The Weird World Of Economics

HARD-hitting official British study released yesterday sketches a grim picture of the terrifying realities of climate change, warning that unchecked global warming could devastate the world’s economy, costing it as much as $9,6-trillion.

The warning of economic devastation on the scale of the world wars and the Great Depression forms part of the report from UK government chief economist Sir Nicholas Stern.

The report, the most powerful establishment study yet on climate change, was introduced by Prime Minister Tony Blair, who said unabated warming would eventually cost the world 5%-20% of global gross domestic product each year.

It warns that failing to tackle climate change could push world temperatures up by 5°C over the next century, causing severe floods and harsh droughts and uprooting 200-million people.

Global warming may cost the world as much as $9,6-trillion by the next century because of the effects of famine, rising sea levels, storms and other environmental damage, the study says.

Blair called for “bold and decisive action” to cut carbon emissions and stem the worst of the temperature rise. He hopes to persuade the US, as well as fast-growing developing nations China and India, to sign up to a new global framework to curb greenhouse gas emissions.

The report by Stern, also a former World Bank chief economist, said establishing a carbon price, through tax, trading or regulation, was “an essential foundation” for tackling global warming.

He said achieving deep cuts in carbon dioxide emissions would cost about 1% of world economic output by 2050, a level that was “significant but manageable”.

Blair and Chancellor of the Exchequer Gordon Brown endorsed the report’s central recommendation for developing an international market in carbon trading to slash emissions of harmful greenhouse gases.

Brown will throw his weight behind a large-scale expansion of carbon trading rather than raising billions of pounds in green taxes.

In his 700-page review, Stern also said policies were required to support a range of low-carbon and energy-efficient technologies. He suggested there could be high returns from doubling investment in these areas to $20bn a year.

“There is still time to avoid the worst effects of climate change if strong collective action starts now,” he said. “With the right incentives, the pri-vate sector will respond and deliver solutions.”

Efforts to move the world on to a low-carbon path would need to go hand in hand with measures to adapt to the effects of climate change.

Blair said in London that the report was the “most important” he had received.

“The Stern review has done a crucial job. It has demolished the last remaining argument for inaction in the face of climate change,” Blair said at the report’s launch. “We know now that urgent action will prevent catastrophe and investment in preventing it now will pay us back many times.

“If the science is right, the consequences for our planet are disastrous.”

Britain is pushing for a post-Kyoto framework that would include the US — the world’s biggest producer of greenhouse gases that cause climate change — as well as major developing countries such as China and India.

US President George Bush pulled the US out of the Kyoto Protocol, in part because he said it hit jobs.

How To Become A Millionaire Digging Caves

The Tipping Point: How Little Things Can Make a Big Difference