Over the past month, a broad consensus has been reached among scientists that global warming is real and substantially man-made. A blockbuster UN report released Feb. 2 confirmed that the world is rapidly warming and added that the cause is almost certainly greenhouse gases, especially carbon dioxide, released through human activity. Earlier this week, the World Bank's chief scientist, Robert Watson, urged nations to try to limit temperature rise over this century to 2 degrees Celsius (4 degrees F.), a task many scientists say will be difficult. On Sunday, the nation's top scientific society, the American Association for the Advancement of Science, added: "The evidence is clear: Global climate change caused by human activities is occurring now and is a growing threat to society."
So should the world's fight to curb greenhouse-gas emissions start with modest steps or does humanity need a crash diet to curb climate change?
Economists have looked at the question for years and concluded that a gradual approach inflicts the lowest cost on society. But last October, an economic report prepared for the British government shifted the debate and argued for more aggressive action.
In his report to the British government, economist Sir Nicholas Stern tried to settle the question. His "Stern Review: The Economics of Climate Change" calculated that failing to curb greenhouse-gas emissions would cut the world's economic output (GDP) by 5 to 20 percent per year, risking economic disruption on a scale of the two world wars or the Great Depression. Without mitigation (efforts to slow CO2 emissions), temperatures could rise 5 degrees C (9 F.) by the end of the century.
Even before that temperature is reached, Mr. Stern contends that the lives of millions will be greatly disrupted through intensified droughts, coastal flooding, and stronger storms.
On the other hand, quick action to limit the worst effects of climate change would cost nations only about 1 percent of their GDP each year, the Stern report argues. The case that the cost of immediate action is less than the cost of inaction is "blindly obvious," Stern says. The aim should be to stabilize greenhouse-gas levels (principally CO2) in the atmosphere to 450 to 550 parts per million (ppm). The current level is about 430 ppm.
While economists have praised the report as a milestone, not all are persuaded. So for the first time since the "Stern Review" was issued last fall, the former chief economist for the World Bank ventured across the Atlantic to make his case before Congress, the United Nations, and a panel of a half-dozen fellow economists at Yale's Center for the Study of Globalization.
Reasonable people can disagree with conclusions in the report, but "reasonable people are obligated to have a serious discussion" about its findings, Stern said at Yale. Even if climate change turned out to be the biggest hoax in history, Stern argues, the world will still be better off with all the new technologies it will develop to combat it. The price of waiting for more evidence is too high, he says. "You're playing with a planet here."
Stern also dismissed two other arguments for inaction: that humans will easily adapt to climate change and that its effects are too far in the future to address now. Putting the burden of dealing with climate change on future generations is "unethical," Stern said.
Prior to Stern's report, models for fighting climate change suggested that the best way to avoid economic disruption was to start modest efforts in the near term and ratchet up spending over both the medium and long term. The Stern review turns that thinking on its head and argues that strong immediate efforts are needed or a crucial window of opportunity will be lost.
Economists who hold to the slower start say Stern has misjudged the effect of climate change on future generations as more significant than in other economic models. Stern asks for greater immediate sacrifices (a tax on carbon emissions) on behalf of future generations, in essence taking more wealth away from society today and giving it to our grandchildren.
But by spending less on curbing CO2 now, another line of reasoning goes, we will be richer in the future and thereby better able to pay for mitigating climate change then. Spending on climate abatement must be weighed against other social costs, they say. For example, scientists expect malaria to spread more quickly as the climate warms. But would money put into CO2 abatement be better spent on developing a vaccine or other malaria-fighting steps? And if future generations are many times richer per capita than today, as some models predict, might they be less affected by the costs of global warming than Stern suggests?
If CO2 cannot be captured from fossil fuels and sequestered, are we going to leave oil, gas, and coal in the ground unused? If so, we'll pay a high cost, says Robert Mendelsohn, a Yale economist. And fossil-fuel alternatives have their own costs, he says. Are we ready to double the number of nuclear power plants? Scatter 2 million windmill generators across the landscape? Convert large areas of agricultural land to grow "energy crops" like corn for ethanol and risk higher food prices or shortages?
Delay also means more high-carbon-emitting sources – power plants and vehicles – will go into service, says Jeffrey Sachs, a Columbia University economist. The cost of retrofitting or decommissioning these sources, he says, is higher than building greener ones in the first place.
If carbon can be captured from power plants and stored underground, the picture brightens considerably, Professor Sachs says. Engineers have thought a lot about energy efficiency, and Sachs is optimistic they will find quick and economical solutions once they concentrate on carbon capture and sequestration.
Sachs suggests imposing a $25 per ton tax on carbon for the next 40 years. Schemes to cap-and-trade CO2 emissions between countries and industries may not send clear enough signals to markets about the real cost of carbon emissions, he says. Yet another approach would be to set standards for carbon emissions, industry by industry, akin to the fuel-economy standards now in place for cars.