HOW CAN WE SOLVE THE TWO GREAT GLOBAL PROBLEMS - POVERTY & CLIMATE CHANGE?

Lord Nicholas Stern, economist and author of the acclaimed and much-discussed Stern Review of 2006, spoke recently at the Royal Geographical Society about the world’s major problems and his suggested solutions to them. This, in summary, is what he said.

The two great issues of the 21st century – poverty and climate change – are interdependent: they succeed or fail together. The economic crisis we are now experiencing is a shorter, shallower problem.

WHO CAUSES THE CLIMATE CHANGE?

There is no doubt that climate change is caused by human activity. People produce greenhouse gases, not all of which are absorbed by the atmosphere. Hence we have a stock of gases in the atmosphere trapping other chemicals: this is what we call ‘the greenhouse effect’. The impact is felt mainly through water – melting glaciers and ice-caps, reduction of ice in the polar regions, tsunamis, rising sea levels.

Early economists misunderstood the impact of climate change because they didn’t recognise the size and uncertainty of the problem, which is global, long-term and very big. The changes that are happening are not marginal like those in economics. Moreover, the problem is growing all the time, so delay worsens it.

Governments and other interested bodies need to consider ‘externalities’ – the effects of one person’s actions on others – and hence the interconnectedness of all aspects of climate change.

WHAT IS THE NATURE OF THE PROBLEM?

About two-thirds of emissions of greenhouse gases are accounted for by only six or seven countries. Poor countries will figure large in emissions in the next years because there are more people in them, but rich countries account for more emissions overall, as their emissions per capita are higher. In the mid-19th century the rate of emission was 285ppm CO2e (carbon dioxide equivalent); now it is 430ppm and we are adding CO2e at the rate of more than 2.5ppm/year. If we continued as we are now – the ‘business as usual’ (BAU) scenario – we would reach a level of 750ppm by the end of the century, which would be nothing short of ruinous.

The challenge is to keep the rate of emissions under 500ppm, or, better still, 450ppm (which we will reach, under BAU, in six years). This would keep the increase in temperature to less than two degrees and would reduce emissions to about 50% of those of 1990-2000.

The trouble is that, although humans have been on earth for some 100,000 years, we don’t know what the effects of high levels of emissions will be. In the last Ice Age, 10-12,000 years ago, the temperature was only about five degrees lower than it is now.

What we do know is that temperature increase will force people from their existing settlements by rising sea levels or loss of suitable conditions for agriculture or survival by other means. Massive human movements are bound to lead to extended conflicts.

It takes a long time for reduced emissions to lead to reduced concentrations in the atmosphere. By 2050 there will be some 9 billion people on the planet. Overall our aim should be to reduce emissions to 2 tonnes per person and by 2050 to reduce emissions to 50% of their 1990 levels.

WHAT ARE WE TO DO?

There are three key areas to focus on:

• energy efficiency
• developing and deploying low-carbon technologies – an attractive and long-term option whose effects promise to last several decades
• halting deforestation, which is the source of 15-20% of emissions.

The cost of reducing emissions is estimated at about $2 trillion. Sounds like a huge amount of money? In fact, it’s only about 1-2% of the world economy – and the cost is to put one-off new measures in place, not a long-lasting, continuous commitment.

Prices, taxes and regulation are necessary too, and individual preferences have to be managed. People need to be made to understand the consequences of their actions. Remember the introduction of the breathalyser? Many people were outraged at the alleged infringement of personal liberty, yet now the practice is not only commonplace but fully accepted as right.

WHAT SHOULD BE THE GLOBAL DEAL?

Action has to be taken internationally. Here is what the global ‘deal’ we need would look like:

1. Global emissions targets for rich countries.

2. Developing countries to take on targets too (as some already have, e.g. Brazil, India and China).

3. Emissions trading should be encouraged.

4. There must be a halt to deforestation and investment in agriculture, an initiative driven by developing countries.

5. Employ technology. Some 50% of our energy currently comes from coal. Carbon capture and storage could give us solids to use as fuel.

6. Adaptation: we need to remember that development in a more hostile climate is more expensive.

These principles need to be firmly established before the next Climate Conference in Copenhagen in December, when it is hoped this deal will be drafted.

There are two points to note about any economic crisis. One is that the longer the risks are ignored, the worse the consequences. The second is that action to get out of the present crisis must not sow the seeds of the next one. But the current downturn creates an opportunity: materials, for insulating homes, for example, are cheaper; and now is a good time to invest in energy efficiency, new technologies and low-carbon growth.

“2009 is a year when political leadership, pressure and decision are vital,” says Lord Stern. “The prize from success is great; the risks from failure are immense.”