SIR NICHOLAS STERN: The British economist argues that fixing global warming will only cost the global economy 1 percent of its future growth--a reasonable premium for insurance against potentially catastrophic climate change.
COURTESY OF NICHOLAS STERN

Scientific American: Is climate change a problem?

Sir Nicholas Stern: It clearly is. The science has given us now probability distributions of various different kinds of outcomes in terms of temperature and climate change in relation to given stocks of greenhouse gases in the atmosphere. We know, for example, that stabilization at 550 parts per million [of carbon dioxide equivalent in the atmosphere] would give us around a 50–50 chance of being [on] either side of a 3-degree Celsius [5.4-degree Fahrenheit] rise from the temperatures in preindustrial times. We also know that if we do very little about climate change we'll be at 550 ppm probably within a period of around 30 or 35 years. If we did business as usual for a century we'd be in extremely dangerous terrain—concentrations of 750 to 800 ppm—and that would give us a 50–50 chance of being [on] either side of [a] 5-degree C (9-degree F) rise, which would essentially transform the planet. It is likely that conditions in much of the heavily populated equatorial regions woudl be intolerable and there would be big movements of population. I think there's absolutely no doubt that climate change is a problem. The better news is that we can head off those risks.

SA: What are sound estimates of the damages from climate change?

NS: Those are actually quite difficult to put together. My own preferred way of looking at this is to describe the kinds of risks we might run. We can describe what would happen if the snows and glaciers melted away in the Himalayas: disruptions in India, China and Bangladesh. You can describe the dangers of more frequent hurricanes in Central America and the southern U.S. You can describe the problems associated with Cairo being subjected to substantial sea level rise. You can describe the kinds of problems that would arise with massive population migrations. But putting precise numbers on those things is very difficult. We came up with numbers that business as usual would give you: losses, averaged over space, over time and uncertain outcomes, of around 5 percent of global gross domestic product and upwards, probably substantially more than 5 percent of GDP. You can avoid a big percentage of those damages by keeping greenhouse gases below 550 ppm. That kind of extrapolation, however, actually badly underestimates the risks we run at these higher temperatures.

SA: What should be done?

NS. We run enormous risks and we know what kind of reductions of greenhouse gases are necessary to drastically reduce risks. Reducing emissions by half by 2050 is roughly in the right ballpark. It would bring us below 550 ppm. And I think it would be accepted by most people that the rich countries should take on much more of that responsibility because they have contributed much more greenhouse gas. The current stock increase relative to preindustrial levels is due largely to the past behavior of the rich countries. They have the technology and economic flexibility to tackle this. Within an overall 50 percent reduction by 2050, rich countries should take on a target of 75 percent reductions.

SA: What will that cost?

NS: If we do such reductions well, it will cost around 1 percent of the world's gross domestic product, subject to pluses or minuses. You must think in terms of ranges rather than just point estimates. A rich country, say, spends 4 percent of GDP or so on primary energy. If the effective cost of energy went up 30 to 40 percent, that figure would go up 1 to 1.5 percent. It could be less if we learn quickly; find more energy efficiency. It could be more if we do it badly. Still, I think it's a very reasonable insurance premium to pay for the kinds of damages to be avoided.