Economist urges speed in fighting climate change
As scientists continue to sound alarms about the impact of climate change, curbing global warming is far from a lost cause — as long as governments and industries act immediately.
That was the message from Nicholas Stern, a leading voice on the economic impacts of climate change and this year’s recipient of the SIEPR Prize that is awarded biennially to a scholar or policymaker who has deeply influenced economic policy.
Stern’s remarks in accepting the Prize on Oct. 7 were peppered with gloomy statistics and worst-case scenarios introduced by a slide warning that the “science of climate change is looking ever more worrying.” But he offered a cautiously optimistic prediction that net-zero carbon emissions can be reached by 2050 provided there is continued investment in technologies to keep the planet from continued overheating.
Watch Stern's remarks, with an introduction from SIEPR Director Mark Duggan and a moderated Q&A with SIEPR Senior Fellow Lawrence Goulder.
“We’re not going anywhere near fast enough,” said Stern, who is the IG Patel Professor of Economics and Government at the London School of Economics, and also leads LSE’s India Observatory and the school’s Grantham Research Institute on Climate Change and the Environment.
“But on the positive side, momentum is building,” he said. “And the public discussion in the last 10 to 15 years is enormously important.”
Stern lauded many large corporations for leading the way — oftentimes ahead of governments — in committing to reducing pollution.
“Who would’ve thought 15 years ago that all the major car companies would be talking today about the end of the internal combustion engine,” he said.
It was in that earlier era that he published the 700-page Stern Review on the Economics of Climate Change, which made a compelling case for calling out climate change as the world’s greatest and widest-ranging market failure.
The work found that significantly cutting carbon pollution would cost just 1 percent of global GDP, while doing nothing would cost the world up to 20 percent of its GDP. The report held several policy prescriptions, including carbon pricing, support for low-carbon technologies, and improved energy efficiency.
Stern said those paths are still the best way forward, but emphasized that it’s just as important to understand the risks associated with what he called “strategic choices.”
“Economists need to think about distributional consequences,” he said — particularly as the world economy claws back from the blows of the COVID-19 pandemic. “Are there some people who will be hit and dislocated in this story? Yes. There will be.”
Shutting coal mines, for instance, will cost miners their jobs. So it is incumbent on economists to forecast those trade-offs, and for policymakers to plan for them.
“We have to think about how to design policies that overcome” those potential drawbacks, he said. That means greater investment in job training, infrastructure and – in some cases – social safety nets.
And those investments will come when more corporations and governments understand that working toward a goal of net-zero carbon emissions in the next 30 years will benefit bottom lines as much as the environment.
Crucial to building that momentum is a commitment from the United States, he said.
“That’s the most important thing,” he said, noting that “nobody wants congested, dirty cities.”
The SIEPR Prize was inspired and first funded by George Shultz, who served as President Richard Nixon's budget director and secretary of Labor and Treasury and later led the State Department in the Reagan administration.
Recipients of the Prize are selected by Shultz; Mark Duggan, SIEPR director; John Shoven, a senior fellow emeritus and former director of SIEPR; and Jim Poterba, a SIEPR Advisory Board member, and President of the National Bureau of Economic Research.
Since the program's founding in 2010, the SIEPR Prize has been awarded to Paul Volcker, a former Federal Reserve chairman; Martin Feldstein, a Harvard professor and former chairman of the President's Council of Economic Advisors; Stanley Fischer, former governor of the Bank of Israel, and vice chairman of the Federal Reserve; Alice Rivlin, a former vice chair of the Federal Reserve Board, director of the White House Office of Management and Budget, and founding director of the Congressional Budget Office; and Bill Bradley, the former U.S. senator who spearheaded a bipartisan effort to reform the U.S. tax code.