Climate Change: The Worst Market-Failure Ever

Tony Blair has called it the most important document report that he has ever received in ten years of being Prime Minister. For the last eighteen months ex-World Bank economist, Sir Nicholas Stern, has been working on a report for the British government on climate change. It is published before the next round of negotiations on climate change that are being held in Nairobi next week.
The Stern Review, as it is called, says that climate change represents the greatest and widest-ranging market failure ever seen. It could plunge the world into an economic depression not seen since the great depression of the 1930s. “There is still time to avoid the worst impacts of climate change, if we take strong action now” says Stern.
For too long politicians like President Bush have argued that to take action against climate change would cost too much money. It would hurt too many jobs. Well Stern’s analysis destroys this argument. The economic benefits of strong, early action considerably outweigh the costs. The longer we wait to act, the more it is going to cost us.
We have already acted too late to stop climate change happening at all. It is too late to avoid some climate change, but at least we can try and avoid catastrophic change. What we do now can have only a limited effect on the climate over the next 40 or 50 years, however what we do in the next 10 or 20 years can have a profound effect on the climate in the second half of this century and in the next.

In economic terms Stern’s conclusion is stark: The review estimates that if we do not act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more.

In contrast, the costs of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change – can be limited to around 1% of global GDP each
year.

The report should be seen, says Blair, “as the final word on why the world must act now to limit the damage we are doing to our planet”. Its conclusions are a “wake-up call to every country in the world”, says the British Prime Minister.

The report really should be the final word on the ugent need for international action and to end our global addiction to oil. It really is time to act. We cannot delay. It is also time for the climate sceptics to finally admit the seriousness of the problem and to shut up.
To access the report, go here.