Fighting Global Warming Offers Growth And Development Opportunities, Leading Economist Proposes

Contrary to current cost models for lowering greenhouse gas emissions and fighting climate change, a group of researchers from the University of Cambridge conclude that even very stringent reductions of can create a macroeconomic benefit, if governments go about it the right way.

"Where many current calculations get it wrong is in the assumption that more stringent measures will necessarily raise the overall cost, especially when there is substantial unemployment and underuse of capacity as there is today", explains Terry Barker, Director of Cambridge Centre for Climate Change Mitigation Research (4CMR), Department of Land Economy, University of Cambridge and a member of the Scientific Steering Committee of the Congress.

"There is some evidence that harder greenhouse gas targets and regulation may actually increase benefits through improved innovation and distribution of low carbon technologies, and increased revenues from taxes or permits. These revenues can be spent to further support new technology and to lower other indirect taxes, ensuring the fiscal neutrality of these measures", says Barker.

"The current global financial crisis must be seen as a timely stimulus to tackling climate change, not a hindrance. If all G20 countries adopted a Green New Deal similar to that proposed by President Obama, the world economy could be greatly strengthened, especially the sectors producing low-carbon technologies," he adds. "But global coordination is critical. Any single country's New Deal may fail if its extra demand for goods and services are met with imports. If we act together, everyone's exports will increase and we can recover employment much quicker".

The prospect of extra growth for the economy from mitigating climate change also raises the possibility of generating funds for helping developing countries adapt to the changes that are now inevitable.

"This 'New Marshall Plan' for the climate would be beneficial to all parties", says Barker.

Though the debate on whether tackling climate change will be a burden or a boost to the economy is still ongoing, the findings presented at the IARU Climate Change Congress show that inaction on climate change has significant and often unexpected economic costs.

One study presented at the conference shows that productivity among New Delhi's outdoor laborers has already declined 10 percent since 1980 as a direct result of climate change. A further temperature rise of 2 degrees Celsius could cut productivity by another 20 percent.

"Increasing excessive heat exposure affects the daily life, work and health of poor people in tropical countries ? that effect of climate change has been ignored until now", says Tord Kjellström, visiting fellow at the National Centre for Epidemiology and Population Health at Australian National University.

A forestry study shows that a shift in production from cold adapted coniferous species such as Norway Spruce to more heat tolerant broadleaves like oak would create significant net losses in the value of forestland in Europe. The forest area of Europe (excluding Russia) is approximately 1.6 million km². Applying a model that predicts the shift of 32 major tree species in this area reveals that under a scenario with an assumed increase of temperature of almost 6°C in 2100, large areas of Europe will be covered by a Mediterranean oak vegetation type with rather low economic productivity.

"The loss of the value of forest land linked to that process is estimated to be worth an average of 200 billion Euro," said Marc Hanewinkel, professor at the Forest Research Institute of Baden-Wuerttemberg, University of Freiburg, Germany.

Similarly a study shows that while it will cost up to 128 billion yen (1 billion euro) to secure Japanese harbors against stronger winds and more frequent storms, failure to do so could result in the loss of 1.5 to 3.4 percent of Japan's GDP by 2085 (Japanese GDP in 2007 was 3.41 trillion euro). This is due to an increased number of days where harbors will be forced to close.

"Port planners should factor this in when designing port capacities. Their designs must be able to prevent delays and increased downtime due to winds and rain. Similarly, they must plan for sea defenses that can limit damage caused by waves. Failure to do so could lead to bottlenecks in the shipments of products and constrain Japanese economic growth" urges Miguel Esteban, Postdoctoral Fellow at the United Nations University Institute of Advanced Studies.