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economic costs of global warming « Previous | |Next »
October 30, 2006

The soon to be released Stern Review, which was commissioned by the UK Treasury and carried out by the former World Bank chief economist Sir Nicholas Stern, argues that inaction could cause a damaging economic costs. It argues that on current trends, average global temperatures will rise by 2C to 3C within 50 years; that if emissions continue to grow, the Earth could warm by several more degrees, with severe consequences that would hit poor countries most.

The Review makes the economic case for change. Its analysis warns that stabilising greenhouse gases in the atmosphere will cost about one per cent of annual global output by 2050 .and that doing nothing about climate change will cost the global economy between 5% and 20% of GDP, whilst reducing emissions now would cost 1%, equivalent to £184bn.

This undercuts the arguments of conservative Australians, including the Howard Government, that dealing with climate change will devastate economic prosperity.Christian Kerr over at Crikey is even running the line that many on the Left are using Kyoto as a handy way of advancing an agenda that has little to do with the environment: it is one that seeks always to blame the West, that is hostile to free trade, and that looks instinctively to state intervention! Crikey, the paranoia.

"Two examples of economic costs that represent risks for business which need to be taken into account to protect shareholder value. A picture of Sydney's future due to rising sea levels:

This will submerge or threaten billions of dollars worth of property, both public and private, by 2100.

The CSIRO has predicted that in most Australian wine regions temperatures will increase by between 0.3 to 1.7C by 2030. This is important because the wine industry was particularly vulnerable to climate change because of the special dependence on links between regional climate and wine styles. So growers will need to adapt to the changing temperature by relocate the grapes currently grown to cooler areas would allow growers and breeding new varieties to suit the warmer climate.

Arguments over the costs of reducing emissions are increasingly becoming part of the debate in Australia. What is often ignored is that markets for low-carbon energy products are likely to be worth at least £265 billion per year by 2050. The utilitarian calculus of the Stern Report srtates that the benefits of worldwide steps to tackle climate change would greatly outweigh the costs.

It is not just a case of state regulation and eco-taxes being the answer. Market mechanisms can be highly effective at delivering green goals.

| Posted by Gary Sauer-Thompson at 8:22 AM | | Comments (0)