The most widely known report on the economic effects of global climate change is the The Economics of Climate Change, The Stern Review by Nicolas Stern. Its conclusions were that
- If climate change continues unabated, average temperatures could rise by more than five degrees Celsius from pre-industrial levels.
- The physical and human geography of the planet will be profoundly affected: 300 million people could become refugees as their homes succumb to drought or flood. Poorer countries will be among the worst affected.
- The world’s economic growth will be cut by 20 per cent or more. Each tonne of carbon dioxide that we emit now is causing damage valued at $85 or more.
- The cost of action to reduce greenhouse gas emissions to avoid the worst impacts of climate change can be limited to around one per cent of global GDP each year.
- Reducing emissions will make us better off. The long-term benefits of shifing the world onto a low-carbon path could be in the order of $2.5 trillion each year.
In 2008 a study by Ross Garnaut in Australia examining the impacts of climate change estimated that the gross cost to the Australian economy of mitigation targetting 550 ppm of CO2 to be 1.9 to 2.6 % of GNP. Gross mitigation costs for a target of 450 ppm of CO2 were estimated to be 2.6 to 3.3 % of GNP, almost a percentage point higher.
In 2008, Stern revised his estimate
of the cost of mitigation to keep greenhouse gases below 500 ppm upward to 2% of global GDP.
of the cost of mitigation to keep greenhouse gases below 500 ppm upward to 2% of global GDP.
A study entitled Towards a Global Green Recovery, Recommendations for Immediate G20 Action by Ottmar Edenhofer of the Potsdam Institute for Climate Impact Research and Lord Nicholas Stern of the Grantham Research Institute On Climate Change and the Environment (of the London School of Economics) has just been released. The report, which was prepared on behalf of the German Foreign Office, includes a chart showing the announced green funds as a share of the total national stimulus package and as a share of 2008 GDP for selected countries of the G-20 (click on the chart to expand it.) China, South Korea, and Saudi Arabia are the only countries where stimulus green funding approaches or exceeds 2% of 2008 GDP. The US exceeds the remaining countries, almost achieving 1% of GDP.
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