Psyche, Science, and Society

Global warming: Pay now to avoid or pay through the roof

October 31st, 2006

A new British Government study of the economic effects of global warming estimates that global warming, if unchecked, will cause economic damage amounting to 5% to 20% of world GDP and create 200 million refugees. [£3.68 trillion: The price of failing to act on climate change]

In contrast, it estimates that global warming could be addressed by spending 1% of GDP, “roughly the same amount as is spent worldwide on advertising, and half what the World Bank estimates a full-blown flu pandemic would cost”

The review by Sir Nicholas Stern, commissioned by the Chancellor of the Exchequer and published tomorrow, marks a crucial point in the debate by underlining how failure to act would trigger a catastrophic global recession. Unchecked climate change would turn 200 million people into refugees, the largest migration in modern history, as their homes succumbed to drought or flood.

Stern also warns that a successor to the Kyoto agreement on cutting greenhouse gas emissions should be signed next year, not by 2010/11 as planned. He forecasts that the world needs to spend 1 per cent of global GDP - equivalent to about £184bn - dealing with climate change now, or face a bill between five and 20 times higher for damage caused by letting it continue. Unchecked climate change could thus cost as much as £566 for every man, woman and child now on the planet - roughly 6.5 billion people.

The 700-page report argues that an international framework on climate change covering the globe will be necessary, and that different countries may opt to reduce emissions differently. Options range from many more green taxes to carbon trading.

This article doesn’t discuss what assumptions are made bout the magnitude of global warming and its effects. But it seems that it used rather optimistic assumptions. Others argue that the type of reforms discussed here are just the tip of the iceberg of what’s needed. But, at least it would be a start, which is a lot better than where we are now.

[UPDATE:Here is a link to the full report. Also available there are a Press Release, a presentation, etc.]

Entry Filed under: Environment, Gobal Warming, Social Issues