The climate crisis will destroy our economies – we learned this 20 years ago. When will we act? | Fiona Harvey — SkimNews
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- The Economics of Climate Change — the 700-page Stern Review, published 20 years ago this week — set out three radical conclusions: the cost of climate inaction exceeds the cost of action, the climate crisis is a market failure, and economic growth is compatible with cutting greenhouse gas emissions.
- Nicholas Stern, the former World Bank chief economist turned adviser to Gordon Brown, argued that future generations have as much right to be born as the present generation, and that applying a discount rate to future lives grossly distorts the economics of climate protection.
- William Nordhaus, whose early-1990s work was the previous standard for climate economics, asserted countries should budget for 'moderate' heating of about 3C to 4C above preindustrial levels; in 2018 he published a paper claiming 3C would reduce global GDP by just 2.1% and 6C by 8.5%, and was awarded the Nobel prize that year with his climate work prominent in the citation and prize lecture.
- Climate scientists have countered that at 6C widespread famine could leave billions of people what the source calls 'suboptimally productive' — or dead — a far bleaker picture than Nordhaus's 8.5% GDP-loss estimate.
- Nicholas Stern says that if he redid the review today he would place more emphasis on nature: biodiversity collapse is a key economic and national security threat that has been grossly underestimated and neglected.
- Governments, businesses and international institutions still use predictions that the climate crisis will shave only a few per cent off GDP, even as temperatures shatter records and the supercharged El Niño threatens trillions of dollars in damages.
- Insurers are alleged to be knowingly fudging their figures to massage climate risk away, as the Guardian revealed this month, while governments refuse to act and markets over-value fossil fuel companies.
Why it matters: Nordhaus's 2018 estimate — 3C costing only 2.1% of global GDP — still circulates in governments, businesses and international institutions, even though climate scientists warn 6C brings widespread famine. Because traditional growth models remain standard training in hundreds of universities, the institutions that price climate risk keep using the discount rates Stern showed devalue future lives.
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