The Stern Review on the Economics of Climate Change was published, amid great fanfare, in 2006. The message of the 700 page document, commissioned by Gordon Brown when he was Chancellor of the Exchequer, was simple: the cost of failing to act on climate change would be far greater than the cost of taking measures to mitigate it. The report concluded that countries would have to spend at least one per cent of GDP on measures to curb greenhouse gas emissions, or else the consequences of inaction could lead to a 20 per cent reduction in global GDP. Last year the author, economist Sir Nicholas Stern, revised his recommendation for expenditure on mitigation to two per cent.
Naturally the Stern Review was seized upon by the Climate Change lobby as a definitive demonstration that cutting carbon emissions not only made environmental sense but also economic sense. In truth, many academics have criticised the report, saying that its conclusions are based on questionable assumptions.
This is, of course, an inevitable part of trying to predict future economic trends, just as it is in predicting the course of climate change. Both are phenomenally complex systems, and it is therefore impossible to have any great confidence in the precise figures that Stern produced. However, the report undoubtedly had a huge impact in forcing policymakers to consider the economic consequences of ignoring climate change. As Mike Hulme, then director of the Tyndall Centre for Climate Change Research, said when the report came out, ‘in a sense it’s neither here nor there whether you believe the numbers. This will take the discourse away from the costs of taking action and put attention onto the costs of inaction.’
Of course, since the Stern Review was published, the financial climate has changed dramatically. But Stern says in an interview with the Guardian published today that the recession could even spur on moves towards a low-carbon economy.
‘This recession is seen as something that would prevent action on climate change only if we confuse ourselves. If we think clearly, this is an opportunity to bring forward some of those investments, because resources are a bit cheaper at the moment. I’ve been struck that this climate change story has stayed very much on the agenda, the way that the green stimulus has been seen as part of the expansion package. In the next two or three decades, I think low-carbon technologies are going to be like the railways or IT – big drivers of growth.’
One of the stated aims of the G20 summit in London this week is to ‘put the global economy on track for sustainable growth’. Let us hope that those attending recognise that keeping environmental considerations in mind will be integral to achieving this goal.