"I must have missed something", John writes. I think he has.
 
How much money is this? 
 
 It's not just the 3% loss of production by 2030; that the FT is talking about; the Stern report is suggesting that we should all devote 1% of GDP for fifty years.   I agree that when we're talking telephone numbers it's difficult to understand what the money means. Monetary values are, however, only an indicator about what is really going on.  When the World Bank declares that people are poor on $1 or $2 a day, don't take the figures literally.  What those figures tell us is that those people are not part of a formal economy; development depends on integrating people with mechanisms of exchange and production, and that once that happens, reports about income start to look different.      
 
I'm not sure where John's $1500 billion comes from, but let's take that as it stands. It's six times the money that developed countries are supposed to offer to developed ones in Overseas Development Assistance, but consistently fail to give. It's far more than the cost of meeting the Millennium Development Goals for radical reductions in World Poverty, which have been estimated at $121 billion to $189 billion per annum 2006-2015.  Halving the numbers of people who have no safe access to drinking water would cost $2.4 billion.  Universal primary education throughout the world would cost $6.5 billion.   Dealing with child mortality and the main infectious diseases is estimated at $20 billion. $1500 billion, then, is more than enough to eradicate many of the evils of world poverty, which currently affects nearly half the planet.  
 
Will the proposed spending do any good? 
 
There are reasons to be sceptical that carbon emissions are the cause of global warming, but let's take the received wisdom as a starting point.  Does it follow that the proposals for reducing carbon emissions, like emissions trading, will avoid the problems?
 
There are three key problems with the proposals in the Stern report.  The estimates he cites suggest a probability of up to one in five that even if the reduction falls well below the range he proposes, the global temperature will still increase by 3 degrees.  This is enough, according to the report, to displace 150 million people, and to put up to 500 million people at risk of starvation. What we are being offered, then, is at best a gamble, and even if it helps it may not prevent some major problems.  

The second problem is that even if prevention is possible, it requires the cooperation of every nation. Stern is clear that any measure that fails to engage most of the world's economies will fail to mitigate global warming.   The UK's contribution to carbon emissions is marginal.  Without America and China on board, the whole approach collapses. To justify any major investment on the part of a single country, we need to know that that nation's contribution would make a difference proportionate to its expenditure, or at least some difference. There is no indication that it would. 

The third problem is that the solution that is being proposed - a global market for carbon emissions - could make things worse. Countries in the process of development will be fettered; they can develop under constraints, or they can sell their rights, which offers a short-term return but traps them in dependency. The main way out of the dilemma for any developing country or emerging economy will be to develop nuclear power.  This is a paradigmatic case of the West willing the end while denying developing countries the means. A world with carbon emissions trading will be underdeveloped, unjust, and dangerously unstable. 

Are there other claims on the money? 
 
Two criticisms have been made of Stern. One is that he does not discount adequately - he gives far too much weight to an uncertain future, counting future generations as worth nearly the same as present generations. Because future generations always outnumber the present, this kind of argument can always be used to show that prevention of unpredictable, remote events is worthwhile. The second problem is that he gives far too little weight to the poor, both now and in the future. Stern does accept that the poorest people will be hit first, and hit hardest.  If Stern is right, there are major issues looming relating to water supply, agricultural production and the migration of 200 million people. I do not know how big the problems will be or how much they will cost, but a forty or fifty year programme of development, resettlement and relief could do a great deal to reduce the harm that the report foresees, and if the numbers of people are those outlined in the report, the money earmarked by Stern for "mitigation" of climate change should be more than enough to lift those people out of poverty. 
 
Should we be slowing economic development?
 
John's central premise seems to be that slowing economic growth won't do any real harm.  Yes. it will.  The developing world needs the developed world to buy its goods - the main criticism of the EU and the US is that they cut the developing countries off from trade.  Cutting economic activity will threaten our economic balance, and the developing countries rely on us for their markets.  They can't do everything from their own bootstraps.  The countries which have done best from the developing world, like those in South East Asia, have done it because they're most integrated with the world economy, while those which are excluded or cut off suffer the most.  
 
Basic aspects of development, like roads and drainage, are fundamental to people's lives.  For an inspiring read, I'd recommend Hettige, "When do rural roads benefit the poor and how?", Asian Development Bank, at  http://www.adb.org/Documents/Books/ruralroad_benefits/default.asp <http://www.adb.org/Documents/Books/ruralroad_benefits/default.asp>  .  Economic development is a fundamental good.  We have to stop talking as if it's a disease which has to be eradicated.  
 
Paul Spicker
Professor of Public Policy
Centre for Public Policy and Management
The Robert Gordon University
Garthdee Road
Aberdeen AB10 7QE
Scotland
 
Tel: +44 1224263120
Fax: + 44 1224263434
 
Website: http://www.rgu.ac.uk/publicpolicy/
 
 

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