The Chancellor Gordon Brown asked Sir Nick Stern to lead a major review on the financial implications of Climate Change, to understand the nature of the economic challenges and how they can be met.

“The Stern review has done a crucial job. It has demolished the last remaining argument for inaction in the face of climate change,” Prime Minister Tony Blair said at the launch of the report.

The report, leaded by the former World Bank chief economist, estimates stabilized greenhouse gases in the atmosphere will cost about 1 percent of annual global output by 2050. In opposite inaction could cut global consumption per person by between 5 and 20 percent.

Looking at sea level rise, Sir David Stern said, it will have an impact “on global economies where cities are becoming inundated by flooding … this will cause the displacement of … hundreds of millions of people.”

Quoted from summary of conclusions:

There is still time to avoid the worst impacts of climate change, if we take strong action now.

Climate change will affect the basic elements of life for people around the world – access to water, food production, health, and the environment. Hundreds of millions of people could suffer hunger, water shortages and coastal flooding as the world warms.

Satellite picture All countries will be affected. The most vulnerable – the poorest countries and populations – will suffer earliest and most, even though they have contributed least to the causes of climate change. The costs of extreme weather, including floods, droughts and storms, are already rising, including for rich countries.

The risks of the worst impacts of climate change can be substantially reduced if greenhouse gas levels in the atmosphere can be stabilised between 450 and 550ppm CO2 equivalent (CO2e). The current level is 430ppm CO2e today, and it is rising at more than 2ppm each year. Stabilisation in this range would require emissions to be at least 25% below current levels by 2050, and perhaps much more.

This is a major challenge, but sustained long-term action can achieve it at costs that are low in comparison to the risks of inaction. Central estimates of the annual costs of achieving stabilisation between 500 and 550ppm CO2e are around 1% of global GDP, if we start to take strong action now.

It would already be very difficult and costly to aim to stabilise at 450ppm CO2e. If we delay, the opportunity to stabilise at 500-550ppm CO2e may slip away.

Action on climate change will also create significant business opportunities, as new markets are created in low-carbon energy technologies and other low-carbon goods and services. These markets could grow to be worth hundreds of billions of dollars each year, and employment in these sectors will expand accordingly.

Tackling climate change is the pro-growth strategy for the longer term, and it can be done in a way that does not cap the aspirations for growth of rich or poor countries.

 

The report (ISBN: 0-521-70080-9) proposes four key elements for future international frameworks:

  • Emissions trading as a powerful way to promote cost-effective reductions in emissions and to bring forward action in developing countries.
  • Technology cooperation can boost the effectiveness of investments in innovation around the world.
  • Action to reduce deforestation as a highly cost-effective way to reduce emissions.
  • Adaptation and international funding should support improved regional information on climate change impacts, and research into new crop varieties that will be more resilient to drought and flood.

Picture Credit: Image Science and Analysis Laboratory, NASA-Johnson Space Center. 14 Aug. 2006. “Earth Sciences and Image Analysis Photographic Highlights.”