A climate policy case that weighs immediate costs against future economic damage remains relevant, Guardian environment editor Fiona Harvey argued in a Wednesday commentary marking 20 years since the Stern review.
Harvey revisited The Economics of Climate Change, the report also known as the Stern review. She says it set out why a shift to a low-carbon economy could be economically justified. The argument still needs repeating, she wrote, because it challenged the view among many economists at the time that economic growth could absorb much of climate damage.
The review described climate change as a market failure and concluded that the costs of inaction outweigh those of action, according to Harvey’s account. It also found that economic growth could continue alongside emissions cuts. Harvey’s commentary presents those conclusions as a way to weigh the expense of climate measures today against the economic harm that could follow from delay.
Harvey said the review identified the discounting of future costs and lives as a structural problem. Discounting assigns less weight to impacts expected later. In climate policy, she argues, that can diminish the place of future generations in today’s decisions.
Harvey argues that bearing costs now is justified by the need to protect children from climate risks. Her commentary also refers to William Nordhaus’s earlier work in climate economics and a 2018 paper that estimated GDP losses from warming, placing the Stern review’s conclusions alongside other work on the economic effects of climate change.
