The great American mechanical engineer Frederick W. Taylor once said “It’s easier to make a reporter into an economist than an economist into a reporter.” I must confess I’ve often sympathised with this view; I’ve often found it rather hard on the grey matter to follow the reasoning of some economists. I can see they have a series of logical arguments but getting my head round all of it in one go is often a challenge. On the 12 March I was fortunate to find a seat in a packed lecture at the University of Exeter where economist Professor Lord Stern of Brentford spoke on getting a global deal on climate change. This was not a dry, hard-to-follow monologue on the minutiae of economic theory. Instead, Lord Stern gave a lucid and convincing talk on the challenges we face in minimising the the risks of significant climate change. The economics were there but it was refreshingly understandable.
Lord Stern is arguably best known for heading up what is known as the Stern Review; published by the UK Government in 2006, this 700 page landmark piece of work made the economic case that it was cheaper to tackle climate change now rather than do nothing. Now the IG Patel Professor of Economics at the London School of Economics, Stern addressed the wider issue of how to deal with climate change. He stressed that the problems we face with climate change are a result of the greatest market failure of all: the environmental damage associated with using fossil fuels is not included in the price we pay. The problem is now how to address this. Although any country could instigate a policy that would fully cost the damage, it won’t have bite unless the majority are onboard. Ultimately, the atmosphere doesn’t care where the gases come from; extra gases being dumped in the atmosphere by free-riders means more warming for everyone regardless of who put it there. There needs to be a global agreement to significantly reduce greenhouse gas emissions. Unfortunately, polarised views are threatening to stymie progress.
For a global deal to stick, Stern identified three criteria that have to be met:
- the deal has to be effective, meaning a cut of at least 50% in greenhouse gas emissions by 2050 (although science has moved forward since Stern's review was released -- with many scientists stating we need to reduce emissions by at least 80% by 2050, or even zero)
- the deal has to keep the costs of emission cuts low; and
- the deal also has to be equable, which in practice means rich countries have to take the lead.
We’ve got the technology and can afford it. Climate has changed. Let’s get on with the job and fix it.
Editor's Note: For a look at the potential ethical implications of Stern's economic view of the world, read An Exchange of Souls by George Monbiot
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