Hot topics                    

Tuesday 31 October 2006

Stern Review on the Economics of Climate Change -

Australian climate change experts react

In a long awaited UK report on the global economic impact of climate change, Sir Nicholas Stern (former Chief Economist of the World Bank and now an economic adviser in the UK Government) warns that climate change could cost the world 5-20% of its GDP.

The Chancellor of the Exchequer, Gordon Brown, commissioned the Stern Review on the Economics of Climate Change in July 2005 “to understand more completely the nature of the economic challenges and how they can be met, both in the UK and globally”.

Further information on the Stern Review is available online at www.sternreview.org.uk

The Australian Science Media Centre has a number of climate, energy, policy and economics experts who are available to comment on the Stern review on the Economics of Climate Change and the United Nations Framework Convention on Climate Change report on rising carbon dioxide emissions. Click here for further information.

Below are several comments from Australian experts. Feel free to use these quotes in your stories.  To speak to these or other experts, call the Australian Science Media Centre on (08) 8207 7415 or email us.

Professor Tony McMichael, Director, National Centre for Epidemiology & Population Health, Australian National University

“This far-sighted report, based on up-to-date climate change science, turns the typically anxious and defensive economic argument on its head.

In addition to recognising that a fulsome response to global climate change need not harm our economy, the report emphasises that anything short of a major and immediate response will seriously endanger our society's future over coming decades.”

Professor Matthew England is climate scientist with expertise on the ocean's role in climate. He is Climate and Environmental Dynamics Laboratory (CEDL) School of Mathematics & Statistics, University of New South Wales

"Australia has to get with the times on this. We are very susceptible to extremes in climate. Add climate change to the equation and things get worse. The farming sector is all too aware of this. The insurance sector is on board - their annual damage claims bill is soaring. Businesses and the community need to know what will be done to tackle climate change and cut greenhouse gas emissions. This needs unilateral participation."

Associate Professor Tony Owen, of the Centre for Energy and Environmental Markets at the University of NSW, has urged the Australian government to introduce measures including carbon trading, to try to halt climate change and its economic consequences. Contact Susi Hamilton for more information - tel. 9385 1583 or 0422 934 024, email susi.hamilton@unsw.edu.au.

"One of the findings of the review was that climate change will cost the global economy at least five percent of GDP each year “now and forever” and that the damage bill could rise to more than 20 percent of GDP. Putting a price on carbon emissions is not an unfair impost on consumers, it is simply ensuring that the ‘polluter pays principle’ is adopted, and that the implicit subsidies given to polluting activities are withdrawn.

“The Stern Review finally closes a chasm that has existed for 15 years between the precautionary concerns of scientists and the cost-benefit views of many economists on the significance of climate change. It could be useful for Australia to do a similar review, but that would take time and it’s time that we just can’t afford. While the problem is indeed massive and urgent – it can be solved. Another major step Australia needs to take is to invest heavily in alternative energy technologies."

Associate Professor Kevin Walsh is a climate scientist from the School of Earth Sciences, University of Melbourne. He has research interests in climate change, climate variability and tropical weather systems, and is the President of the Australian Meteorological and Oceanographic Society.

“The climate science used in the report is not controversial to those of us who have been working in this field for some time; it has long been known that some low-probability future scenarios could cause very negative impacts. The focus of the report on low-probability, high-impact climate effects is commendable in that a risk-management approach to climate change requires this emphasis. Another important aspect of the report is that calculating the costs of possible extreme climate change impacts has been in the too-hard basket for far too long, and the report addresses this issue explicitly. Lack of detailed climate change costs estimates has been previously acknowledged as a significant gap in our assessments of climate change impacts.

Finally, despite the disturbing possible impacts of climate change listed in the report and the daunting challenges that we face to contain them, the report does conclude that containing the effects of climate change is both feasible and not very costly when compared to the cost of doing nothing. So in many ways, the report is encouraging”.

Frank Muller is an Adjunct Professor at the Institute of Environmental Studies, University of New South Wales. He is a policy expert with specific interests in greenhouse and sustainable development policy.

"The Stern Review is an urgent call for action. Scientists have issued many calls for action – but this time it comes from one of the world’s leading economists following the most rigorous and comprehensive economic assessment of climate change ever undertaken. The report totally transforms the climate change policy debate. It shows that strong action on climate change is the pro-growth, pro-prosperity path while continued inaction by governments will bring long term economic peril. It reinforces calls for Australia to adopt a carbon price signal, ratify the Kyoto Protocol and engage positively in international negotiations for a stronger agreement beyond Kyoto."

Dr Mark Diesendorf is Director of the Sustainability Centre in Sydney and Senior Lecturer at the Institute of Environmental Studies, University of New South Wales.

"The Stern Report confirms, with clear and rational analysis, that doing nothing of substance about human-induced climate change is not an option. Not only would this lead to huge social, environmental and health damage, but Stern shows that it would also cause massive economic damage in the longer term, far greater than the costs of mitigation. By doing little, we would be sentencing our children and grandchildren to much suffering."

Professor Will Steffen is Pro Vice-Chancellor (Research), the Australian National University and has worked in the areas of climate change and global environmental change for many years.

"The Stern Review is the best summary I have yet seen of the economic and policy imperatives and options for dealing with climate change.

It is very refreshing to see an economic and policy analysis that is built around the biophysical realities of the climate change challenge. First, the review accepts the scientific evidence that there is a limit of greenhouse gas concentrations above which the risk of severe impacts is unacceptably high. Second, it squarely faces the time-lag issue and warns that serious action in the next 10-20 years – not in the distant future - is essential to reduce the risk of potentially catastrophic consequences towards the end of the century. Finally, in addition to emphasising the necessity of effective and quick mitigation action, the review acknowledges that adaptation is also required to deal with the impacts of climate change that are occurring now and are in the pipeline for the coming decades.

Dr Frank Jotzo is an economist and Postdoctoral Fellow at the Australian National University, where he conducts research on the economics of climate policy.

“The Stern Review gives a bigger picture than most economic analyses of climate change. It includes non-market impacts such as the loss of ecosystems, it prices the risk of catastrophic events under abrupt climate change, and it takes into account that the burden of climate change will be greatest on people in poorer countries including India and Southeast Asia. Consequently, its estimates of the future costs from climate change are high, and its argument for action is strong.

The Review is optimistic about the prospects for reducing greenhouse gas emissions at reasonable economic costs. It points out that both technology policy and a pervasive price signal are needed to bring about the necessary changes in production and consumption. This should make the Australian government think about its current insistence on using only technology subsidies, and about its ruling out of emissions trading or taxes. The Kyoto Protocol approach is not perfect, but it presents the best realistic chance for moving forward on climate change internationally. It can be improved through better economic mechanism design, and supported by other policies. Fears that Australian businesses will shift abroad are probably overdone. In order to bring China, India and other fast-growing developing countries on board, rich countries with high relative emissions need to show good faith and act first – and that means not just Europe and Japan but also the United States and Australia.”

Mr Thomas Lowe, Research Associate at the Tyndall Centre for Climate Change Research, researching climate change perception and communication.

“The Stern report is important not only from a business perspective but also in terms of helping the public to comprehend the economic implications of climate change.

Numerous empirical studies show that the public in richer countries see climate change as a phenomenon affecting poorer people in distant locations; the costs of reducing these less tangible climate change impacts are not seen as acceptable by the vast majority. However, the Stern report makes it clear that the cost of inaction will be felt by everyone.

In addition, the report presents our options in a way that is familiar to people in their day to day decision making; that of ‘costs’ and ‘benefits’.

Until now it has largely been believed that the seemingly insurmountable challenge of climate change mitigation will come at the expense of our growth and freedom; by making it clear that such massive rewards can be achieved from such a small investment, the public is presented an opportunity, rather than the doom-laden messages that we are all so used to receiving.”

Professor Snow Barlow, Professor of Horticulture and Viticulture, Head, School of Agriculture and Food Systems, University of Melbourne

“The Stern Review is a 'tipping point ' in the global climate debate. It has brought together the 'agreed science' with respected and authoritative economics in a framework for action that has the potential to move the global climate debate to another level.

For the first time the costs and inequitable global outcomes of inaction are clearly compared with the costs and benefits of global action with regard to climate change

Together with the UNFCCC report of rising global emissions the Stern Report makes a compelling and positive case for early action on greenhouse that could avoid endangering our grandchildren's future.”

Professor Andrew Blakers, Director of the Centre for Sustainable Energy Systems at the Australian National University.

“Here we have a top economist looking dispassionately at the science, and drawing the obvious conclusion that the cost of reducing greenhouse gas emissions is much smaller than the cost of not doing so. We only have one planet. Lets not conduct a gigantic and irreversible experiment with it.”

Wasim Saman is Professor of sustainable energy engineering and Director of the Sustainable Energy Centre at the University of South Australia. The Centre works with industry and government in developing systems and technologies for improving energy efficiency and the use of renewable energy in the building and transport sectors.

“The Stern report is particularly timely as its release coincides with the latest report from the secretariat of the United Nations Framework Convention on Climate Change, which clearly demonstrates the escalation of the greenhouse gas emissions of industrialised countries. It is good to see that economists are lending their support to climate change scientists and researchers by contrasting the low economic cost of immediate action to reduce emission with the huge economic as well as social and environmental consequences of inaction.

A similar study focussing on Australia is particularly timely and necessary in developing an Australian action plan for reducing greenhouse gas emissions and living with the inevitable consequences of climate change. The University of South Australia is well positioned to work with others in developing the integrated assessment approach employed in the Stern study to evaluate economic, social and environmental impacts of climate change, building on the work carried out by the CSIRO.

The University of South Australia’s Institute for Sustainable Systems and technologies has also developed a number of practical technological solutions for reducing emissions through energy efficiency and alternative energy use particularly in the building and transport sectors. We are keen to have these technologies commercialised rapidly to add to economic development as well as aid in the effort for emission reduction.”