The
Stern Review although concerned with the ultimate global topic of climate
change is firstly an economic review. That this is the case and moreover
that it has prompted such response is strong evidence for the dominance
of economics in the world today. Certainly western Governments respond
to economics quite differently than to science or technology or environmental
issues, indeed they tend to define their role and activities and monitor
their progress and success in essentially economic terms.
To date environmental issues, no matter how seemingly calamitous have
generally prompted limited and unilateral responses and in this sense
the Stern Review whatever might be thought of it, elicited serious governmental
consideration across the globe. In part this is down to timing, with the
potential response coloured by the global war on terror, the related push
for democratisation and the conversions to market economies of hitherto
“command” economies like North Korea, former USSR and China.
Indeed democracy and market economy are seen as fundamentally related.
In terms of the Stern Review, two elements, risk
and cost are the key economic aspects and have enabled the notions that
climate change MUST cause action (inaction is not an option) AND that
with costs (which can be minimised with the right action) will also come
opportunities. This is an important difference of slant compared with
the environmentalist’s doom and gloom scenario and acts as both
stick and carrot for governments AND business. For governments it also
offers rationale and reduced blame for introducing taxes and new legislation
e.g. increased air tax or new European emissions legislation for car manufacture.
A key development which Stern promotes and which links economics and climate
change is carbon trading (see separate section) .Moreover the business
opportunities which climate change offer are clearly illustrated if one
looks at the share price performance of e.g. Climate Exchange PLC, one
of the new companies dealing with carbon trading.