Climate change will ‘cost world far more than estimated’

Lord Stern says current models do not adequately reflect the science and the impact on global economies  

A A A

Lord Stern, the world’s most authoritative climate economist, has issued a stark warning that the financial damage caused by global warming will be considerably greater than current models predict.

This makes it more important than ever to take urgent and drastic action to curb climate change by reducing carbon emissions, he argues.

Lord Stern, who wrote a hugely influential review on the financial implications of climate change in 2006, says the economic models that have been used to calculate the fiscal fallout from climate change are woefully inadequate and severely underestimate the scale of the threat.

As a result, even the recent and hugely authoritative series of reports from the UN Intergovernmental Panel on Climate Change (IPCC) are significantly flawed, he said.

“It is extremely important to understand the severe limitations of standard economic models, such as those cited in the IPCC report, which have made assumptions that simply do not reflect current knowledge about climate change and its ... impacts on the economy,” said Lord Stern, a professor at the Grantham Institute, a research centre at the London School of Economics.

Professor Stern and his colleague Dr Simon Dietz will today publish the peer-reviewed findings of their research into climate change economic modelling in the The Economic Journal.

Lord Stern says the fiscal fallout that has been calculated is woefully inadequate Lord Stern says the fiscal fallout that has been calculated is woefully inadequate (AFP/Getty)

Their review is highly critical of established economic models which, among other things, fail to acknowledge the full breadth of climate change’s likely impact on the economy and are predicated on assumptions about global warming’s effect on output that are “without scientific foundation”.

Professor Stern, whose earlier research said it is far cheaper to tackle climate change now than in the future, added: “I hope our paper will prompt ... economists to strive for much better models [and] ... help policy-makers and the public recognise the immensity of the potential risks of unmanaged climate change.”

“Models that assume catastrophic damages are not possible fail to take account of the magnitude of the issues and the implications of the science,” he said.

Professor Stern and Dr Dietz say their findings strengthen the case for strong cuts in greenhouse gas emissions and imply that, unless this happens, living standards could even start to decline later this century.

For the study, they modified key features of the “dynamic integrated climate-economy” (Dice) model, initially devised by William Nordhaus in the 1990s. The changes take into account the latest scientific findings and some of the uncertainties about the major risks of climate change that are usually omitted.

The standard Dice model has been used in a wide range of economic studies of the potential impacts of climate change, some of which have been cited in the most recent IPCC report which has been released in three parts over the past nine months.

Dr Dietz said: “While this standard economic model has been useful for economists who estimate the potential impacts of climate change, our paper shows some major improvements are needed before it can reflect the extent of the risks indicated by the science.”

Dr Dietz said his aim was to show how a new version of the model could produce a range of results that are much more representative of the science and economics of climate change, taking into account the uncertainties.

“The new version of this standard economic model, for instance, suggests that the risks from climate change are bigger than portrayed by previous economic models and therefore strengthens the case for strong cuts in emissions of greenhouse gases,” he said.

The new model differs in that it considers a wider temperature range when estimating the impact of doubling the atmospheric concentration of greenhouse gases – a measure of “climate sensitivity”.

Whereas the standard model usually assumes a single temperature for climate sensitivity of about 3C, the new model uses a range of 1.5C to 6C, which the authors say more accurately reflects the scientific consensus.

The standard model also “implausibly” suggests a loss of global output of 50 per cent would only result after a rise in global average temperature of 18C, even though such warming would likely render the Earth uninhabitable for most species, including humans, Dr Dietz contends.

The new model includes the possibility that such damage could occur at much lower levels of global warming. Standard economic models rule out the possibility that global warming of 5-6C above pre-industrial levels could cause catastrophic damages, even though such temperatures have not occurred on Earth for tens of millions of years. Such an assertion, he says, is without scientific foundation and embodies a false assumption that the risks are known, with great confidence, to be small.

The new model also takes into account that climate change can damage not just economic output, but productivity. The standard model assumes that rising levels of greenhouse gases in the atmosphere only affect economic growth in a very limited way, according to Dr Dietz.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
Mock the tweet: Ukip leader Nigel Farage and comedian Frankie Boyle
peopleIt was a polite exchange of words, as you can imagine
Life and Style
fashion
Life and Style
Britons buy more than 30 million handsets each year, keeping them for an average of 18 months
tech
Arts and Entertainment
TV Presenters Ant McPartlin and Dec Donnelly. Winners of the 'Entertainment Programme' award for 'Ant and Dec's Saturday Night Takeaway'
musicAnt and Dec confirmed as hosts of next year's Brit Awards
Arts and Entertainment
Orson Welles made Citizen Kane at 25, and battled with Hollywood film studios thereafter
film
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Humanities and Economics Teacher - January 2015 - Malaysia

£18000 - £20400 per annum + Accommodation, Flights, Medical Cover: Randstad Ed...

SEN Teaching Assistant needed for long term assignment

£45 - £55 per day: Randstad Education Preston: We are looking for an experienc...

Primary Teachers Required in King's Lynn

Negotiable: Randstad Education Cambridge: Primary Teachers needed in King's Ly...

Primary Teachers needed in Ely

Negotiable: Randstad Education Cambridge: Primary Teacher needed in the Ely ar...

Day In a Page

Isis in Syria: A general reveals the lack of communication with the US - and his country's awkward relationship with their allies-by-default

A Syrian general speaks

A senior officer of Bashar al-Assad’s regime talks to Robert Fisk about his army’s brutal struggle with Isis, in a dirty war whose challenges include widespread atrocities
‘A bit of a shock...’ Cambridge economist with Glasgow roots becomes Zambia’s acting President

‘A bit of a shock...’ Economist with Glasgow roots becomes Zambia’s acting President

Guy Scott's predecessor, Michael Sata, died in a London hospital this week after a lengthy illness
Fall of the Berlin Wall: History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War

Fall of the Berlin Wall

History catches up with Erich Honecker - the East German leader who praised the Iron Curtain and claimed it prevented a Third World War
How to turn your mobile phone into easy money

Turn your mobile phone into easy money

There are 90 million unused mobiles in the UK, which would be worth £7bn if we cashed them in, says David Crookes
Independent writers remember their Saturday jobs:

Independent writers remember their Saturday jobs

"I have never regarded anything I have done in "the media" as a proper job"
Lyricist Richard Thomas shares his 11-step recipe for creating a hit West End musical

11-step recipe for creating a West End hit

Richard Thomas, the lyricist behind the Jerry Springer and Anna Nicole Smith operas, explains how Bob Dylan, 'Breaking Bad' and even Noam Chomsky inspired his songbook for the new musical 'Made in Dagenham'
Tonke Dragt's The Letter for the King has finally been translated into English ... 50 years on

Buried treasure: The Letter for the King

The coming-of-age tale about a boy and his mission to save a mythical kingdom has sold a million copies since it was written by an eccentric Dutchwoman in 1962. Yet until last year, no one had read it in English
Can instilling a sense of entrepreneurship in pupils have a positive effect on their learning?

The school that means business

Richard Garner heads to Lancashire, where developing the 'dragons' of the future is also helping one community academy to achieve its educational goals
10 best tablets

The world in your pocket: 10 best tablets

They’re thin, they’re light, you can use them for work on the move or keeping entertained
Lutz Pfannenstiel: The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents

Lutz Pfannenstiel interview

The goalkeeper who gave up Bayern Munich for the Crazy Gang, Bradford and a whirlwind trawl across continents
Pete Jenson: Popular Jürgen Klopp can reignite Borussia Dortmund’s season with visit to Bayern Munich

Pete Jenson's a Different League

Popular Klopp can reignite Dortmund’s season with visit to Bayern
John Cantlie video proves that Isis expects victory in Kobani

Cantlie video proves that Isis expects victory in Kobani

The use of the British hostage demonstrates once again the militants' skill and originality in conducting a propaganda war, says Patrick Cockburn
The killer instinct: The man who helps students spot potential murderers

The killer instinct

Phil Chalmers travels the US warning students how to spot possible future murderers, but can his contentious methods really stop the bloodshed?
Clothing the gap: A new exhibition celebrates women who stood apart from the fashion herd

Clothing the gap

A new exhibition celebrates women who stood apart from the fashion herd
Fall of the Berlin Wall: Goodbye to all that - the lost world beyond the Iron Curtain

The Fall of the Berlin Wall

Goodbye to all that - the lost world beyond the Iron Curtain