Tuesday, October 31, 2006

Is this loud and clear enough?

The Stern review report on climate change was published today. Undoubtedly it will be discussed a lot, its message will be understood as well as misunderstood and as always, what will be done in the end is a whole other question.

The review was commissioned by the Chancellor of the Exchequer (finance minister in the rest of the world, one of the coolest titles you can ever have) Gordon Brown, and the purpose of the report was to look at climate change from the economical perspective. The review group tried to answer the following five questions: what are the risks and costs of the impact that climate change has; what are the options for reducing greenhouse gases and how much they cost;what policies and strategies should be developed for mitigation of climate change; how should we adapt to the inevitable changes and how should this adaptation be financed; how do the processes of mitigation and adaptation work in the international level.

In short: what's going to happen, what should we do, who should do what, and how much is it going to cost and who's footing the bill.

Where this report is successful is that puts things in terms that all politicians and business managers will understand - money. It's hard to put a price tag to your lifestyle, especially if that lifestyle involves the countryside in any way. Also, it's difficult for a consumer in England to see a link between their car driving habits and Bangladeshi floods. So far, putting things in terms of how many degrees the temperature will rise has failed as spectacularly as in my recent example on effects of bad diet to life expectancy. Just as people prefer to party hard when they are young and not to worry if they live one or two years less, people generally think that if temperature rises a few degrees it is actually a good thing. Both are dangerous fallacies, as the report reiterates, and putting things is more direct and concrete terms works. The doctors should have said that so many thousands of people more die at the age of 40-50 rather than 60-70 due to their diet and lifestyle in North of England than in the South. Similarly, the Stern report says that if we do nothing now, the cost could be up to 20% of global GDP by 2050, whereas if we act successfully, the cost will be as low as 1%.

To illustrate the 1% cost, it would mean that the economy would continue to grow, but at a slightly slower rate, so that the level we'd reach in 2050, we reach in 2051. Putting it this way and it doesn't feel like an insurmountable cost. Of course this way of calculating doesn't take into account the "finding" of the Stern report that the business-as-usual model would actually end up being so cataclysmic and costly that constant economic growth would be impossible.

There are of course caveats, and they have to do with the huge variance in the predictions of different climate models, and the natural inertia of the atmosphere, which means that any change now will take a long time to take effect. What this report is successful in doing is that it says that we need to act now, and we need to do it internationally, and the costs are not that big compared to the risks we face with inaction. Also, the report states that economic growth can still be sustained even

So, switch off those computers and TV's for the night, unplug your cell phone charger when not in use, and take a train instead of a plane at least once. It's the least we all can do, no statistics needed.

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