the art" energy-saving store at Diss in Norfolk has managed to cut its energy use by only 20%. Warehouses containing the same quantity of goods use roughly 5% of the energy. Out-of-town shops are also hardwired to the car -- delivery vehicles use 70% less fuel.
    Timescale: fully implemented by 2012.

    These timescales might seem extraordinarily ambitious. They are, by contrast to the current glacial pace of change. But when the US entered the WWII, it turned the economy around on a sixpence. Carmakers began producing aircraft and missiles within a year, and amphibious vehicles in 90 days, from a standing start. And that was 65 years ago.

    If we want this to happen, we can make it happen. It will require more economic intervention than we are used to, and some pretty brutal emergency planning policies (with little time or scope for objections). But if you believe that these are worse than mass death then there is something wrong with your value system.

    Climate change is not just a moral question: it is the moral question of the 21st century. There is one position even more morally culpable than denial. That is to accept that it's happening and that its results will be catastrophic, but to fail to take the measures needed to prevent it.

    George Monbiot's latest book is Heat: How to Stop the Planet Burning

    Reposted in accordance with Title 17, US Code, for noncommercial, educational purposes.

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