Stern Review ‘Not Fit For Purpose’, Says New Report

  • Date: 04/09/12

A senior British Conservative has called for the commissioning of a fresh independent study into the economics of climate change and sharply criticised economist Nicholas Stern’s six-year-old report – which warned that the costs of doing nothing to prevent global warming significantly outweighed the costs of acting.

In a new paper published today called What is wrong with Stern? [pdf], Conservative MP Peter Lilley claims that the influential report “was not fit for purpose” and urges the government to adopt a new strategy taking a more gradual approach to reducing emissions. According to Lilley, while Stern’s arguments were considered “incontrovertible truth” at the time, “the mood has changed since the recession” as the costs of tackling climate change have hit homes and businesses.

The Stern review was the first comprehensive study of its kind and has informed British government policy since its publication in 2006. It argued that if no action was taken the effects of climate change would be “equivalent to losing 5 per cent of global gross domestic product each year now and forever”. Meanwhile it put the costs of reducing emissions “to avoid the worst impacts of climate change” much lower at an annual 1 per cent of GDP.

But Lilley, an MP since 1983 and a minister in the Thatcher and Major administrations, has now called on the government to stop using the “misleading” Stern review to justify policy decisions and order a new study. He says the “alarmist” original report, which was commissioned by the then Labour Chancellor of the Exchequer Gordon Brown in 2005, has since been used to “silence dissent from the official orthodoxy” on climate change.

“Stern’s estimates of the costs and benefits of preventing global warming differ markedly from the consensus among environmental economists and even from the economic assessment of the United Nations Inter-governmental Panel on Climate Change,” Conservative MP Lilley writes in his own report, published by the London-based Global Warming Policy Foundation think-tank.

Describing Stern’s message as “dogmatic”, he continues: “The sacrifices this generation is asked to make to prevent global warming will accrue centuries ahead when people will be many times richer than us and far better equipped to adapt to, prevent, or even reverse global warming.” He adds that, in any case, “global warming seems to have paused in recent years”.

Lilley does not deny the science behind climate change, taking the IPCC’s view on the matter as a given. “Virtually all climate scientists – from sceptics to alarmists – accept that increasing concentrations of greenhouse gases will raise temperatures, other things being equal,” he writes. “The only scientific disputes are about how much, how certain and whether other things are equal. However, economic pressures do justify whether the economics of climate change policy is sound.”

Arguing for a new strategy that emphasises adaptation to climate change “as it occurs” rather than focusing solely on preventing it, Lilley writes that developing countries should be able to use the cheapest energy sources available while financial aid is used to help mitigate the effects of global warming in the most vulnerable countries. He also advocates for a more gradual increase in incentives to reduce emissions and cost effective measures to improve energy efficiency.

Public Service Europe, 4 September 2012