The Lesson of the Financial Crisis for Climate Change, 'Tackle Risk Early': Nicolas Stern

farming or deforestation photo

photo: Ikhlasul Amal

Though if you've just seen the money in your retirement account disappear this may not be the time to bring this up, but I will anyway. We mustn't lose focus on the absolute importance of moving away from fossil fuels (no matter how low their price goes) and tackling climate change. We also have an opportunity to reassess how we incorporate environmental externalities into the prices of goods, and in the process tilt the scales towards greater ecological sustainability.

But just don't take it from me. Advocates and economists far more pedigreed than I are also continuing to ring the "inaction on environmental issues will cost us" bell. Here's Nicholas Stern on climate change and wall street woes:Ignore Climate Change At Our Collective Peril

The risk consequences of ignoring climate change will be very much bigger than the consequences of ignoring risks in the financial system. That's a very important lesson, tackle risk early.

The lesson that we can draw out from this recession, is that you can boost demand in the best way possible by focusing on low carbon growth in future. (Reuters)

In the past, Stern has said that failure to act on global warming will create physical changes to the planet that will create economic hardship equal to that seen during the Great Depression. If not restricted, climate change will cost the world's nations 5-20% of their GDP.

An Opportunity to Reinvent Economics
The opportunity we now have now though is a transition towards full implementation of the principles of ecological economics. As Robert Costanza of the University of Vermont told Reuters , "Most of our valuable assets are not on the books. We need to reinvent economics."

A decade ago, Costanza put the value of natural services provided by the world's ecosystems for free as $33 trillion. A Deutsche Bank economist recently estimated that we're currently squandering $2-5 trillion of that every year to deforestation.

Create an Earth Atmospheric Trust: Costanza
More recently Costanza said that one way to value nature, tackle climate change, and decrease poverty would be to "set up a government-backed system to trade all greenhouse gas emissions and channel the revenues, estimated at $0.9-3.6 trillion a year, into an 'Earth Atmospheric Trust'". Half of the proceeds would be share among all people on the planet (each receiving somewhere between $71-285 a year), and the rest going specifically to increase renewable energy use and clean technology. (Reuters)

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