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THE STERN REVIEW: THE ECONOMICS OF CLIMATE CHANGE
The Stern Review was commissioned by Britain’s Chancellor of the Exchequer, reporting to the Chancellor and Tony Blair as a contribution to assessing the evidence and building an understanding of the economics of climate change. Here are some of the review’s key points:
The scientific evidence is now overwhelming: climate change is now a serious global threat, and it demands an urgent global response. The benefits of strong and early action far outweigh the economic costs of not acting.
Climate change will affect the basic elements of life for people around the world: access to water, food production, health, and the environment. Hundreds of millions of people could suffer hunger, water shortages and flooding as the world warms.
If we don’t 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. 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 investment that takes place in the next 10-20 years will have a profound impact in the second half of this century and the next. Our actions now and over the coming decades could create risks of major disruption to economic and social activity, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century. And it will be difficult or impossible to reverse these changes.
There is still time to avoid the worst impacts of climate change, if we take strong action now.
The scientific evidence points to increasing risks of serious, irreversible impacts from climate change associated with business-as-usual (BAU) paths for emissions. Under a BAU scenario, the stock of greenhouse gases could more than treble by the end of the century, giving at least a 50% risk of exceeding a 5 degree Celsius global average temperature change during the following decades.
Mitigation -taking strong action to reduce emissions – must be viewed as an investment, a cost incurred now and in the coming few decades to avoid the risk of very severe consequences in the future.
The damages from climate change will accelerate as the world grows warmer.
The impacts of climate change are not evenly distributed: the poorest countries and people will suffer earliest and most.
The costs of stabilising the climate are significant but manageable: delay would be dangerous and much more costly. Stabilisation requires that annual emissions be brought down to more than 80% below current levels.
Action on climate change is required across all countries, and it need not cap the aspirations for growth of rich or poor countries.
Establishing a carbon price, through tax, trading or regulation, is an essential foundation for climate change policy.
Policies are required to support the development of a range of low-carbon and high-efficiency technologies on an urgent timescale.
Curbing deforestation is a highly effective way of reducing greenhouse gas emissions. Emissions from deforestation are 18% of global emissions – greater than global transport emissions.
A range of options exists to cut emissions; strong, deliberate policy action is required to motivate their take-up. Emissions can be cut through increased energy efficiency, changes in demand, and through adoption of clean power, heat and transport technologies.
Climate change is the greatest market failure the world has ever seen. Three elements of policy are required for an effective global response. The first is the pricing of carbon, implemented by tax, trading or regulation. The second is policy to support innovation and the deployment of low-carbon technologies. And the third is action to remove barriers to energy efficiency, and to inform, educate and persuade individuals about what they can do to respond to climate change.
Send a short message to the Prime Minister asking him to take immediate action to implement the following recommendations of the Stern Report: Post to Parliament House, Canberra ACT 2600, or email: |