(This is Part 2 of a series. Go back to Part 1.)
One of the central arguments against taking concerted action now to curb global warming is that it would be "bad for business." That is the strong insistance of the current U.S. administration, it is the stance of most developing countries including China and India, and it is the unspoken stance of even developed countries in Europe and elsewhere. After all, no government anywhere gets a substantial part of its revenue from a tax on the use of carbon.
But is this assumption really true, that a concerted program now to slow or halt global warming would be "bad for business"? With the release of the Stern Report that question is now, for the first time, being addressed not by a scientist but by a prominant economist.
Sir Nicholas Stern was commissioned by the British government to look at the subject of global warming from an economic perspective. Stern is a heavyweight, the former chief economist of the World Bank, and so the conclusions of the Stern Report cannot be easily dismissed by even the most fanatical head-in-the-sand types.
And here is the gist of what it says: That a quite substantial but still manageable expenditure by government, business and consumers now and in the near future will prevent a truly staggering and catastrophic economic cost further down the road. In other words, it is not action but the lack of concerted action and investment now that would truly be "bad for business" a few decades hence.
Translation: Face the problem now at substantial cost or face it later at a cost that will be economically ruinous. Delay, that is, will get more and more costly—at an accelerating pace—as time goes on.
Through sophisticated modeling the report estimates that if the problem is tackled immediately it would cost approximately 1% of world GDP (world gross economic product)—substantial but not crushing. As each decade goes by, the cost in percentage terms of world GDP rises. For instance, by 2050 the cost would be a continual lowering of world GDP by approximately 20%, a cost comparable but larger than the economic cost of World Wars I and II and the Great Depression of the 1930s.
In fact, according to this analysis such delay—"business as usual"—would by itself usher in a global Calamitous Depression as business and consumers cope with the domino effects of global heating.
The "line in the sand" in terms of its economic effects—never mind the catastrophic ecological ones—appears to be 500 to 550 parts per million of carbon in the atmosphere, approximately double the pre-industrial level but only 70 to 120 ppm above where we are currently. Above that level various runaway phenomena could occur whose unknown effects the human race would be very wise not to find out about.
Even to stabilize at that level, according to the report, emissions of carbon per unit of global GDP would need to fall by three-quarters by 2050. Moreover, richer countries will need to pick up 60-80% of the global cost involved, because poorer countries will be far less able to afford it. These are daunting statistics. We'd best get on with it.
A little further on in this series we'll look at potential solutions to this multi-pronged global challenge.
—jim sloman, 10.31.06
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