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A report last week on the economic aspects of climate change is not just another warning of imminent catastrophe, it is also an optimistic message for developed and developing countries alike.

Last week's report on climate change by one of Britain's leading economists, Sir Nicholas Stern, paints a dire picture of what is likely to happen if drastic action is not taken soon to curb the build-up of greenhouse gases in the atmosphere.

But the underlying economic message is more optimistic. Preventing climate change, argues Stern, does not mean stopping economic growth, but merely containing it within reasonable limits, and ensuring that it follows a responsible path.

According to Stern's estimates, for example, an investment of just one per cent of the world's gross domestic product (GDP) would be sufficient to cap carbon emissions at between 500 and 550 parts per million a year. This in turn, he says, is likely to limit the rise in global average temperature to between two and three degrees centigrade — a significant, but not necessarily catastrophic, increase.

A worthy investment

The message is timely as countries signed up to UN Framework Convention on Climate Change — particularly those that have ratified the Kyoto Protocol, pledging to cut carbon emissions significantly by the period 2008-2012 — gather in Nairobi, Kenya, for the latest round of negotiations on how to put their commitments into practice.

One of the main tasks they face is how to forge an international consensus on action once the Kyoto Protocol expires in 2012 and how to bring larger developing countries like Brazil, China and India into a 'post-Kyoto' regime.

Two arguments are generally used to excuse these countries from not doing more, both based on concepts of international equity. The first is that they should not be penalised for being late starters in the industrialisation stakes. The second is that it is unfair to ask either country to make economic sacrifices when the world's largest emitter, the United States, refuses to do so.

But Stern's report provides a useful antidote to those who argue that developing countries should not be expected to contribute significantly to efforts to reduce climate change. As with education or basic research, today's expenditure to curb carbon emissions should be seen as an investment in future benefits, not as an operating loss.

Time is money

Furthermore, the cost of delay is likely to be high, and to increase rapidly, leading eventually to annual losses of 20 per cent of global GDP. As Stern puts it: "the benefits of strong and early action far outweigh the economic costs of not acting."

Such a conclusion justifies a wide range of political responses. One is that international aid is urgently needed to help fund carbon reduction strategies and technologies in developing countries. This includes curbing deforestation as well as assessing whether projects funded through carbon trading schemes are efficient enough.

A second is that there should be a massive increase in expenditure on renewable energy research. The worst culprit here is the United States, which has had virtually the same energy research budget for the past decade. But other countries are not much better.

The third conclusion to follow from Stern's analysis is that developing countries stand to benefit substantially from building their own technological capacity to limit carbon emissions. This requires not only mobilising domestic resources, but also convincing the voting public of the urgency of such investment — a task in which the national media have an important role to play.

Relying on the developed world to provide the technical, financial and other means for reducing emissions is not a long-term solution.

The art of the possible

Many climate change sceptics, who tend to see any attempt to control growth only in terms of its negative impact on the economy (as well, they would claim, as its curtailment of economic freedoms), have already dismissed Stern's warnings as another set of alarmist predictions.

Other critics have warned that Stern does not go far enough. They suggest, with some plausibility, that measures that are predominantly economical — such as enhanced trading in carbon emission permits — may fail to achieve Stern's stabilisation target. And that even this target may be insufficient to prevent major climate-linked catastrophes, such as widespread drought in sub-Saharan Africa.

From a political perspective, however, the major challenge at present is not to come up with a logically watertight answer to climate change, but a strategy that has a chance of succeeding in the real world. This means persuading countries such as China and India that it is in their own interests to engage in global efforts to curb carbon emissions.

Stern's report seeks to do this. Its underlying message is that tackling climate change effectively requires global action. But it is action from which everyone will eventually benefit — and in which everyone, whether in developed or developing countries, should therefore participate.

David Dickson
Director, SciDev.Net