Economics of Climate Change: The Stern Review

There are many politicians who claim that we can’t afford to make the changes that will be

required to avert or lessen global climate change, but an increasing number of scientific studies

indicate the opposite. In fact, according to many leading scientists, we can’t afford to not make

these changes. According to The Stern Review, the cost of climate change is now expected to be

larger than many earlier studies suggested.

 

For dry temperate zones––like almost all of Australia,

much of Africa, and where most of China’s grain is grown––climate models indicate that these

areas will probably see an inundation of long-term devastating droughts that will seriously

undermine their ability to remain agriculturally productive. A sea-level rise of just 8 to 32 inches

(20 to 80 cm), brought on by accelerated melting of the ice caps of Greenland and Antarctica

combined with thermal expansion due to warming of the deep ocean waters, is predicted to

permanently displace 150 to 200 million people living in low-lying areas by the middle of this

century (Stern 2007, 91).

 

 

 

Part of the problem with comparing the costs of our current way of doing business, “business

as usual,” with the costs of doing business in a sustainable manner is that traditional accounting

methods do not build adverse environmental and health costs into the cost of goods. In fact, the

opposite is often true. Currently, most of the time the “free market” rewards companies for bad

environmental practices, since the companies with poor environmental records have traditionally

maintained a higher profit margin by spending minimal amounts to prevent environmental

damage.