Getting warmed up

In the fall of 2006, Sir Nicholas Stern, former chief economist at the World Bank and an adviser to the British chancellor Gordon Brown, produced a 600-page report calling for global investment in new technologies to head off the worst of global warming. The alternative, he said, was a global recession by the end of the century that would cut the world's wealth by as much as 20%.

He forecast huge disruption to African economies in particular as drought hits food production; up to a billion people losing water supplies as mountain glaciers disappear; hundreds of millions losing their homes and land to sea level rise; and potentially big increases in damage from hurricanes. The economic cost of failing to act could approach $4 trillion by the end of the century, he [said].

Last week, he declared that his assessment had been too rosy.

“We underestimated the risks ... we underestimated the damage associated with temperature increases ... and we underestimated the probabilities of temperature increases,” Lord Stern, former chief economist at the World Bank, told the Financial Times on Wednesday.

In retrospect, he said, he would have taken a much stronger view in the report on the drastic changes that would come about if greenhouse gas emissions were not abated.

The costs, he said, should have been much higher.

At the same time,

he defended his estimates of the cost of taking action on emissions, which he put in the report at about 1 per cent of global GDP.

“Subsequent reports, [from] McKinsey, the International Energy Agency, the Intergovernmental Panel on Climate Change, have pointed to the [Stern report’s] costs of action being roughly in the right ball park. Nothing [since] has led me to revise the cost of action,” he said.

The costs of inaction far outweigh the costs of action. Then again, they often do.