Climate Change Economics

by RAY FLEMING
TONY Blair cut a sorry figure at Prime Minister's Questions in the Commons this week when trying to defend his unwillingness to set year-on-year targets for reducing climate–changing gas emissions. It would, he said, be “very, very difficult” to meet year-on-year targets and proposed instead three, five or ten year targets; he did not, however, explain why they would be easier to meet. His reluctance was all the more surprising given that he must already have known about the scary report about climate change which Sir Nicholas Stern will deliver next week. Sir Nicholas, a former World Bank economist, was commissioned by Gordon Brown to predict the economic consequences of climate change. It is believed that his report will say global warming could cost the world's economies up to 20 per cent of their gross domestic product if urgent action is not taken to prevent floods, storms and natural catastrophes. According to Sir Nicholas, “business as usual is not an option”. The world must be ready to spend one per cent of its gross national product to avert catastrophe; but doing nothing could cost five to twenty times as much. It will be interesting to see what reaction Sir Nicholas' report will get in the United States. Perhaps what are being called his “hard-headed” and “frighteningly convincing” arguments will be more persuasive in Washington than the warning of the world's top scientists have so far been.