A Blueprint for a safer Planet

A Blueprint for a Safer Planet is Nicholas Stern’s book that put forwards what Stern thinks should be done to combat Anthropogenic Global Warming (AGW). Stern is an important figure in AGW economics because he was selected to write an economic case to justify the policies that the Blair / Brown government wished to follow. His Stern Review was similar to Australia’s Garnaut Review.

Stern, who only started to study AGW economics in 2005, made a number of contributions to climate change economics. Previous studies had put the alleged damage from AGW at a about of 5% of GDP. Stern managed to get it to start at 5% and go to a maximum of 20% damage to GDP. Other economists who had been studying climate change for up to a decade had also used discount rates that had been traditionally used for long term economic calculations of 2% to 10%. Stern instead constructed an innovative ‘social discount rate’ that was only 0.01%. This was very innovative in that  he had a discount rate, if he had used zero his report would have been immediately questioned, but by using something that was effectively zero he could make abatement appear as a better option. Partha Disgupta has called Stern’s discount rate “patently absurd” as it would imply a savings rate of 97.5% compared to the observed rate of around 15%.

So the book was expected to attempt to justify some of Stern’s assumptions and to put forward the case as to why AGW should be addressed with huge sums of money.

Stern accepts all the IPCC figures and starts from there. He spends fairly little time on looking at the IPCC’s results. He does mention the ‘deniers’ but doesn’t look at any of their arguments. He doesn’t mention Lindzen, Spencer, Christy or any of the better known skeptics and states that the loudest skeptics are not scientists. This is in contrast to Al Gore.

Stern uses a table of probability of parts per million against the likelihood of a particular rise in temperature as his base for various scenarios and goes on to attempt to price how much achieving these levels of C02 would cost. Stern goes on to look at what reductions in C02 emissions can be made and how much things are likely to cost. Here Stern is defending the cost estimates that he made in his report that others termed very optimistic. Stern is an advocate of all the possible technologies including nuclear and Carbon Capture and Storage (CCS). This is a good thing. It is disappointing to see that countries that have large uranium reserves and whose current governments regard C02 emission reductions as crucial are excluding the technology that has already been used to reduce c02 emissions successfully while maintaining a high standard of living as demonstrated by France.

The book also has something of a response to Stern’s critics like Nordhaus and Richard Tol. Stern states that his discount rate is an ethical choice. He also pushes the argument that even if AGW has been exaggerated that doing something about is worthwhile just in case. He also frequently refers to his area of expertise that of attempting to reduce poverty in the developing world, in particular in Africa. He states that there is no choice involved in spending on money on either one of these goals and that instead both must be attempted. Stern does openly acknowledge that the largest emitters of greenhouse gases is China. Stern doesn’t mention Lomborg but is apparently away of Lomborg’s position and does state that spending money on dealing with the possible adverse consequences of AGW should also be attempted but that it is only a small part of a more costly solution.

Stern does mention the figures that he says will be needed to be spent. He talks about 1-2% of GDP instead of mentioning the direct amounts of money of 0.5 to 1 trillion dollars per year. He also tends to talk in terms of the percent of GDP when assessing possible future damages so this isn’t unreasonable and does mention direct figures of some factors of reduction cost directly.

Stern isn’t a bad writer and this isn’t a bad book. It addresses some of the criticisms made against the Stern review by economists who have specialise in studying the economics of AGW. Stern keeps the book fairly brief and to the point. It’s good to be able to read environmental forecasting books at this time. Reading books like The Population Bomb 40 years after their predictions have been shown to be wrong is one thing, reading the latest forecasts of environmental doom should also be done to see how the forecasts will fair in the future.

3/5

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