Nicholas Stern: From Pessimism to Optimism

I am currently reading his Blue Print for a Safer Planet. Nicholas Stern encourages people to not become pessimistic as we will surely fail. I recall listening to Bob Brown, the Leader of the Australian Greens, at his launch encouraging his supporters to be optimistic. I also agree with this. I don’t feel pessimistic, I feel we are being faced with reality and it is important we wake up. That we pay attention and not find ourselves distracted by television and going out. Putting it in the too hard basket, it is your world and you are participating, as you consume you also contribute to the destruction of rainforests, so you can vote through consumption or you can become engaged in the debates and own your democracy. Even if they appear complex you will find you will get it, if you just keep the juggling balls in the air (as I typically say to myself). In other words I read it, even if I don’t understand, then eventually the penny drops. Always it does.

Here is an overview of who is Nicholas Stern and then an article from The Gaurdian. Nicholas Stern is the Economist who tackled Climate Change and Economics and put the facts on the table. A very lofty goal and courage move, as he is most definitely walking into the snake pit there. He is challenging business taboos, yet the reality is we have to face the market failure of capitalism and to rise to the occasion, to create a better world worth living in and that sustains all life. Interestingly, Stern is an advocate of vegetarianism, one move I’ve never regreted. I can tell you, you won’t miss meat, you actually feel healthier and the impact on the planet is immeasurable.

Why should we face Earth Changes and re-envisage Economics? The time has come to face the truth of ourselves and live the authentic life that is our true nature, that is sustainable. Indeed the time is now.

Nicholas Stern has many similarities to Joseph Stiglitz who I have featured in previous blogs. I suspect they would know each other very well.

Nicholas Stern Background, courtesy of Wikipedia.

Nicholas Herbert Stern, Baron Stern of Brentford, Kt, FBA (born 22 April 1946, Hammersmith) is a British economist and academic. He is IG Patel Professor of Economics and Government, Chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE), and 2010 Professor of Collège de France.

Stern is the son of the late Bert Stern and Marion Stern and nephew of Donald Swann—half of the Flanders and Swann partnership. Richard Stern, former Vice-President, World Bank, and Brian E Stern, former Vice-President Xerox Corporation, are his brothers, and his sister is Naomi Opalinska. He was the Chief Economist and Senior Vice-President of the World Bank from 2000 to 2003, and was recently a civil servant and government economic advisor in the United Kingdom. In June 2007, Stern became the first holder of the I. G. Patel. In 2008, he was also appointed Chair of the Grantham Research Institute on Climate Change and the Environment, a major new research centre also at LSE. He is also Chair of the Centre for Climate Change Economics and Policy at Leeds University and LSE.

After attending Latymer Upper School, he earned his Bachelor of Arts degree in mathematics at Peterhouse, Cambridge, and his Doctor of Philosophy in economics at Nuffield College, Oxford. He was a lecturer at University of Oxford from 1970 to 1977, and served as a Professor of Economics at the University of Warwick from 1978 to 1987. He taught from 1986 to 1993 at the London School of Economics, becoming the Sir John Hicks Professor of Economics. From 1994 until 1999 he was the Chief Economist and Special Counsellor to the President of the European Bank for Reconstruction and Development. His research focused on economic development and growth, and he also wrote books on Kenya and the Green Revolution in India. From 1999 until 2000 Stern was Chairman of the consultancy London Economics founded by John Kay.

After his time working for the World Bank, Stern was recruited by Gordon Brown, then Chancellor of the Exchequer, to work for the British government where, in 2003, he became second permanent secretary at H.M. Treasury, initially with responsibility for public finances, and head of the Government Economic Service. Having also been Director of Policy and Research for the Commission for Africa, he was, in July 2005, appointed to conduct reviews on the economics of climate change and also of development, which led to the publication of the Stern Review. At the time, he ceased to be a second permanent secretary at the Treasury though he retained the rank until retirement in 2007; the review team he headed was based in the Cabinet Office.

Regulation, carbon taxes and carbon trading are recommended to reduce greenhouse gas emissions. It is argued that the world economy can lower its greenhouse gas emissions at a significant but manageable cost. The Review concludes that immediate reductions of greenhouse gas emissions are necessary to reduce the worst risks of climate change. The Review’s conclusions were widely reported in the press. Stern’s relatively large cost estimates of ‘business-as-usual’ climate change damages received particular attention.[3][4] These are the estimated damages that might occur should no further effort be made to cut greenhouse gas emissions.

There has been a mixed reaction to the Stern Review from economists. Several economists have been critical of the Review,[5][6] for example, a paper by Byatt et al. (2006) describes the Review as “deeply flawed”.[7] Some have supported the Review,[8][9] [10] while others have argued that Stern’s conclusions are reasonable, even if the method by which he reached them is incorrect.[11] The Stern Review team has responded to criticisms of the Review in several papers.[12] Stern has also gone on to say that he underestimated the risks of climate change in the Stern Review.[13]

Stern’s approach to discounting has been debated amongst economists. The discount rate allows economic effects occurring at different times to be compared. Stern used a discount rate in his calculation of the effects of “business-as-usual” climate change damages. A high discount rate reduces the calculated benefit of reducing greenhouse gas emissions. Using too low a discount rate wastes resources because it will result in too much investment in cutting emissions (Arrow et al., 1996, p. 130).[14] Too high a discount rate will have the opposite effect, and lead to under-investment in cutting emissions. Most studies on the damages of climate change use a higher discount rate than that used in the Stern Review. Some economists support Stern’s choice of discount rate (Cline, 2008;[15] Shah, 2008 [10] Heal, 2008)[16] while others are critical (Yohe and Tol, 2008;[17] Nordhaus, 2007).[18]

Another criticism of the Stern Review is that it is a political rather than an analytical document. Writing in the Daily Telegraph newspaper, columnist Charles Moore compared the Stern Review to the UK Government’s ‘dodgy dossier’ on Iraqi weapons of mass destruction.[19]

In a speech given in 2007 at the Australian National Press Club, Stern called for one per cent of gross global product to be employed in global warming-related environmental measures.[20] He also joined the Cool Earth advisory board. In 2009, Stern linked recovery from the global economic crisis with an effective response to climate change.[21][22] His book, Blueprint for a Safer Planet, was published in April 2009. ISBN 978-1847920379

In 2009, he published the non-fiction literary work, The Global Deal: Climate Change and the Creation of a New Era of Progress and Prosperity.[23] The book examines climate change from an economist’s perspective, and outlines the necessary steps toward achieving global economic growth while managing climate change. In 2009, he also became a member of the International Advisory Council of the Chinese sovereign wealth fund China Investment Corporation.[24]

Stern is an advocate of vegetarianism as a climate change mitigation element.[25]

He is a member of the scientific committee of the Fundacion IDEAS, Spain’s Socialist Party’s think tank.

This article is from The Guardian, UK. Nicholas Stern: We must not give in to pessimism

http://www.guardian.co.uk/environment/blog/2009/apr/22/nicholas-stern-talk

The author of the Stern Review was upbeat in a talk given to promote his new book, A Blueprint for a Safer Planet.

It was heartening to hear last night that even the most influential economist in the world on impacts of climate change sometimes feels weighed down by the massive global challenge we face.

Nicholas Stern, the former chief economist of the World Bank, former head of the UK Government Economic Service and author of the hugely influential Stern Review on climate change in 2006 was speaking at the London School of Economics – where he now heads the Grantham Research Institute on Climate Change and the Environment.

In the Q&A at the end of Stern’s talk, the Guardian blogger Ed Gilespie asked him how he could be optimistic in the face of contradictory policies by the UK government. Stern confessed that sometimes he could not help focussing on the negatives: “The Russians will cheat, the Americans are not going to give up their SUVs, the Chinese don’t care anyway and the Brits are too lazy to do anything. I can sit in a bar and tell these stories – and I have done – but that doesn’t mean that they are a good basis for action,” he said.

But if we give in to pessimism then we have already failed to solve the climate crisis, he said. “What’s the alternative to optimism? Unless we act as if we can sort this out you might as well just get a hat and some sun tan lotion and write a letter of apology to your grandchildren. The only way we can think of going forward is to try to make the best of a bad starting point.”

“The one way of guaranteeing to fail is to assume that we will,” he added.

Stern’s description of the scale of the problem was characteristically uncompromising – “this is the biggest market failure the world has ever seen”, “the world is more risky than I articulated [in the Stern Review]”, we risk a “transformation of the planet”. But the talk itself, which was to promote his new book, A Blueprint for a Safer Planet, had an upbeat tone. His message was that we have a pretty good idea what the solutions are and what we need to avoid. New technologies like better renewable energy are vital, energy efficiency is a must, deforestation has to be halted and massive fiscal stimulus packages designed to deal with the economic crisis can and should transform the world economy with a greener hue.

In particular, Stern said the world has to get a move on with carbon capture and storage. Currently around half the world’s electricity comes from burning coal so we have to find a way of doing that without releasing stacks of CO2. “If coal is going to be used, the only response – because it is the dirtiest of all fuels – is that we have to learn how to do carbon capture and storage and we have to learn how to do it quickly on a commercial scale,” he said.

If CCS won’t work on a large scale we have to find out quickly. “If we can’t then it’s plan B and plan B will be more expensive probably,” he added.

He repeated his call that the proposed Kingsnorth coal-fired power station should not go ahead unless it is fitted with CCS. “We can’t ask India and China to use new clean coal technologies if we are not prepared ourselves to demonstrate that they work and share those technologies,” he said.

The UK government’s announcement on Kingsnorth is imminent. It remains to be seen whether it is listening.