Climate change goes mainstream

by Maria on October 31, 2006

US newspaper headlines are understandably focused on the upcoming election, but another development that will have as much, if not more, effect on us all is headline news in the UK. The Stern report on climate change, commissioned by Gordon Brown, was launched yesterday by Brown and Blair. Stern spells out the economic basis for action on climate change. He warns that if we do nothing, climate change could cost anything between 5% and 20% of global output. If we start now, it will cost about 1% of global output to stabilise carbom emissions. The 700 page report shows that failing to act will cost our economies more than limiting carbon emissions – and not in 2100, but beginning in the next 20 years. The UK is calling for a treaty to limit carbon emissions by taxing or trading to be in place by 2008. To succeed, the UK must convince the US, China and India to join the club.

Climate change denialists should note that Paul Wolfowitz says the report “provides a much needed critical economic analysis of the issues associated with climate change”. Countries like the UK will still struggle with the politics of economic self-restraint when it comes to convincing voters that, for example, one pound flights to Carcassonne were a historical blip. But this report – and the united Blair/Brown staging and messaging behind it – could be the turning point in making climate change a mainstream political issue. If Tony Blair ever wanted to call payback time on his supine special relationship with the US, the moment has come.

The Irish Times reports that the UK government has actually hired Al Gore to raise US public awareness of climate change. The Guardian reports that the Treasury is sending Sir Nicholas on a tour of China, India, the US and Australia to sell the message and urge rapid action. The FT reports that the Germans, who will head both the G8 and the EU next year, are making supportive noises. (In-depth FT analysis of the report here.) Let’s hope the stars are moving into alignment.



Antipholus Papps 10.31.06 at 6:20 am

I’m beginning to wonder if this is the new big lie. Blair’s espousing it, the mainstream media are decrying it and I’m certain the solution will be further decimation of civil liberties and new taxes.


Andrew 10.31.06 at 6:52 am


Er, yeah. Nothing worse than high taxes when your house is underwater.


otto 10.31.06 at 7:14 am

To succeed, the UK must convince the US, China and India to join the club.

I dont know enough about Indian or Chinese politics to comment, but there is absolutely no chance of the US Political System producing 2/3rds of the senate and implementing legislation to either very significantly restrain domestic carbon use or pay developing countries large sums of money for restraining their carbon use. The US may become a bot more environmentalist i.e. higher fuel efficiency regulations for cars. That is all that is possible and to expect otherwise is to ask for a pony.


Aaron_M 10.31.06 at 7:50 am

Intergenerational distribution of costs

This is a probably an easy question for some but is there an economist out there that can help me identify when, according to the Stern report, the net benefits of their proposed programme for GHG emissions stabilization will arrive.

Let me explain what I mean.

I suppose that my children will be economically worse off following the Stern plan because the proposed costs over their lifetime will be outweighed by the benefits they will incur during their lifetime. However at some point in the future the benefits of past investment in GHG abatement will outweigh whatever investment is being made at that time.

My question is when, on the Stern model, will this happen? In other studies I have seen predictions for the arrival of net-benefits ranging from 2300-2080. Any pointers in the right direction will be greatly appreciated.


stuart 10.31.06 at 8:20 am

He warns that if we do nothing, climate change could cost anything between 5% and 20% of global output. If we start now, it will cost about 1% of global output to stabilise carbom emissions.

And if we stabilise carbon emissions, how much of global output will climate change cost us then? As far as I am aware stabilising carbon emissions will still lead to climate change, just less than might have otherwise been experienced. Surely to be a true economic impact analysis you would have to measure costs against benefits, and not costs against costs?

I don’t doubt that acting to limit carbon emissions now is a very prudent measure, but if the doubters that can be convinced (as opposed to the zealots) then don’t the arguments need to be as valid and logical as possible, rather than trying to use rhetorical devices that are easily exposed?


Ginger Yellow 10.31.06 at 8:32 am

I’m not sure what Wolfowitz’s stamp of approval is supposed to prove. He’s hardly renowned for level-headed analysis of global issues.


Raymond 10.31.06 at 8:36 am

I survived the ice age we thought was coming in the 1970’s. I survived AIDS, which was supposed to decimate the hetero community. Now I’m supposed to mortgage my future because of potential habitat loss to gay penguins and polar bears and such.

Better, more critical science is needed, less emotion. The zero tolerance for dissent on this issue tells me all I need to know.


Matt Weiner 10.31.06 at 8:47 am

He’s hardly renowned for level-headed analysis of global issues.

And climate-change denialists left level-headed analysis behind a long time ago, so it’s suitable for the target audience.


Steve LaBonne 10.31.06 at 8:52 am

You know, raymond, it’s perfectly possible for you to find sources of information that can explain to you on a non-specialist level what the climate-science community is thinking and on exactly what evidence that thinking is based. (I would start at and go from there.) Wouldn’t it make more sense for you to put in the effort to inform yourself, and then make up your own mind, rather than simply sticking your fingers in your ears and humming as loudly as you can?


engels 10.31.06 at 9:18 am

The zero tolerance for dissent on this issue tells me all I need to know.

Well done, Raymond. Is that how you also figured out that your Maths teacher was lying when he told that 1+1=2?


stuart 10.31.06 at 9:23 am

#4: Well according to what Maria wrote summarising above, the report seems to suggest the benefits of action will be a net economic positive by 2026, although I am not sure on what assumptions that statement rests.


abb1 10.31.06 at 9:27 am

When Blair and Wolfowitz are on mission, we have nothing to worry about.


Steve LaBonne 10.31.06 at 9:53 am

Wolfowitz could actually be useful in an “only Nixon could go to China” way. About time we got some good out of him…


David Sucher 10.31.06 at 10:05 am

Antipholus Papps is correct that if we do nothing, then the possible catastrophes of climate change will definitely call forth authoritarian government which restricts civil liberties.

That’s exactly the reason why we should be starting to take some action now — to at least admit that there is an issue — before the only measures left are extreme ones and we have no choice but to adopt them.

And to the “denialists” out there — don’t worry. Once you accept the fact that climate change is happening there is still plenty of legitimate disagreement about what to do and/or how rapidly to do it.


anne 10.31.06 at 10:21 am

Understandable that Raymond et al are cynical. In what other connection recently did we hear from Blair that the ‘evidence’ for something was ‘overwhelming’ and the ‘consequences’ disastrous? Wasn’t that a 45-minute warning? In the interests of ‘balance’, the BBC were trotting out Prof Fred Singer and other mockers and doubters all day yesterday, giving them a free rein. Posters on this forum can reasonably be expected to inform themselves, but not everyone’s going to bother. My point here being there’s a massive PR exercise needed quite apart from convincing politicians, and that can be counterproductive.

Already we’ve heard some gloating rumblings from the Green Taliban about things they’d like to have banned. Already there are growls of protest about what’s seen as more threats to freedom. It’s not going to be easy.

If we’re not careful, an unintended consequence of all this will be not consciousness-raising and positive action, but public disorder and worse. And nothing done.


bob mcmanus 10.31.06 at 10:29 am

Let’s us play “Lifeboat” The less population, especially in the high consumption crowd, the easier the problem will be to manage.

First overboard: global warming deniers. If they are still deniers, they are likely to be problems in the future.

Second group overboard: The cost/benefit calculators who think they can enjoy their current lifstyle and pass the horrors on to theur grandkids.

Third group overboard:hoarders, those who will try to accumulate resources, like defense expenditures, so as to establish little islands of luxury while the rest burn and boil.


Peter Clay 10.31.06 at 10:35 am

Third group overboard:hoarders, those who will try to accumulate resources, like defense expenditures, so as to establish little islands of luxury while the rest burn and boil.

Wow, it’s getting vicious and genocidal already. Why does discussion of this issue always become so negative so quickly?


Aaron_M 10.31.06 at 10:38 am


I am not sure what Maria means when she notes 20 years, but is it definitely note the expected date for net-benefits. I am guessing she means when there will be clear negative economic effects from climate change on economic growth.

No plausible abatement policy and certainly not the one recommended by the Stern report will have any impact on climate conditions in 20 years. Therefore it is impossible that in twenty years we will be experiencing a net-benefit from reduced climate change (i.e. due to past investments) in relation to the investments we are making then (i.e. if we are still following the Stern investment plan).


engels 10.31.06 at 10:39 am

He warns that if we do nothing, climate change could cost anything between 5% and 20% of global output.

The real question is: how long before they wheel out Fred Kaplan? “That isn’t an estimate – it’s a dartboard.”


Walt 10.31.06 at 11:01 am

Peter Clay: Genocidal? Bob McManus has a dark and cynical view of human nature, but he has yet to kill one person, let alone millions.


Martin James 10.31.06 at 11:02 am

Global warming has such a nice darwinian/malthusian plot. One species expands its ecological footprint, begins growing in such a way that it changes the global resource distribution, which will change the environment with a speed not seen since a giant asteroid last hit.

Which species will survive?

It would seem that two types of species have the best chances, the most quickly adaptable and the those least subject to climate change.

Look on the bright side, its not an economic tragedy, its the largest science experiment ever.


oneoffmanmental 10.31.06 at 2:46 pm

Stern doesn’t go far enough. It is possible to stabilise the climate with a CO2 concentration of 450ppm, rather than the 550ppm (twice pre-industrialisation levels). There is a significant economic risk even at the stabilisation level he proposes.

Stabilising CO2 concentration at 450ppm will reduce the probability of surpassing the threshold of danger to about below 40%. This would require peaking emissions at 10GtC/yr by 2010, declining to 6 GtC/yr by 2050 and 4GtC/yr by 2100. We currently emit 8GtC/yr of CO2 into the atmosphere, rising 1.5GtC/yr per decade.

To succeed, the UK must convince the US, China and India to join the club

Andrew Dessler of Texas A&M has co-authored an excellent book “The Science and Politics of Climate Change” – he argues that global treaties will not come about in the short term. The best bet is to have a coalition of the willing (i.e. most of EU and Japan) implementing stringent emission reducing strategies, whilst there is also a bilateral agreement between the US and China, with most investment happening in China to reduce initial capital costs.

To make sure that the ‘coalition of the willing’ are not unfairly disadvantaged, border emission taxes are proposed on imports.

Eventually more countries could join the coalition until a global system is established.


bob mcmanus 10.31.06 at 2:58 pm

“Wow, it’s getting vicious and genocidal already. Why does discussion of this issue always become so negative so quickly?”

Take a look at the current administration, it’s obvious and not so obvious strategies;it defense expenditures, both on budget and supplemental;its programs for weird items like missile shields and new submarines and space initiatives;its geographical areas of interest and activity.

Hell, I am not genocidal;I am trying to prevent genocide by a nation that almost defines itself by the practice.

“…indeed, Detroit (and the Europeans and Japanese to a lesser extent) was happy to use decades-old designs and processes.

“Even though cleaner alternatives existed in the United States, relatively dirty automotive technologies were transferred to China,” she writes. One result is the smog that is choking Chinese cities; another is the invisible but growing cloud of greenhouse gases, which come from tailpipes but even more from the coal-fired utilities springing up across China. In retrospect, historians are likely to conclude that the biggest environmental failure of the Bush administration was not that it did nothing to reduce the use of fossil fuels in America, but that it did nothing to help or pressure China to transform its own economy at a time when such intervention might have been decisive.”


bob mcmanus 10.31.06 at 3:07 pm

So look at that above;Detroit and other American outsourcers were deliberately sending high pollution industries to China at the same time they were arguing they couldn’t sign on to Kyoto unless China was forced to the same standards as everyone else. Hilarious.

Oh, I love my country.


roger 10.31.06 at 3:32 pm

If Paul Wolfowitz and Tony Blair are both behind this, it can only mean taking some perfectly virtuous, common sensical thing and making it a pretense for a senseless, morally abhorrent war.

So, if China doesn’t comply with our standards, we invade? That actually makes perfect sense. Just as the U.S., which famously has spent trillions on WMD, invaded a country that had none on the pretext that they might have spent some money on those WMD, so, too, we could form a coalition of the smokestacks, pump our defense budget up to that second trillion, and invade, hmm, not China, too strong – Kazakhistan. A country of smog terrorists. I hate the smogheads!

That’ll work for the peckerwoods. What other constituency counts?


stuart 10.31.06 at 9:55 pm

Personally I think if any targets are set for nations, then they have to be based on the assumption of full industrialisation and modernisation of their economy. Pointing to China and India increases and suggesting that any cap on limits has to be put on them immediately is laughable.

The limits on countries should be per capita, and equal for all countries except with adjustments for the size and climate of the country (so large countries get an extra factor multiplied in, small ones less – for transportation costs, and hot/cold countries get bonuses to the output rate).

Of course no one would suggest such a plan, because it would put the onus on all the industrialised nations to halve or less their output of GHGs, and allow the developing nations to double or more their current output.

The current US position is just as ridiculous of course – that any nation not fully industrialised should somehow do so while fixing emissions such that the can miraculously turn into a fully modernised economy but with only 10-20% of the emissions output of the US, which naturally has to do (comparatively) almost nothing apart from fit some lower wattage lightbulbs etc to comply with the freeze on GHG output.


lemuel pitkin 10.31.06 at 10:31 pm

We should nto assume that dealing with global warming will simply impose costs. In real modern economies, there is not a one-to-one tradeoff (or even, necessarily, a tradeoff at all) between investment and consumption. Replacing large portions of our current energy and transportation infrastructure could be a major stimulus to economic growth.

(And of course, that’s leaving aside the question of how much any foregone consumption — e.g. long car commutes — represents a genuine sacrifice.)


oneoffmanmental 11.01.06 at 12:33 am


Neither Kyoto nor the Framework Convention on Climate Change proposes that developing countries emissions are capped at first. The key to lowering the emissions in China and India is to make sure they are getting the best emission lowering technology as they install the machines for further industrialisation. Their emissions can be capped further along the industrialisation process.


lemuel pitkin 11.01.06 at 2:00 am

Ugh, and did you notice Blair’s response, that we need a system of tradable carbon permits? Trust him to latch onto the worst possible solution. See Maxspeak discussion here and here.


engels 11.01.06 at 9:59 am

Lemuel – Carbon emissions trading was the basis for the Kyoto Protocol. There was an international consensus in favour of this method of regulating carbon emissions, for which there are strong economic arguments in terms of overall efficiency; it is the basis for the only such scheme currently in force, albeit a rather poorly designed one, the EU Emissions Trading Scheme; and it was the solution agreed to by businesses represented at the 2005 G8 Climate Change Roundtable. At any rate, I think it’s a little unfair to suggest that Blair has “latched on” to it at this stage. Having skimmed the links you provide I can’t see any evidence that it is “the worst possible solution”, as opposed to, for example, criticisms of the way in which the EU ETS was designed, but perhaps you can explain why you have been convinced of this. Your argument that reducing emissions could actually increase growth does not sound very plausible to me: rather like Laffer’s argument for cutting taxes.


Adamsmithee 11.01.06 at 2:18 pm

#4: A brief look at the Annex to Chapter Two of the report suggests that the review discounts future benefits on two grounds: (i) we might all be extinct due to nuclear war, meteor strike, other; (ii) we’ll be richer in the future, and there’s a declining marginal return to income. It *doesn’t* look like there’s discounting, as is usual economic practice, purely because stuff in the future is worth less to us than stuff today. Overall, this means a very low discount rate and benefits surpassing costs very early. There is a discussion of the ethics of such a calculation in the annex.

That will mean that the turning point comes way earlier in the Stern model than in others, although it still looks to be sometime after mid-century.

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