- Climate change presents a unique challenge for economics: it is the greatest example of market failure we have ever seen.
- There is still time to avoid the worst impacts of climate change if strong collective action starts now.
- It is already very clear that the economic risks of inaction in the face of climate change are very severe.
These messages give the radical flavour of the Stern report, a large study on the economics of climate change published, surprisingly, a fortnight ago by the stuffy British Treasury. It bears the name of the Whitehall mandarin and LSE professor Sir Nicholas Stern, the former head of the British Government’s economics service and Chief Economist at the World Bank.
So this is a political as well as an academic document. Why is Gordon Brown sponsoring it?
The occasion seems to have been the publication in June 2005 of a sceptical report by the obscure House of Lords Economic Affairs Committee. According to John Quiggin of Crooked Timber, this enquiry had been hijacked by the shrinking band of climate change denialists, instigated by Nigel Lawson, a less successful Tory predecessor of Gordon Brown’s. This flimsy polemic presented Brown with a soft target for a rebuttal. With one stroke, he could get in a good party political blow against the Tories; get ahead of David Cameron in the race for the British Green vote; gain stronger intellectual cover for his unpopular but correct policy of high energy taxes; advertise his policy wonk credentials as superior to those of Tony Blair or any rivals for his succession; and showcase himself as world-statesman-in the-making.
Attaching the name of a serving Sir Humphrey to a report is unusual in British terms. It gives Brown wiggle room and even deniability if politically necessary; but it puts Stern’s professional reputation on the line, not to mention his prospects of a cushy retirement job as head of an Oxbridge college. He could easily have had the report published anonymously in the usual way. It’s probable that both men genuinely think the situation critical, and action on it good politics as well as good policy.
So my expectations of the report, which I’ve only started to read, are:
– it will be a professional piece of work, offering a narrow target for rebuttal;
– it will if anything err on the side of caution, as false alarms would be politically damaging.
I’m writing about this, rather than some other document in the vast literature in the bin beneath the White House shredder, for two reasons. First, the report is lucidly written for a policy audience. It’s shorter and more accessible to non-specialists than the IPCC reports, the last comprehensive set dating back to 2001. Second, this report concentrates on the economics. There is no longer a serious question about the fact and causation of global warming, so the real debate has moved on to the strategy for mitigation. I know a little more about economics than about climate science, and am more likely to understand the arguments and have something moderately useful to say. I shall be commenting on the full version as I plough though it, rather than the executive summaries.
Next post on the science. Don’t expect fireworks.