The Stern Review, as you may have gathered, is a highly influential document on the economics of climate change. It came out in 2006 and was a real game changer, showing that the cost of action to prevent climate change would be less harmful to the economy than the consequences of inaction. It’s a complicated and ethically compromised piece of economics, but it made Lord Stern a key figure in the climate debate.
More recently, Stern has turned his attention to the need for a global deal on climate change, and A Blueprint for a Safer Planet: How we can save the world and create prosperity is his attempt at outlining the kind of deal we need. I should start by pointing out that post Copenhagen, the book needs reviewing. It was released this year, but it would be a much better book if the publishers had delayed the paperback edition by a few weeks and brought it up to date. It was written in autumn 2008, and a lot has changed. It was written before Obama was elected, and talks non-specifically about ‘America’s new president’, for example. No doubt a second edition will emerge sooner or later, and if you’re thinking of reading this book I’d hold on for a bit.
For me, the subtitle was the main reason I wanted to read this. Stern is a cheerleader for economic growth, and sees climate change as an opportunity for more of it. “I offer a blueprint of how to build a safer planet” he writes, “or how to manage climate change while creating a new era of growth and prosperity.” Others maintain that this is a fantasy and that growth is impossible in the face of climate change. It’s an important debate – in fact it may be the key debate in the whole climate change problem.
So what’s the blueprint? Well, it’s based on the idea that climate change is a market failure, “the biggest market failure the world has ever seen” in fact. The damage that CO2 causes isn’t factored into the price of emitting it. Price it in through carbon trading, and the market will correct itself, although there’s more to do as well. Halting deforestation is a priority, along with every possible energy efficiency, an upscaling of renewable energy, and serious investment in promising technology, including carbon capture and storage. All of this should work together to keep atmospheric concentrations below 500ppm, which is Stern’s baseline.
There’s a lot of detail here about how individuals and companies would fit into the picture, and even more on the structure of a global deal – who gives what to whom, and how. It’s a maze, quite frankly. I admire Stern for tackling it and getting his head around it. I also understand much more clearly why world leaders didn’t secure a deal at Copenhagen. The whole thing is fiendishly complicated and full of pitfalls, potential inequities, or opportunities for gaming the system. It’s obvious that a global climate deal is possible, but getting there is going to require a whole new approach to diplomacy.
There’s no doubt that Stern has thought this all out very carefully. However, I have a couple of problems with his starting assumptions. After all his careful reasoning, the growth question is still the elephant in the room. “It is neither economically necessary nor ethically responsible to stop or drastically slow growth to manage climate change” he asserts, because “without strong growth it will be impossible for the poor people to lift themselves out of poverty.” I don’t doubt Stern’s commitment to the poor. He co-authored the Commission for Africa report and knows his stuff, but growth is not the best way to solve poverty. As nef have proved, growth is so unequally shared that if you wanted to lift everyone living on less than $2 a day to just $3 a day, you would need 15 planets worth of resources to do it.
The failure here is to distinguish between necessary and unnecessary growth. I agree that African economies need to grow, but why should American or European economies continue to grow? Stern even recognises that growth can’t go on forever: “a picture of indefinite expansion is an implausible story of the future” he writes, but he doesn’t go on to say when ‘enough’ would be. If everyone lived like Americans, we’d need five planets. So when is enough? Six planets, seven? It’s ridiculous to see growth in Africa growth in the West as equally good. A dollar of growth in a poor country is worth far more than growth in a rich country.
What’s worse is that Stern uses this very logic to justify ‘discounting’ the needs of future generations. We know that a unit of extra wealth means less to a richer person than to a poorer person. We also know, according to Stern’s growth assumptions, that growth will continue and future generations will therefore be richer than we are. That means that a unit of growth will mean more to us than to them. Conveniently, this means we can put our needs first. It’s economically logical, and neatly circumvents the golden rule of sustainability that requires us to meet “the needs of the present without compromising the ability of future generations to meet their needs.” It also shows why you should never put an economist in charge of anything that involves real people.
Interestingly, Stern hints at another way in passing. “Short of creating an immediate, major and prolonged world economic decline, it is impossible to big and sustained reductions in emissions starting immediately” he says, acknowledging that de-growth is the only immediate solution to climate change while dismissing it at the same time.
Lord Stern is obviously a highly intelligent and influential man. What if he were to able to entertain that heresy for a bit, to explore the idea that ending growth might actually be the best way to fix the climate? He could have written a book detailing how to ‘ration’ growth to countries that need it most, how to slow an economy without destabilising it, how to maintain employment, how to create new money for mortgages and pensions without the growth imperative of interest. In a world of peak oil, climate change and population growth, the notion that the future must inevitably be richer than the present strikes me as a rather rash assumption. Because of it, the message of A Blueprint for a Safer Planet is music to the ears of politicians and businessmen alike, but it is ultimately built on sand.
The Earthbound Report 
Jeremy,
I love the idea of “rationing” growth! Just like we should ration our GHG emissions. Truth is, in order to stop emitting we must stop growing, they cannot be separated (without some miracle technology that doesn’t exist yet).
I am almost finished with Tim Jackson “Prosperity Without Growth,” which makes the best argument for stopping economic growth I’ve ever heard. Now we need a George Monbiot or similar to outline the rationing of growth. Great stuff!
Cheers,
Joshua
Thanks Joshua. The rationing idea is something I picked up from Duncan Green at Oxfam. He’s written about it here: http://www.oxfamblogs.org/fp2p/?p=925
The world has to act now or face devastating economic consequences. Walter Economics
Jeremy,
Thanks for this interesting review. Two things:
1.
I find a consistent sleight of hand in the way you present the question of growth’s importance to ending poverty. You say that growth alone will end poverty sowly and inefficiently. At current trends, that is certainly true. That is why development experts are calling for global commitments to 0.7 aid, better social safety nets in developing countries, etc. Growth could be made much more ‘pro-poor.’
But you go from ‘growth without significant redistribution is a surprisingly inefficient way to reduce poverty’ to ‘growth is not the best way to reduce poverty.’ This is a huge leap! I’ve read tens of posts on this site now and I don’t feel you’ve ever really articulated what the post-growth model of development would look like for poor countries. In fact, you’ve often admitted you think poor countries *should* continue to grow!
What I think you’re trying to say is that without deliberate redistribution there is minimal clear development benefit to economic growth, especially in already-rich countries. We could argue about that, but at least it’s honest. But although growth may not be a very good driver of development, it is the only thing that has ever lifted any human being out of poverty. The onus is on you, I think, to put some flesh on what ‘development without growth’ would look like.
2.
In this post, as elesewhere, you confront a numerated, evidenced argument that economic growth can, in fact, be made compatible with 2C of climate change or less. And rather than providing evidence that this is wrong, you rather sidestep the issue. You argue that Stern doesn’t address the idea that rich countries should grow less – but why should he, if rich country growth can be made sustainable? You may feel that wealth corrodes the soul, but you must accept that the majority of people do not.
As unlikely as it sounds, Stern – and McKinsey and Joe Romm and the bloody IPCC – say that we can ‘get away with it’ – continue economic growth, in rich and poor countries alike, and still get atmospheric carbon below 450ppm. Are you convinced they’re wrong, in which case can you show evidence? Is it that growth+450ppm is possible, but growth+350ppm isn’t?
I’m trying very hard to look at this with an open mind, but I’m starting to feel that your position is based more on you finding Western wealth inherently distasteful rather than you being genuinely completely convinced it can never be made sustainable.
Please, prove me wrong!
1. I’m not arguing for development without growth for poor countries, although that is actually entirely possible – see:
http://makewealthhistory.org/2010/11/08/un-development-is-possible-without-growth/
I don’t see why it’s such a problem to accept that growth in poor countries is a good thing, while ongoing growth in countries that already have enough is not. That’s no contradiction to me.
There’s no deliberate sleight of hand here. I don’t believe growth is the best way to solve poverty because it’s just too simplistic – what is growing? Who is getting the benefits? It’s like saying trade is good, without specifying what is being traded. Slaves? Drugs? Growth is an abstract, and it’s simply not correct to say that growth lifts people out of poverty. Look at Egypt, with growth rates of 7% a year, and the number of people living in poverty doubling over the same period:
http://makewealthhistory.org/2011/01/31/is-egypt-a-victim-of-its-economic-policy/
2. I didn’t decide that wealth is a bad thing and start looking for excuses to dismantle it. I started looking at what was wrong with the world, whether there was any truth to problems like peak oil or climate change. Along the way, I have come to understand the problems better and am beginning to get my head around the core issues – one of which is the problem of economic growth.
The example you mention all argue that economic growth is possible, and guess what? They’re respected and read by politicians and businessmen. Heinberg or Jackson say it isn’t possible, and guess what? They’re marginalised and ignored.
There is maths behind this, I just referenced some on my last comment. I haven’t explored it on the blog because I’m not a scientist myself, but it’s there on my bookshelf. I’m a sceptic. I regularly read things that I don’t believe, on both sides of the debate.
All these calculations and the whole growth agenda falls down, by the way, with the word ‘forever’. You can make any number of calculations and projections, but the idea of indefinite material growth on a finite planet is a fantasy.
I think it’s nonsense to say that Jackson has been marginalised – there have been a lot of column inches related to the post-growth idea. It hasn’t caught on in policy circles, but couldn’t that be because those arguing for growth seem to have the evidence on their side?(But see other comment about numbers etc)
Thanks for the Egypt and development links, very interesting.
The book began as a report for the Sustainable Development Commission, which was disbanded within weeks of the current government coming to power – a more deliberate institutional marginalisation you will never see.
The postgrowth thing was nowhere ten years ago, but it slowly gathering steam. It is generating an increasing number of column inches, and the was a great special edition of the New Scientist dedicated to it. In policy circles, growth is the god of the day, and nobody dares to raise the postgrowth question. Jackson himself says that he has seen politicians ‘physically recoil’ when he tells them the title of his book.
Ah yes, OK, fair point – I suppose I was thinking in terms of the public discussion, where I think postgrowth is over, not under-represented – the average man on the street (unless they’re a denier) would probably agree with your premise. Pessimism is easy. But fine, if you’re talking about in the political & institutional sphere, you’re right.
As someone who talks about postgrowth quite a lot, I find I get a range of reactions. You’re right that the average person on the street will often agree on postgrowth, but without entirely understanding it and that’s actually not helpful at all. It plays too easily into the silly banker-bashing narrative, when it’s far more sensible than that.
When I meet scientists, there’s often a ready acceptance of postgrowth there too. Infinite growth is obviously impossible from a biology or physics point of view, and there’s no question about it.
The moment you come up against anyone in business, media or politics however, you get the opposite reaction – an almost hostile rejection. It’s a genuine taboo subject. You’d have an easier time telling people that democracy is a bad idea than suggesting that growth can’t continue.
That’s the problem, really. The people with the power won’t even accept the question, so debate is stifled at the level that matters.
“You’d have an easier time telling people that democracy is a bad idea than suggesting that growth can’t continue.”
I actually sometime think democracy will have to go for either of our approaches – end-of-growth or huge-effort-to-clean-up-growth – to have a chance of success. But that’s a different debate.
You may be right, I haven’t thought very far down that line.
Incidentally, my approach isn’t ‘end of growth’ as a end in itself. It’s more huge-effort-to-clean-up-economy, which involves removing growth as a deliberate aim, and may or not involve removing economic growth in practice.