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Monday 21 Aug 2017 | 11:03 | SYDNEY
Monday 21 Aug 2017 | 11:03 | SYDNEY

Martin Wolf's climate change column



24 May 2013 10:05

Further to the thread I started on Monday about Martin Wolf's pessimistic column, I've had an email from economist John Quiggin which goes directly to the source of Wolf's (and my) pessimism.

For Wolf, the problem is that the case for acting against climate change is always based around privation of some sort: we must make do with less; we must lower our expectations about our standards of living, which are based on unsustainable levels of energy use. I agree with Wolf that this message is simply not going to sell, particularly to a developing world which wants the same luxury, dignity, longevity and good health that we in the developed world enjoy.

Quiggin has sent me a link to a recent AFR column of his making the case that it is possible to fight climate change while continuing to improve our living standards. According to Quiggin, Nicholas Stern's 2006 report to the British government, widely reported as presenting the climate problem in very gloomy terms, actually makes the task look quite manageable (my emphasis):

The Stern review was highly controversial...the main dissent from economists focused on Stern’s estimates of the cost of doing nothing, and particularly on his treatment of the way in which future benefits and costs should be discounted...

There was much less criticism of Stern’s estimates of the cost of stabilising climate. Even the sharpest critics among economists only suggested that Stern’s estimates were at the optimistic end of a plausible range, the upper end of which might be 5 per cent of national income, or around two years of economic growth. That is, by 2050, a low-carbon economy might have the material living standards that would otherwise have been reached by 2048.

This is, on the face of it, a striking conclusion. We use energy in nearly everything we do, and it is, therefore, widely assumed that a modern economy is dependent on cheap energy. Yet mainstream economists, even those most critical of Kyoto, are unanimous in the view that we could greatly reduce emissions of carbon dioxide while continuing to improve living standards at much the same rate as in the past.

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