As evidence of human-induced climate change mounts, a new global commission launched today will analyze the economic costs and benefits of acting on climate change. The Global Commission on the Economy and Climate comprises leaders from government, finance and business from 14 countries, chaired by former President of Mexico Felipe Calderón.
The Commission is launching the New Climate Economy project, bringing together some of the world’s foremost economic experts to examine how stronger economic performance can be supported by good climate policy. The project aims to contribute to the global debate about economic policy, and to inform government, business and investment decisions.
“Climate impacts are rising and the evidence of warming is increasingly clear, but most economic analysis still does not properly factor in the increasing risks of climate change or the potential benefits of acting on it,” said Commission Chair and former President of Mexico Felipe Calderón. “We need urgently to identify how we can achieve economic growth and job creation while also reducing emissions and tackling climate change.”
From The Economist, December 3, 2009, “Getting Warmer”:
But some economists think Lord Stern’s cost estimates are too low. Dieter Helm,
professor of energy policy at Oxford University, says the underlying assumptions about
the costs of various technologies are likely to prove overoptimistic because they are
produced by people who have an interest in exaggerating their viability.
Whether or not Lord Stern has won the argument economically, he has certainly won it
politically, for his 1% of GDP figure for the cost of mitigating climate change is now
widely used. But a large caveat should accompany any use of that figure, because it
assumes that the policies employed for mitigation will be both efficient and effective—
and so far that has not been true. As Mr Helm points out, “there is a voluminous
literature of government failure, regulatory capture and the impact of rent-seeking
behaviour within the policy process. Climate-change policy is likely to be one of the
largest sources of economic rents from policy interventions. There is a large and
growing climate-change ‘pork barrel’.” The larger the barrel, the higher the costs of
mitigation will be.