Our Environment

Our environment is a public good so relying on the next person to do anything about green house gases will not solve the immanent problem that is climate change. The question that remains is whether Dietz and Stern were correct to assert that ‘strong and urgent action is good economics.’ This came as a response to critics after the Stern review, which has perhaps been the most extensive and rigorous problem-oriented economic study of climate change. It has managed to re-write the political debate regarding the economics of climate change and it also closes the gap between science-led precaution and economics-led cost-benefit concerns, with methodologies that raised the estimated costs of climate change. As a result it has raised criticism from researchers within the field. The main point that it tries to get across is that while the costs of stabilising the climate are significant they are also manageable, but delay will be costly and dangerous. There are those such as Robert Mendelsohn (2008) who has countered these assertions claiming that while climate change is happening, the review presents it in an over dramatised and over estimated manner. This essay will therefore attempt to critically assess whether such strong and urgent action is in fact good economics and whether the world can afford to just sit back and let the climate be changed beyond return

The Stern Review argues that at the most basic level human induced climate change is an externality. Those who are producing emissions and therefore causing climate change are imposing costs on the world and on future generations. They themselves, however, do not face directly the full consequences and costs of their actions. The costs of GHGs, in terms of climate change are not immediate so they are not likely to be experienced by the emitters who, as a result face little or no economic incentive to reduce emissions. Because of this, as argued in the stern review, it is an externality that will not be ‘corrected’ through any institutions or the market unless policy intervenes. In the absence of public policy there are limited returns to private investors but it emphasises that there are profound implications for economic growth and also for development if the process is not addressed quickly.

Dietz and Stern (2008) put forward the point that economic research which opposes strong and urgent action distinguishes between those who favour strong action such as environmentalists, and those who apparently don’t such as economists. They also argue that previous economic literature has failed to grasp the necessary scale and timing of action but more importantly it has failed to simultaneously assign the necessary importance to issues of risk and ethics. The Stern Review claims that strong and urgent action is necessary based on the severe risks that science has now identified. With this in mind it would be difficult to argue against this case because these impacts