15 Years after the Stern Review

There Has Never Been A More Important Moment for International Collaboration Than Now

Fifteen years ago, the Stern Review made the economic case that the cost of inaction on climate change was greater than the cost of action. Today, Lord Stern says, the cost of inaction has gone up, as the scientific projections for the effects of climate change have become more severe, and, the cost of action has gone down (largely due to technological advancements).

At the LSE last week, where he chairs the Grantham Institute on Climate Change and the Environment, he gave a lecture marking the anniversary of the report where he hinted at some optimism in terms of private sector and international action.

Since 2005 there has been an increase of emissions by 20% and a stalling of political interest following the financial crisis in 2007. Stern claims that to have the necessary impact, there must be significant investment, innovation and disruption in order to create systemic change within markets and infrastructure. Slow progress has been made he suggests because of assumptions that if we take environmental action, living standards have to be compromised and the economy loses out.

However, Stern sees growing recognition that environmental change is a new form of growth, and signs that the international community is starting to move. Countries are to share their carbon projections at COP26 with the goal of keeping global warming below 2 degrees, and aiming for below 1.5. When these projections were shared at COP21 in Paris, 6 years ago, they would have led to over 2 degrees, so it was decided that countries needed to make these more ambitious, and they had 5 years to figure out how (this became 6 because of the pandemic). 

He was positive about China’s commitment, made in September last year to go carbon neutral by 2060 and suggested that there were clear signals that they are doing it because they think it is the right thing to do, they recognise the danger of climate change on China itself and they have ambitions for the ‘green race’.

Stern argues that climate change is the biggest market failure the world has ever seen. Greenhouse gases were almost entirely unpriced. He says carbon pricing is one part of the story, but that, more broadly, policy must be built that gives the right signals to markets. Development banks can play an important role in kick-starting the right kind of investment.

He cites ‘remarkable movement’ toward net zero investments, suggesting that while some investments are more credible than others, all are promising as this statement gives the shareholders the opportunity to hold them to account in this way. Stern sees as hopeful the prediction by BlackRock’s Vice Chair that we will see the biggest market reallocation the world has ever seen.

He sees this as a critical moment for internationalism, suggesting that the international community is in a good place, with the G7 and G20, to move in an integrated way. He stated “There has never been a more important moment for international collaboration than now”. 

It is a very attractive path if we get it right, he argues, with benefits and improvements to lifestyle going beyond the avoidance of catastrophe.  

Climate Change & Extreme Weather Where is worst affected and least able to adapt?

With COP26 starting in Glasgow today, it is timely to consider the extreme weather events across the world that have already had devastating consequences. These events are happening across all continents with increasing frequency and low-income countries find it hardest to adapt.

In 2019 (latest figures)  Mozambique, Zimbabwe and the Bahamas were found to be  the countries most affected by the impacts of extreme weather events, in 2018 it was Japan, the Philippines and Germany and averaged across 2000-2019 it was Puerto Rico, Myanmar and Haiti. Germanwatch, which made these findings in their Global Climate Risk Index also calculates there were over 475,000 deaths globally as a direct result of over 11,000 extreme weather events since 2000. Though some regions are worse affected, and some less able to cope for economic or political reasons, extreme weather, with serious consequences, occurs across all continents.

The map below shows which countries had the highest percentage of the population affected by droughts, floods and extreme temperatures, averaged across 1990-2009 (latest World Bank data). China, India, Australia and parts of Africa (notably Niger, Eritrea, Kenya and Malawi) appear darker, indicating that they have a higher proportion of people displaced, evacuated, injured, left homeless or requiring immediate assistance following a natural disaster. Over one in a hundred people in the majority of countries are affected in this way.

Map to show percentage of population affected by droughts, floods and extreme temperatures

Averaged across 1990-2009 (World Bank data)

There continues to be a rhetoric in relation to climate change that we can win if we work together and try hard enough. In a Sky News interview yesterday, Boris Johnson claimed the whole of humanity is “in the ring”  (though he conceded that climate change is not going to be stopped). When we consider the impacts already experienced across every continent, and see predictions of further catastrophe that is already unavoidable, it is hard to imagine what winning would look like. In a recent NPR Hidden Brain podcast, Shankar Vedantam argues that the battle against climate change is more like Dunkirk than Normandy. We have already lost, we need to manage casualties.

This is not to say that all is negative. Through global responses to climate change there have been, and will be further, technological advances, improvements to air quality, job creation as new industries take off and a greater understanding of our ecosystem and our relationship with the natural world. The key point is that support for those experiencing extreme weather events must not be side-lined by carbon reduction (the split is currently 20/80 between funds for adapting to climate impacts and cutting carbon emissions, according to the OECD). Extreme weather is much harder to manage in low-income countries, with less robust infrastructure, greater reliance on agriculture and inability to adapt. An IIED report this month has found that “the world’s least-resourced communities and countries are increasingly unable to adapt to or absorb worsening climate impacts”. 

So, while we should celebrate our advancements and ability to cut carbon, and strive to go further, we cannot ignore what is already happening, and those who need support today.