View this article online: https://www.insurancejournal.com/magazines/mag-editorsnote/2006/11/05/152871.htm
While British Prime Minister Tony Blair has stood by President George Bush’s side on Iraq, he has parted ways with the Bush Administration over global warming, publicly and privately warning the United States and the world to take the issue seriously. The latest warning came in the form of a recent British government report prepared by Sir Nicholas Stern, a former World Bank chief economist.
The Stern report puts the threat of climate change in stark economic terms, pointing out that it’s a “false economy” to put off climate change action because costs will only rise, with the impact of global warming costing as much as 20 percent of the world’s gross domestic product (GDP).
The report characterizes climate change as “the greatest market failure the world has seen” but concludes optimistically that there is still time to avoid the worst impacts if the United States and international community act together now.
While the costs of inaction appear high, the costs of acting to reduce greenhouse gas emissions to avoid the worst impacts of climate change could be limited to around 1 percent of global GDP each year. “People would pay a little more for carbon-intensive goods, but our economies could continue to grow strongly,” the study said.
At the same time, a shift to a low-carbon economy will also mean economic opportunities, according to the study. “Markets for low-carbon technologies will be worth at least $500 billion, and perhaps much more, by 2050 if the world acts on the scale required,” it reported. “Tackling climate change is the pro-growth strategy; ignoring it will ultimately undermine economic growth.”
The Stern study concluded on an optimistic note:
“There is still time to avoid the worst impacts of climate change, if we act now and act internationally. Governments, businesses and individuals all need to work together to respond to the challenge. Strong, deliberate policy choices by governments are essential to motivate change. But the task is urgent. Delaying action, even by a decade or two, will take us into dangerous territory. We must not let this window of opportunity close.”
Stern recommended expanding and linking emissions trading schemes around the world; doubling support for energy research; setting international product standards for energy-efficiency; and integrating climate change adaptation into development policy.
Skeptics of global change and critics of the science have been afforded more attention and legitimacy than their numbers and research merit. British Prime Minister Tony Blair said the Stern conclusions should be seen as “the final word” on why the world must act now to limit the damage being done to the planet.
The insurance industry is wisely among those interests that have moved beyond words to action. It is past time for Washington to accept the word of science and put its warnings into action, too.