The Stern Report (of 2006)

To assess the evidence of climate change and build an understanding on the economics of climate change, the UK government asked Sir Nicholas Stern, the former Chief Economist of the World Bank (2000-2003), and his team to conduct a review and come up with a report. The report, called the 'Stern Report', released on October 30, 2006, gained international prominence because of its conclusions related to the economics of risks.

After assessing innumerable evidences on the impacts of climate change and on economic costs, through use of various techniques to calculate costs and risks, the report underlined that climate change is already underway and that, it is inevitable. It is a serious global threat and we could avoid the worst impacts only if we act NOW.

The costs we incur now to mitigate climate change should be considered as an investment for future - an investment to avoid risks of very severe consequences in the future. On the basis of results from economic models, the review estimates that, the costs of reducing man-made greenhouse gas emissions (which are the most likely cause for climate change) can be limited to about 1% of global GDP each year. But if we do not take any action, the overall damage due to climate change will be equal to losing about 5-20% of the global GDP or more per year. If no action is taken on emissions, then there is more than 50% chance that global temperatures will rise by five degrees Celsius over the next 100-150 years.

The report calls for a stabilization of greenhouse gas levels in the atmosphere to 500 to 550 parts per million of carbon dioxide equivalent by 2050. It is 430ppm today. To stabilize, we need to bring down the annual emissions to more than 80% below current levels. This is challenging, but it is possible. It can be achieved through sustained long term action at much lower costs than the costs of not doing anything at all.

Climate change will have a direct effect on people, plants, animals, and water. As the world warms up, billions of people could suffer from hunger, water shortages and extreme weather conditions including floods, droughts and storms. The regional and sectoral impacts of changing weather patterns were studied in detail and the indications are that because of their already existing vulnerabilities, poor countries and poor people will be the most affected although they are least responsible for contributing towards causes of climate change.

A global collaborative and coordinated effort is required to respond to climate change. Although different countries are using different approaches to tackle the problem, a shared international vision of long-term goals is crucial. The report also highlights the need to build international frameworks such as the Kyoto Protocol that will help to look for equitable and efficient solutions to meet these common goals.

Stern opines that the developed countries should take the responsibility of reducing their emissions between 60-80% from 1990 levels by 2050. Developing countries also need to take immediate action. However, they may not be able to bear the complete costs and may need financial and technological assistance to prepare and adapt. Efforts should be geared to build resilience and decrease costs. Improved planning, better information, more climate resilient crops and infrastructure may help in protecting people and countries from the potential impacts, to some extent

Emissions trading: Expanding and linking the growing number of emissions trading schemes around the world is a powerful way to promote cost-effective reductions in emissions and to bring forward action in developing countries: strong targets in rich countries could drive flows amounting to tens of billions of dollars each year to support the transition to low-carbon development paths.

Technology cooperation: Informal co-ordination as well as formal agreements can boost the effectiveness of investments in innovation around the world. Globally, support for energy R&D should at least double, and support for the deployment of new low-carbon technologies should increase up to five-fold. International cooperation on product standards is a powerful way to boost energy efficiency.

Action to reduce deforestation: The loss of natural forests around the world contributes more to global emissions each year than the transport sector. Curbing deforestation is a highly cost-effective way to reduce emissions; large-scale international pilot programmes to explore the best ways to do this could get underway very quickly.

Adaptation: The poorest countries are most vulnerable to climate change. It is essential that climate change be fully integrated into development policy, and that rich countries honour their pledges to increase support through overseas development assistance. International funding should also support improved regional information on climate change impacts, and research into new crop varieties that will be more resilient to drought and flood.

Regarding policies for an effective global response, Stern recommends: the pricing of carbon, implemented through tax, trading or regulation; innovation and the deployment of low-carbon technologies; and actions to remove barriers to energy efficiency, and to inform, educate and persuade individuals about what they can do to respond to climate change.

Eighty per cent of India cooks using "carbon neutral" biomass. Yet, some western agencies want us to believe that un-burnt residue and soot from biomass are more powerful pollutants than carbon from fossil fuel. India thus needs to be very clear about the contours of the emerging ecopolitics. A similar case in point was the methane emission data from Indian cattle. Exaggerated figures in this regard were wrongly quoted in the 1990s by some Western countries who contended that India thus contributed substantially to climate change. Once the Indian government challenged the data the matter was dropped and instead our own data -- which was substantially lower than what the West has calculated -- was accepted as correct. There is therefore need for in-country research that meets international standards to demonstrate the benign impact of biomass based coking fuel on climate change.

In the area of hydrocarbons we need to use more gas and obtain the technology to convert coal to gas. This is necessary to avoid tipping climate events. Gas is the least carbon intensive among hydrocarbons. India must therefore use more of it.

As the melting of Himalayan glaciers suggest, climate change and reduction in snow over the Himalayas would imply losing hydroelectric potential. It would also impact severely on agriculture. Resource grab by South Asian countries including China of the shared rivers is one possibility. Though the acquisition of oversees oil/gas acreage is now considered a business challenge between India and China, armed conflict over fresh water may be a reality if climate change is abrupt and severe. Attempts should be made to resolve the climate crisis before it gets worse and out of control.

The Stern Review has brought forth profound implications of climate change in the long run and urged everybody to tackle this issue without further delay. It has also highlighted the costs of inaction. Instead of assuming that only the government can sort out this problem, communities need to come forward and take responsibility and ownership of their quality of life. Broad public debate on the social, economic and health impacts of climate change and the impacts of current international negotiations will go a long way in supporting our policy-makers in taking strong and considered actions now.

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