Sir Nicolas Stern's recent report on the economics of global warming has finally changed the nature of the debate. Instead of being pigeonholed as an environmental problem, global warming can finally be seen for what it really is — an economic one.
The Stern Report was huge. Literally, at 700 pages, but also for the shockwaves it sent around the world. Mr. Stern is no lightweight. He's a former chief economist with the World Bank. At his disposal was a team of 20 other researchers and academics. And the report they presented, while certainly not the final word on the topic, has finally assigned a dollar figure to the costs of global warming.
That figure is astounding: $7 trillion (U.S.) — or between five and 20 per cent of the global economy — wiped out by the beginning of the next century because of problems brought about by a warmer planet. Global warming, the report says, could cost more than the first two world wars combined and lead to a worldwide depression.
Predictably, some people pounced on the report, saying it was alarmist and inaccurate. Of course, the reality is that no one knows how accurate it is. Creating a report of this kind naturally requires making certain assumptions and even some guesses about future trends. But it represents a very good estimate that can now be refined over time.
What we mustn't do, however, is get so bogged down in fighting over the details that we fail to see the most important message in the report — that we can't afford not to take serious action. For years, many politicians and industry lobbyists have painted global warming as an environmental problem — like creating a new park, helping an endangered species recover or planting trees. Yes, we need to help the environment, they said, but we have to be careful not to do anything that could slow economic growth. In fact, some went to great lengths to insist that tackling global warming would mean "shutting down" the economy. Sure, they lamented, we could do something about the problem, so long as you don't mind living in caves and eating dirt.
Basically, global warming was painted as an either-or environmental problem. Either you had a robust economy and accepted a hotter planet that might not have as many pretty birds or plants, or you had no economy and lived like the Flintstones with lots of fuzzy animals and spotted toads. According to the standard argument you couldn't have both.
Mr. Stern's report shows this is a lie, for two reasons. First, the economic costs, not just the environmental costs, of inaction are actually much higher than adequately dealing with the problem now. Mr. Stern says that measures to stabilize greenhouse gas concentrations at levels that will prevent dangerous global warming will cost just one per cent of the global GDP. This means that we most certainly can afford to take significant action.
Second, the report shows that tackling global warming is not about saving the whales or some such thing; it's about not being stupid. It's about having the capacity to recognize the health of the world we live in and the health of our people and our economies are intimately connected. It's about recognizing that, although we rarely think about it, the services provided by nature are worth a great deal (of money, if you like to think of it that way).
We can't stop global warming in its tracks, but we can avoid the worst of it. Fighting the problem certainly has a price, but it's manageable. These are the lessons of the Stern Report. Reasons enough to put aside the rhetoric, stop the posturing and not be stupid.