Timothy A. Clary/AFP/GettyImages

There are many reasons to be concerned about global warming, and now the Stern report on climate change has added the economic dimension to the worries we face with this mounting catastrophe. Written for the UK government by former chief economist of the World Bank Sir Nicholas Stern, the report concludes that global warming could lead to the biggest recession since the Wall Street Crash and the Great Depression.

Until Stern’s 700-page tome was released late last October, economists were generally of the view that taking action on global warming would be too costly to be warranted. Overnight, the widely-reported Stern report rewrote the economic argument. Stern added up the costs and benefits, and made it clear that failing to curb greenhouse gases would result in an economic disaster.

It’s telling of the limitations of neoclassical economics that to assess the economic implications of climate change, Stern compared the costs in reduced GDP of preventing climate change against how much climate change will reduce future growth in GDP. That’s like comparing the cost of repairing the brakes on your bicycle to the costs you will face when the brakes fail and you crash into oncoming traffic.

The detailed economic consequences of global warming tallied up in Stern’s report are far more alarming than the projected drop in world GDP he emphasized to the press. Stern warns of melting glaciers reducing dry season flows to one-sixth of the world’s population, declining crop yields leaving millions of people in Africa hungry and impoverished, acidifying oceans leading to less fish to catch, rising sea levels displacing up to 200 million people, more deaths from malnutrition and heat stress

And yet, all these vast tragedies, all these livelihoods rendered more difficult, get simplified by most economists into one measure, a hiccup in their dreams of an ever-increasing GDP. But Stern didn’t just change the economic argument on global warming. Himself a highly respected member of the economic profession, soon to return to the London School of Economics, Stern found that using mainstream economics to analyze climate change stretched the discipline to its limits. For Stern, climate change “presents a unique challenge for economics: it is the greatest and widest-ranging market failure ever seen.”

Leading ecological economists told Adbusters that they agree that climate change poses challenges to mainstream economics. Here is a sampling of their reactions.

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"The human economy has increased more than 40 fold since 1820 while the size of the Earth has remained the same. Human-induced climate change is just one of several indications that the increasing scale of the world’s economy is having measurable, degrading impacts on the environment. Economists should recognize and teach students that the economy is a large and growing sub-system of the planet and that it makes no sense to study the economy as if it existed in isolation of the biosphere."
Peter Victor, Ecological Economist, York University, Toronto.

"As 'the greatest market failure the world has ever seen,' climate change cannot be adequately dealt with through normal economic tools and concepts such as cost-benefit analysis. The Stern report employs standard economic tools and concepts as intelligently as possible, but, admirably, it recognizes their limitations and recognizes the need for ethical perspectives ‘focusing on welfare, equity and justice, freedoms and rights.’ Ethical perspectives have long been unwelcome in economics. In seeking to create sustainable, humane economies, we should not abandon (all of) economic theory, but must recognize that even its most useful offerings supply only a small part of the knowledge required. A new humility is required of economics teachers, a willingness to go outside of their own expertise."
Neva Goodwin, Co-director, Global Development and Environment Institute, Tufts University. Co-author, Microeconomics in Context.

"The Stern report is a boost for the concept of political economy. It forces us to think about moral and political issues. A crucial part of the report, for example, is its assumptions on intergenerational equity, on how the well-being of people now alive ought to be balanced against the well-being of future and hopefully better-off generations. I’m not sure that Stern has made a sensible choice, but the report makes us think about it and the inherently political and democratic choices we face."
Paul Ormerod, Economist and author of Why Most Things Fail

"The Stern report makes a mistake in assuming that economics can contribute to resolving the climate change crisis. Economics has a limited capacity to respond to anything where outcomes are more important than outputs. In this context, its usual response is to seek commodification of public goods, such as through trading carbon credits, which are a license to emit even more for those who can afford to. The bizarre market-based abstractions used by economists to impute values to the productive, reproductive and service work of the environment render the analysis meaningless for policy intervention. These are ‘our public goods’ at stake here, the air we breathe, the water that sustains the environment and us. Economics can say nothing about those most affected by climate change, those who are forced to live marginally on the most vulnerable parts of the planet, overwhelmingly women and children."
Marilyn Waring, Professor, Institute of Public Policy, Auckland University of Technology.

"The Stern report’s findings demand a fundamental change in economics. The most serious economic problem is no longer how to allocate raw materials provided by nature among alternative economic products, but rather how to allocate natural capital between economic products and the life support functions provided by healthy ecosystems – a problem of collective action and cooperation, not self-interested competition. But the report lets us down by failing to question the goal of never-ending growth, which caused the problem in the first place."
Joshua Farley, Assistant Professor, Community Development and Applied Economics and Fellow, Gund Institute for Ecological Economics, University of Vermont

 

Tom Green is an ecological economist in Vancouver working on reforming undergraduate economics education.
 

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Click above to download these warning labels and print them out on pre-cut label paper. Not sure why we need to take action? Read "The Revolution Will Begin with a Textbook" by Tom Green (Adbusters #69).

COMMENTS:

We mandated emissions because of ozone layer depletion, why can't we do the same for global warming, and even larger threat? Oil is too profitable – that's why we killed the electric car!
Joe Ross

It's sad to see that most people yet don't realize the great impact of global warming, and how it affects pretty much EVERYTHING. Soon enough, there will be drought and famine and disease. How can they not care that the world is changing for the worse? They might not care yet because they can still afford all the commodities that make them ignore how the planet is deteriorating (why stand the heat if i can turn on the a/c?). They will care eventually, when the catastrophe is so heavy it pops even their comfy bubbles where they isolate themselves from what they've done.
Vanessa

I'm glad that the great potential for environmental disaster is being put into terms that most governments and companies can understand: money. It might be enough to open their eyes. We can only hope.
Brad

We need to rethink Capitalism totally if we're going to survive as a species.
Mike Smith

I should've said "the Indonesian tsunami" because another one has hit since I wrote that. Also, I was off on the death toll by about 100K (brain flatulence, sorry). Guess I'm just an optimist.
Harlan

Stopping or even just slowing down something as massive as global climate change is beyond the capabilities of human industry at this point. How do we put the shells back on the mollusks, for example, or adjust the pH of the world's oceans (the increasing carbonic acid in seawater, from absorbing more atmospheric CO2, dissolves the calcium of shells and corals)? Capitalism is not solely to blame, either, and in fact can contribute to some positive responses through stimulating innovation. Nature has her CO2 cycles, too, and one large volcanic eruption can throw more carbon in the air than years of industry, so even if we all do everything 'right' to slow global warming it may well come blazing in anyway. I see the need for humans to rethink the very ways in which we live, something much more fundamental than devising a new economic model. Our infrastructure is fixed, rigid, heavy, and essential utilities are centralized. The future demands mobile, flexible, and light, with essential utilities diversified and decentralized. The future is unpredictable in its specifics, and we'll increasingly need to be able to quickly move large populations out of areas rendered uninhabitable by whatever cause, and just as quickly set up the infrastructure to support the newlymoved population, as they will likely be unable to return. Case in point: Some rocks move under water and 115,000 people die; untold millions are made homeless and forced to relocate. And that was just some rocks shifting, no big deal as far as the planet was concerned. Look for this scenario to become more common. Oddly enough, there might be a direct connection between our oil addiction and the tsunami, as there's a huge Exxon gas well complex above the epicenter. Basically, it is time to fasten our seatbelts and get ready to hang on for the wildest ride in history, and we'd better hurry as it's already started.
Harlan

Don't waste your time with the war on drugs or the war on terror. The second world war was nothing compared to the surprise we have coming to us! We will see and experience global warning, species and habitat destruction, minerals and food shortages; all pushed irrevocably by the growing human population to a Crisis of Stupidity. Will we survive? Are we clever enough to realise what we are doing to ourselves? Will we struggle to fix it and just possibly save ourselves, or will we just keep on driving those great fat cars while the garden on our planet turns to a huge rubbish dump? And that bottomless resource, the sea, isn't bottomless. Fish stocks are dangerously low and the plants are dying. Plastic bags and toxic algae are multiplying while everything else dies. And we forget that other creatures are as alive as we are. Who are we to endanger the lives of so many other lifeforms just so that we can leave unnecessary lights on? Just so we can dump rubbish and sewage a bit more cheaply? But what do I know? Just another dribbling autistic, just another retard taking time off from the million-dollar job I am working on.
P Buddery

Personally, I would love to see the world burn in hell. Humanity no longer deserves to be on planet earth anymore...we've had our chance to figure shit out long time now. Unless those crazy conspiracy theorists are right, and there is some all-powerful Illuminati group shaping world events and making sure everything turns out okay, then peace peace baby. I'm resolved in how f'ed we all are. Watching all those ignorant Americans (especially the economists and their families) running around in utter confusion and fear would be enough to make this shitty life worth living.
yoyos

je trouve votre journal trés important.
traormamadoubella

Yoyos has got to get some counseling. The point of the Stern report is that action CAN be taken to correct this enormous market failure. The question is how to get the global community to decrease their emissions together. The incentives for countries not to cooperate in this goal are obvious, since greater emissions tend to lead to greater growth (exactly what has caused all of this). However, any one country, no matter how big, cannot by itself stop the rapid increase of carbon dioxide equivalent emissions into the atmosphere. Cooperation is necessary. Stern makes the point that even though it may be difficult to obtain cooperation amongst the countries of the world, the struggle is worth it because it will increase the likelihood of us seeing our grandchildren smile, and them seeing their grandchildren smile.
ad salad

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