It seems fitting at the beginning of a new year to take a look at what is probably the greatest threat to everyone on the planet – especially those who, like us, live on small, low-lying islands. It is, of course, climate change – or global warming as we have come to know it.

Despite idiotic letters from people who recommend equally idiotic Web sites claiming the contrary, the vast majority of the world’s scientists (and anyone who has half a brain and the ability to be objective) agree that the Earth is warming at an unprecedented rate.

This heating up of our atmosphere is caused primarily by a combination of our massive use of hydrocarbons and the deforestation of millions of acres of carbon dioxide–absorbing forests.

A few weeks ago, the UK government released the Stern Review on the Economics of Climate Change – a report on the effect of global warming and climate change on the world economy compiled by British economist Sir Nicholas Stern.

The Stern review is one of the first major government-sponsored reports on global warming/climate change conducted by an economist rather than an atmospheric scientist.

Consequently it looks at the potential economic damage to the world rather than just the ecological damage caused by climate change. This column will review the report because the Cayman media gave it virtually no coverage.

Its main conclusions are that “one per cent of global GDP is required to be invested in order to mitigate the effects of climate change, and that failure to do so could risk a recession worth up to twenty per cent of global GDP”. In other words, a massive, worldwide economic depression.

Stern indicates that climate change threatens to bring about the greatest and widest-ranging market failure ever seen, and he suggests prescriptive measures, including environmental taxes, to minimise the resultant disruptions.

He states that “our actions over the coming few decades could create risks of major disruption to economic and social activity later this century and in the next on a scale similar to those associated with the great wars and the economic depression of the first half of the twentieth century”.

The BBC reports that Stern, a distinguished development economist and former chief economist at the World Bank, “is not a man given to hyperbole . . . and his report gives prescriptions for how to minimise this economic and social disruption”.

His central argument is that spending large sums of money now on measures to reduce carbon emissions will bring dividends on a colossal scale. It would be wholly irrational, therefore, not to spend this money.

H e warns, however, that we are too late to prevent all the harmful consequences of climate change. The prospects are worst for Africa and developing countries, he says, so the richer nations must provide them with financial and technological help to prepare and adapt.

Tough decisions

Stern believes it is practical to aim for a stabilisation of greenhouse gas levels in the atmosphere of 500 to 550 parts per million of carbon dioxide equivalent by 2050 – which is double pre-industrial levels and compares with 430 parts per million (ppm) today.

Carbon dioxide itself stands at about 380 ppm, but Sir Nicholas has used the higher figure of 430 ppm, which incorporates other greenhouse gases such as methane.

“But even stabilising at that level will probably mean significant climate change. Even to stabilise at that level, emissions per unit of gross domestic product (GDP) would need to be cut by an average of three-quarters by 2050 – a frightening statistic,” the BBC story continues.

It’s going to require making tough decisions at all levels of government, as well as in industry and as regards private consumption.

As well as decarbonising the power sector by 60 per cent to 70 per cent (which means virtually ending fossil fuel–fired electrical generation), there will have to be an end to deforestation – emissions from deforestation are estimated at more than 18 per cent of global emissions, more than from transportation – and there will have to be deep cuts in emissions from transportation (cars, trucks, trains, buses, etc.).

The BBC reports that the cost of these changes should be around 1 per cent of global GDP by 2050 – in other words, the world would be 1 per cent poorer than we would otherwise have been, which would be significant but far from prohibitive.

To be clear, this does not mean that we would be 1 per cent poorer than we are today, but that global growth will be slower. The way to look at this 1 per cent is as an investment, because the costs of not taking this action are mind-bogglingly large.

Rising estimates

Sir Nicholas Stern’s starting point is economic modelling carried out in other studies showing that a scenario of 2 to 3 degrees of warming would lead to a permanent loss of up to 3 per cent in global world output, compared to what would have happened without climate change.

But he says those estimates are too low. He believes 5 to 6 degrees of warming is a “real possibility” for the next century.

“Having fed the probabilities of the various different degrees of global warming into his economic model, he estimates that ‘business as usual’ would lead to a permanent reduction in global per-capita consumption of at least 5 per cent,” says the story, reported by Robert Peston,
BBC News business editor.

“But,” he says, “that estimate does not include the financial cost of the direct impact on human health and the environment from global warming, or the disproportionate costs on poor regions of the world.

“It also ignores so-called ‘feedback mechanisms’, which may mean that as the stock of greenhouse gases increases there is a disproportionate rise in warming with each new increment in emissions.”

Unfair burden

Putting all these factors together, he comes up with the stark conclusion that if we do nothing to stem climate change, there could be a permanent reduction of 20 per cent in per capita consumption.

In other words, everyone in the world would be one-fifth poorer than they would otherwise have been.

Worse, these costs will not be shared evenly: there will be a disproportionate burden on the poorest countries.

“So here’s the winning formula: Stern says spend 1 per cent of world GDP to be 20 per cent richer than we will otherwise be. It looks like a no-brainer,” the story continues.

There is another way of presenting this analysis of benefits versus costs. Stern says that if you take the present value (the value in today’s money) of the benefits of taking action to stabilise greenhouse gases by 2050, then deduct the costs, you end up with a “profit” of US$2.5 trillion.

Any way you look at it, the financial case for tackling climate change looks watertight. That said, there are great impediments to harvesting this dividend.

One is the very obvious problem that it requires collective, coordinated action by most of the world’s governments – and securing the necessary consensus on the way forward will definitely not be simple.
In the interests of fairness, Stern argues that the richer countries should take responsibility for between 60 per cent and 80 per cent of reductions in emissions from 1990 levels by 2050.

But assuming that consensus is reached, what is the best way to correct the grotesque market failure that is currently taking us on a path to poverty?

How do we start to pay a price for carbon that reflects its true economic and social costs, or a price that includes the present value of future climate change?

Stern says that there are two main ways of achieving this. One is through taxation (oops, sorry – can’t mention the “t” word in Cayman). The other is through rationing the amount of carbon emissions that any business – or any individual – can generate, and then creating a proper global market.

Such a move would allow any business or institution that wants to emit more than its entitlement to buy that right, and any business that emits less than its entitlement to sell the unused portion of its entitlement – in effect, carbon trading.

“Another imperative for governments is to encourage research and development on low-carbon technologies.

“Governments must also encourage ‘behavioural change’, through regulation – such as imposing tighter standards on the energy efficiency of buildings – as well as educating the public about the true costs of wasting energy.” Anyone listening?

We should prepare for a series of shocks from the effects of climate change that are already unavoidable. There will probably be both more droughts and more floods. An increased incidence of devastating storms is expected.

And there is a rising risk of famine in the poorest countries. So we must start to get better at monitoring of climatic conditions – and adapt ourselves for the new world.

That means reinforcing buildings and infrastructure to make them sturdier in the face of extreme weather conditions, investing in new dykes, and supporting financial markets so that it is possible to purchase insurance against climate-related disaster.

It will all be very expensive, disproportionately so for developing countries. Stern argues, and it’s hard to disagree, that there is a strong moral obligation on the richer countries to help the poorest ones protect themselves against the very worst that may transpire.

It will be interesting to see if we can make it happen.

City-sized ice island breaks off

One of the most recent effects of climate change has just been reported in the Canadian media.

Canada’s National Post newspaper reports that an ancient ice shelf has cracked off of northern Ellesmere Island in the Arctic Ocean, creating an enormous, 66-square-kilometre ice island and leaving a trail of icy blocks in its wake.

“It really is incredible,” said Warwick Vincent of Laval University, one of the few people to have laid eyes on the scene. “It’s like a cruise missile has come down and hit the ice shelf.”

The breakup was so powerful that seismometers (earthquake monitors) 250 km away picked up the tremors as the shelf – which is 3,000 to 4,500 years old – tore away from its fjord on Ellesmere.
It broke up 16 months ago, but no one was present to see it, and scientists are only now releasing details after piecing together what occurred from seismographs and Canadian and US satellite photographs.

They say the ice-shelf collapse is the biggest in Canada in 30 years and is indicative of the transformation under way on Ellesmere, Canada’s most northern landmass.

“We’re seeing incredible changes,” said Mr Vincent, whose group is studying the island’s disappearing ice shelves and their unique ecosystems. “People talk of endangered animals – well, these are endangered landscape features, and we’re losing them,” he said.

In 2002, his graduate student Derek Mueller discovered that Ellesmere’s Ward Hunt Ice Shelf had cracked in half. The researchers have also seen the sudden collapse of ice dams and the draining of 30-km-long lakes into the sea.

It took less than an hour for the ice shelf to calve off in the early afternoon of 13 August 2005. Low frequency “rumbling” and tremors were picked up on seismometers at Alert, and Canadian and US satellites captured images of the shelf cracking and breaking away.

“If you were standing right on the edge of the shelf, there’d have been this huge 15-kilometre crack as far as you could see in both directions,” said Luke Copland, head of the global ice laboratory at the University of Ottawa. “And then the ice drifted off.”

Within an hour, the giant ice island was a kilometre offshore. It travelled west about 50 km over the next few weeks and then moved east before freezing into the sea ice about 15 km offshore.

The ice island is about 37 metres thick and measures roughly 15 km by 5 km. That’s the size of a small city, or larger than 11,000 football fields.

The island is now stuck in the winter ice, but the researchers believe it is just a matter of time before it is freed and floats away. They say the ice island could become a potential hazard to navigation and oil and gas extraction if it sails south towards the Beaufort Sea.

Such massive ecological changes in Canada have led to a similar massive change in the Canadian political system.

There, after the election of a former environment minister, Stéphane Dion, to lead the Liberal Party, the ruling minority Conservative government has partnered with the left-wing New Democrats to come up with an integrated environmental programme for the country.

Perhaps we could do the same?

If you wish to contact the Green Hornet directly, you can e-mail me at: caymanhornet@yahoo.com. All messages will be treated confidentially.