Stern report on the economics of global warming
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There are many reasons to be concerned about global warming, and now the Stern report on climate change has added the economic dimension to the worries we face with this mounting catastrophe. Written for the UK government by former chief economist of the World Bank Sir Nicholas Stern, the report concludes that global warming could lead to the biggest recession since the Wall Street Crash and the Great Depression.
Until Stern's 700-page tome was released late last October, economists were generally of the view that taking action on global warming would be too costly to be warranted. Overnight, the widely-reported Stern report rewrote the economic argument. Stern added up the costs and benefits, and made it clear that failing to curb greenhouse gases would result in an economic disaster.
It's telling of the limitations of neoclassical economics that to assess the economic implications of climate change, Stern compared the costs in reduced GDP of preventing climate change against how much climate change will reduce future growth in GDP. That's like comparing the cost of repairing the brakes of your bicycle to the costs you will face when the brakes fail and you crash into incoming traffic.
The detailed economic consequences of global warming tallied up in Stern's report are far more alarming than the projected drop in world GDP he emphasized to the press. Stern warns of melting glaciers reducing dry season flows to one-sixth of the world's population, declining crop yields leaving millions of people in Africa hungry and impoverished, acidifying oceans leading to less fish to catch, rising sea levels displacing up to 200 million people, more deaths from malnutrition and heat stress.
And yet, all these vast tragedies, all these livelihoods rendered more difficult, get simplified by most economists into one measure, a hiccup in their dreams of an ever-increasing GDP. But Stern didn't just change the economic argument on global warming. Himself a highly respected member of the economic profession, soon to return to the London School of Economics, Stern found that using mainstream economics to analyze climate change stretched the discipline to its limits. For Stern, climate change "presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen."
(From Adbusters Copyright 2007)
Saul
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