Stern Rebuke

[Aristophanes]

Bjorn Lomborg, Financial Post
Published: Tuesday, November 07, 2006

The report on climate change by Nicholas Stern and the U.K. government has sparked publicity and scary headlines around the world. Much attention has been devoted to Mr. Stern's core argument that the price of inaction would be extraordinary and the cost of action modest.

Unfortunately, this claim falls apart when one actually reads the 700-page tome. Despite using many good references, the Stern Review on the Economics of Climate Change is selective and its conclusion flawed. Its fear-mongering arguments have been sensationalized, which is ultimately only likely to make the world worse off.

The review correctly points out that climate change is a real problem, and that it is caused by human greenhouse-gas emissions. Little else is right, however, and the report seems hastily put together, with many sloppy errors. As an example, the cost of hurricanes in the U.S. is said to be both 0.13% of U.S. GDP and 10 times that figure.

The review is also one-sided, focusing almost exclusively on carbon-emission cuts as the solution to the problem of climate change. Mr. Stern sees increasing hurricane damage in the U.S. as a powerful argument for carbon controls. However, hurricane damage is increasing predominantly because there are more people with more goods to be damaged, settling in ever more risky habitats. Even if global warming does significantly increase the power of hurricanes, it is estimated that 95% to 98% of the increased damage will be due to demographics. The review acknowledges that simple initiatives such as bracing and securing roof trusses and walls can cheaply reduce damage by more than 80%; yet its policy recommendations on expensive carbon reductions promise to cut the damages by 1% to 2% at best. That is a bad deal.

Mr. Stern is also selective, often seeming to cherry-pick statistics to fit an argument. This is demonstrated most clearly in the review's examination of the social damage costs of CO2 -- essentially the environmental cost of emitting each extra ton of CO2. The most well-recognized climate economist in the world is probably Yale University's William Nordhaus, whose "approach is perhaps closest in spirit to ours," according to the Stern review. Mr. Nordhaus finds that the social cost of CO2 is US$2.50 per ton. Mr. Stern, however, uses a figure of US$85 per ton. Picking a rate even higher than the official U.K. estimates -- that have themselves been criticized for being over the top -- speaks volumes.

Mr. Stern tells us that the cost of U.K. flooding will quadruple to 0.4% from 0.1% of GDP due to climate change. However, we are not told that these alarming figures only hold true if one assumes that the U.K. will take no additional measures -- essentially doing absolutely nothing and allowing itself to get flooded, perhaps time and again. In contrast, the U.K. government's own assumptions take into account a modest increase in flood prevention, finding that the cost will actually decline sharply to 0.04% of U.K. GDP, in spite of climate change. Why does Mr. Stern not share that information?...

More here.


The Stern report is not being completely upright with us, but Bjorn Lomberg does a decent job of addressing some of the inadequacies-although I disagree with his final conclusions.

[Denny Crane!]

If some of the figures were incorrect the basic assumption of the report was correct that the faster we move to counteract growing carbon emissions the better.

If climate change isn't your thing there are many other reasons to support it. If your in the UK then energy security and exponential price rises should have everyone thinking about where are energy will come from in the future and at what cost.

Peter

[Freddie]

There are already two thread based on the stern report.

Either way the apathy shown towards it is shocking. I think a lot of people her don’t realise how catastrophic the consequences of global warming are.