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Eco-nomics: Was Stern 'wrong for the right reasons' ... or just wrong?

Perhaps greens just aren't the good guys

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If not Stern, then what?

The result of Stern Report, Tol writes in the foreword, is an "overly ambitious emission reduction in the short run, as embraced by the European Union and the United Kingdom, is needlessly expensive". Climate activists over-egged their case, essentially.

In Lilley's view the government should return to evidence-based policy making. It should back emissions reductions policy where it makes economic sense: increasing energy efficiency, replacing coal with natural gas, which has half of coal's CO2 emissions. It should back R&D. "These are the low hanging fruit," he writes.

The most compelling argument against rapid carbon dioxide cuts is the human misery inflicted on the most vulnerable - suffering not felt in the affluent West. Stern is "coy" on how much poor countries would suffer, notes Lilley. Given that it's unlikely that Western countries could make 80 per cent cuts, they'd buy credits in developing countries.

"By definition, that involves paying developing countries to use more costly technology than they would otherwise have done or to forego development of their energy needs".

And depriving poor countries of cheap energy and modern energy grids (and the vans and trucks they need to go to market) is condemning them to avoidable misery. Lilley, who with Claire Short, Menzies Campbell and Hilary Benn founded the charity Trade Out Of Poverty, finds this both hypocritical and immoral. He writes:

"Armchair environmentalists may romantically imagine us returning to the simple life without dependence on fossil fuels which they imagine poor people enjoy," he observes.

"The reality is a lot grimmer: In fact, it means lives of grinding toil – where water is hauled every day rather than pumped through pipes; where fields are tilled and crops harvested by hand rather than with tractors and combine harvesters; where surplus crops – if any surplus can be produced without fertilisers - must be carried to market on your own or your animal’s back; where you have no light to read or study by in the evening; where you cannot run any of the domestic appliances, from fridge to TV, which we all take for granted; where you cannot buy cheap clothes, food, and mass-produced goods made elsewhere because there is no transport to bring it to local markets; where hospitals cannot run X-ray machines, sterilise equipment or keep drugs cool because they have no electricity."

The UN's ambitions to create a global successor to the Kyoto Protocol died in Copenhagen in 2009, largely as a result of the refusal of poor countries to stay poor: "Even if that is an attractive vision to some Western intellectuals, it is perfectly clear that every developing country in the world wants to acquire as rapidly as possible what we in the developed world take for granted. To do so they need abundant energy as economically as possible; they are not going to invest their limited capital in new low-carbon technologies which will give them only a fraction of the power they could have from conventional sources.

"Stern’s approach would require them to do so. It would put the interests of a future rich world ahead of those of today’s poor."

It may well be a bogus choice in any case. As Diane Coyle pointed out a decade ago (PDF) in a debate with George Monbiot, in the US and the UK "all the growth of the 1990s occurred without any additional use of raw materials and resources at all." And she pinpointed the problem:

"Environmentalists, on the other hand, stake their expertise on the likelihood of catastrophe."

So the morality of climate policy is far from a simple fable of goodies versus baddies. It is difficult to accept, at face value, that activists whose policies retard economic development, and by doing so prolong human misery, are doing 'the Right Thing'.

The 'dismal science' of economics is much criticised today, and large areas of it - particularly macroeconomics - lie in disrepute. Economics is a peculiar mix of the normative (shoulds and oughtas), and the positive (what is), as Lilley notes. Of late, it has become a political tool, the collection of evidence to justify a set of beliefs and value judgments. But we can't escape economics; it's a discipline we're cursed to continue. We can choose to do badly, or do it well.

Why don't we do it well? ®

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