Leading economist Lord Stern says his profession has built models which vastly underestimate effects of climate change
By Sophie Yeo
Economists are partly to blame for the vacillations that have stopped climate policy from moving forward quickly enough, says Lord Stern.
The models which economists have built underestimate the cost of climate change, he said, and fail to take into account the future disruption that climate change will cause.
Stern is a leading climate change economist and the author of the Stern Review – a paper which he has since said failed to take into account the full extent of climate change.
Talking on the issue of policy vacillation at the Royal Society on Tuesday, he said, “I think actually economists haven’t helped. Why? Well, they’ve built models that really tell us that the risks are modest.
“They aren’t climate science deniers, of course not, but they’re building models which have features which essentially underestimate the risk.”
He is due to publish a paper on the topic this week in the Journal of Economic Literature.
He said, “They deal with models which have temperature increases of 4 or 5°C, losses which might be 5, 10 or 15% of GDP. You’re talking about a transformed world economy, with lots of people potentially having to move, potential conflict, great disruption of production structures, and they’re talking about modest losses like that.
“The damages themselves really do look like gross underestimations. It’s very difficult of course to put in plausible damages because you’re talking about stuff way outside our experience, but we can say with certainty that the damages put in look deeply implausible.”
He went on to say that the language of economics alone was inadequate when describing the problems that climate change will bring.
He said, “If I spoke to you about the great leap forward and the great famine in China around 1960, would I say what happened to GDP? I don’t think so. I think I’d begin by saying 30 million people died.
“If you asked me to describe the First World War, I think I would approach it in a similar way, so we’ve got to think about the way we describe the kinds of events we’re talking about, and I think just a simple economic aggregate like GDP, although we know that it’s helpful for some things and in some circumstances, but this is not one of those circumstances.”
Most of his scorn, however, was reserved for climate deniers, whose argument he branded “daft”.
“There are very few, even among the denial community, who are ready to go out and say the sentence that they really need to say to justify their point. They have to say that they know that the risks are small, or they don’t give a damn about the future – one or the other, or both.
“And if you put it that way, it seems astonishing, in the weight of the evidence, that anybody could say they’re really confident that the risks are small. You can’t be confident that the risks are small because you discover one paper is wrong in a literature of thousands. Evidence builds up.
“They have to make a very powerful statement that very few of them have the intellectual courage to make – and you need a lot of intellectual courage because it’s daft.”