Welcome to Ask the Minister - an online interactive forum that allows you to put questions to UK officials visiting the United States. When a chat is announced, questions can be submitted online and will be answered directly by the official.

Sir Nicholas Stern was chief economist of the World Bank from 2000-2003. While working for the UK Treasury in 2005, then-Chancellor of the Exchequer Gordon Brown commissioned him to lead a major review of the economics of climate change, to understand more comprehensively the nature of the economic challenges and how they can be met, in the UK and internationally.

Published in October 2006, the Stern Review on the Economics of Climate Change, the most comprehensive review every carried out on the subject, gained immediate and world-wide attention as an authoritative perspective on the economic challenges and opportunities presented by our changing global climate.

In June 2007, Sir Nicholas returned to the London School of Economics and Political Science where he had previously taught, becoming the first holder of the IG Patel Chair at the LSE Asia Research Centre. In addition to his myriad academic duties, he continues to engage with audiences around the world on behalf of the UK government, for whom tackling climate change is a key priority.

View the Q&A transcript below:

Sir Nicholas Stern says: Hello. I’m Nicholas Stern, author of the Stern Review on the Economics of Climate Change. I’ll try and get through as many of your questions as I can in the time I have.

Cherry Marcellus, Colorado: What in your opinion is the single biggest challenge in the climate change debate?

Nicolas Stern replies: Cherry, climate change is the greatest market failure the world has seen. It is an externality that goes beyond those of ordinary congestion or pollution, although many of the same economic principles apply for its analysis. This externality is different in four key ways that shape the whole policy story of a rational response. It is: global; long term; involves risks and uncertainties; and potentially involves major and irreversible change.

Correspondingly action must be multilateral. Any one country is only part of the problem. But the behaviour of each country will determine whether the collective response is sustained and effective. Further, it will be far easier to take policy forward in one country if other countries move together.

I am optimistic having done the Review that we have the time and the knowledge to act. But only if we act internationally, strongly and urgently. Achieving this is clearly a significant challenge.

Noel Gladstone, MTVN Latam Miami Beach, FL(a British citizen living in hurricane central, South Florida, for three years): What role can we play as individuals to alleviate the effects we have on our climate? And what role can governments adopt with the help of their citizens to also help alleviate climate change?

Nick Stern replies: Thanks for the question Noel. What’s going to happen to our climate in the next 20 or 30 years is already determined. It’s, our actions in the next 20 or 30 years which will affect what happens in the decades that come after that. So when we talk about action to reduce GHG emissions we’re talking about alleviating the effects of climate change in the second half of this century and of course, into the next century and beyond when we might not be around but our grandchildren will. However, the fact that we are too late to have an effect on the climate in the near future or even our lifetimes is not a reason to stall on mitigation action now for the sake of future generations.

As the Review discussed, reducing greenhouse gas emissions (mitigation policy) rests on the voluntary decisions of nation states. It is national governments that have the power to introduce binding legislation and other policy instruments to shape private markets and alter patterns of investment and consumption. But an international framework of formal and informal agreements for co-ordination of these national policy decisions, firmly linked to a long-term global goal, has very strong advantages over a purely domestic approach.

Three elements of policy are required for an effective global response. The first is the pricing of carbon, implemented through tax, trading or regulation. The second is policy to support innovation and the deployment of low-carbon technologies. And the third is action to remove barriers to energy efficiency, and to inform, educate and persuade individuals about what they can do to respond to climate change.

Where individuals can make the greatest impact on reducing GHG emissions is on improving energy efficiency, changing demand, and through the adoption of clean power, heat and transport technologies. By turning off electrical appliances rather than keeping them on standby, turning off lights when the room is empty and unplugging mobile phone chargers when they are not being used, individuals and families can reduce emissions as well as save money on fuel bills. Similarly, car sharing schemes and opting for public transport or walking over taking your car where possible can also reduce emissions per capita. If even a fraction of the population of a country like the US would adopt such practices, the cumulative effect on emissions reductions would not be insignificant.

However, reducing the risks of climate change requires collective action. It requires co-operation between countries, through international frameworks that support the achievement of shared goals. It requires a partnership between the public and
private sector, working with civil society and with individuals.

Adaptation is the only response available for the impacts that will occur over the next several decades before mitigation measures can have an effect.

However, it is difficult for individuals to take action in developed countries such as the US to reduce the impacts of impending climate change on their own lives. However government has a role to provide a clear policy framework to guide effective adaptation by individuals and firms in the medium and longer term. There are four key areas:

• High-quality climate information will help drive efficient markets. Improved regional climate predictions will be critical, particularly for rainfall and storm patterns.
• Land-use planning and performance standards should encourage both private and public investment in buildings, long-lived capital and infrastructure to take account of climate change.
• Government can contribute through long-term polices for climate-sensitive public goods, such as natural resources protection, coastal protection, and emergency preparedness.
• A financial safety net may be required to help the poorest in society who are most vulnerable and least able to afford protection (including insurance).

James Wrightsman, New York: Here in the USA there are many people who doubt that climate change is actually happening. As someone who is frustrated and worried that these doubters are hampering our reaction to this looming disaster, I am curious if there is a "magical bullet" that would convince them now to put their efforts into combating climate change?

Nick Stern replies: James, those who deny the importance of strong and urgent action on climate change essentially offer one of, or a combination of, the following arguments.

First, there are those who deny the scientific link between human activities and global warming; most people, and the vast majority of scientists, would find that untenable given the weight of evidence.

Second, there are those who, while accepting the science of anthropogenic climate change, argue that the human species is very adaptable and can make itself comfortable whatever the climatic consequences; given the scale of the outcomes that we now have to regard as possible or likely under business-as-usual (BAU), this must be regarded as reckless. Finally, there are those who accept the science of climate change and the likelihood that it will inflict heavy costs, but simply do not care much for what happens in the future beyond the next few decades; most would regard this as unethical.

The basic question is whether it is worth paying to avoid the additional risks of higher emissions. In the Review we estimate the cost of avoiding these risks at 1% of GDP per year and the costs of not acting of between 5% and 20% of GDP per year. We should recognise the balance of risks. If the science is wrong and we invest 1% of GDP in reducing emissions for a few decades, then the main outcome is that we will have more technologies with real value for energy security, other types of risk and other types of pollution. However, if we do not invest the 1% and the science is right, then it is likely to be impossible to undo the severe damages that will follow.

Lorenna Russell-Shalev, New Mexico: Taxation on airline transportation was recommended unexpectedly by the Tories while I'm visiting my mother in England. This seems like an idea worth passing on to the Americans PLUS so much British experience on public transport. Also I saw small electric cars in London. Can these work in the States and be exported?

Nick Stern replies: Lorenna, an essential element of climate change policy is carbon pricing. Greenhouse gases are, in economic terms, an externality: those who produce greenhouse gas do not face the full consequences of the costs of their actions themselves. Putting an appropriate price on carbon, through taxes, trading or regulation, means that people pay the full social cost of their actions. This will lead individuals and businesses to switch away from high-carbon goods and services, and to invest in low-carbon alternatives.

The establishment of common incentives across different sectors is important for efficiency. The overall structure of incentives, however, will reflect other market failures and complexities within the sectors concerned, as well as the climate change externality.

The private sector is the major driver of innovation and the diffusion of technologies, such as low-carbon vehicles, around the world. But governments can help to promote international collaboration to overcome barriers to technology development. In fact the president’s State of the Union speech earlier this year outlined plans to improve efficiency, reduce emissions and improve energy security particularly in the transport sector. Energy efficiency standards in such large markets can stimulate innovation and influence markets throughout the world.

Jonathan B. Tourtellot, director at Center for Sustainable Destinations, National Geographic Society, Washington DC: The growing "Don't fly" movement holds serious dangers for environmental benefits (e.g. wildlife preservation) in sustainable-tourism destinations dependent on airlift. Also, the public has unclear impressions of what types of air travel and planes are least and most harmful re climate change. Comment?

Nick Stern replies: Jonathan, the first element of mitigation policy is carbon pricing. Greenhouse gases are, in economic terms, an externality: those who produce greenhouse-gas emissions are bringing about climate change, thereby imposing costs on the world and on future generations, but they do not face the full consequences of their actions themselves.

Putting an appropriate price on carbon – explicitly through tax or trading, or implicitly through regulation – means that people are faced with the full social cost of their actions. This will lead individuals and businesses to switch away from high-carbon goods and services, and to invest in low-carbon alternatives. Economic efficiency points to the advantages of a common global carbon price: emissions reductions will then take place wherever they are cheapest. The cheapest reductions may not be in aviation.

However, the second element of climate-change policy is technology policy, covering the full spectrum from research and development, to demonstration and early stage deployment. The development and deployment of a wide range of low-carbon technologies, including in the aviation industry, is essential in achieving the deep cuts in emissions that are needed.

Dr. M Stewart: What should I say to those who firmly believe that global warming is not real?

Nick Stern replies: Dr. Stewart, please refer to my answer to James from NY, who asks a similar question.

Harry C. Blaney III, senior fellow, Center for International Policy, Foreign Service Officer (Ret.), Washington, DC: First, many thanks for your vital report and your earlier talks on climate change and urge need for action. We need to hear your voice even more now that our political debate is “warming” up. I understand that you are now associated with LSE and hope this will be a platform for further shaping the global response to this crisis.

Would you specifically now suggest as the best international and national strategy for the United States post 2008, to adapt to not only address this issue but also be again an effective leader in practical environmental solutions as it was decades ago? Lastly, will Britain, under Gordon Brown, be even more a leader on this issue? Will the EU also commit to an all out effort?

Nick Stern replies: Thanks for writing in Harry, we will not be able to solve this problem without US leadership. This can be done most cost-effectively through a global, coordinated set of mandatory actions, ranging from carbon pricing to investment in low-carbon technology, to scaling up financial flows for clean development in developing countries.

The UK, domestically, as a member of a EU, and as part of the wider international community, has and continues to be a leader on finding solutions to climate change. The EU recently committed to a 20% reduction below 1990 levels in carbon emission by 2020, as well as a 20% by 2020 renewable energy target, and 20% by 2020 energy efficiency target. The EU has committed to accelerating its emissions reduction target to 30% if other developed countries will bring similar commitments to the table.

David Holzman, Lexington, MA: The US is the fastest growing industrialized nation. A recent study by the Center for Immigration Studies, relying on census data, says that in 50 years the US population will have grown from a little more than 300 million today, to 462 million (about one third due to native increase and two thirds to immigration). How will that growth affect US efforts to reduce greenhouse gas emissions?

Nick Stern replies: David, the UN projects world population to increase from 6.5 billion in 2005 to 9.1 billion in 2050 in its medium variant and still to be increasing slowly then (at about 0.4% per year), despite projected falls in fertility. The average annual growth rate from 2005 to 2050 is projected to be 0.75%; the UN’s low and high variants give corresponding rates of 0.38% and 1.11%. Population growth rates will be higher among the developing countries, which are also likely in aggregate to have more rapid emissions growth per head. This means that emissions in the developing world will grow significantly faster than in the developed world, requiring a still sharper focus on emissions abatement in the larger economies like China, India and Brazil.

Climate change itself is also likely to have an impact on energy demand and hence emissions, but the direction of the net impact is uncertain. Warmer winters in higher latitudes are likely to reduce energy demand for heating, but the hotter summers likely in most regions are likely to increase the demand for refrigeration and air conditioning.

Richard: The report on climate change by the UK Parliament’s House of Lords Select Committee on Economic Affairs (2005) criticized the UN’s Intergovernmental Panel on Climate Change for its bias, called for an independent review of climate science, and declared that it would be cost effective to deal with effects of any climate change and to ignore calls for actions such as the Kyoto Protocol. The UK government responded to that report by asking you to assess the costs if all ‘worst-case’ scenarios for global warming were to come true, and you did this in the report you published in November 2006. 

Subsequently, several ‘Green’ groups have claimed the ‘Stern Report’ provides ‘proof’ that man-made global warming is a problem.  But it does not.  Your report merely assesses the costs if all ‘worst-case’ scenarios for global warming were to come true.

In reality, there is no evidence for man-made global warming: all recent climate changes are within the range of natural changes that have happened in the past (anyone who doubts this should read the recent report of the UN Intergovernmental Panel on Climate Change, IPPCC). A claim that man-made global warming exists is merely an assertion: it is not evidence and it is not fact.  And the assertion does not become evidence or fact by being voiced, written in words, or written in computer code.

So, why have you failed to repudiate claims that the ‘Stern Report’ provides proof that man-made global warming is a problem?
 

Nick Stern replies: Richard, The Stern Review was commissioned in July 2005 and required to report in the autumn of 2006, ahead of the IPCC’s Fourth Assessment Report (AR4). It was clear during the writing of the Review that the science had moved on since the IPCC’s Third Assessment Report (TAR), and that the economic literature had not yet fully reflected the scientific advances. The first chapter of the Review therefore set out our own understanding of the key findings and directions from the IPCC TAR and from more recent peer-reviewed scientific literature.

The IPCC’s Working Group on the science of climate change has now published its Summary for Policymakers. The IPCC has confirmed that there is now very high confidence that human activity is warming the climate, and that human influences are likely to have been at least five times greater than those due to solar variations. There is now very little justification for believing that the scientific understanding of climate change is fundamentally flawed, or that the remaining areas of uncertainty imply that current knowledge is inadequate as a basis for drawing conclusions for policy. The fact that the IPCC 4AR drew similar conclusions to us was no surprise as we drew on the same body of evidence and consulted the same experts in the field.

The Stern Review did not select the studies with worse case scenarios. It used only peer-reviewed science and all key scientific assumptions have since been endorsed by the Working Group 1 report by IPCC. The Stern Review only summarised the science. The IPCC remains the most comprehensive summary of the science and the Review team took advice from its contributing scientists to ensure that the Review was based on the best available science.

William Blackburn, William Blackburn Consulting, Ltd., Long Grove, IL: We know of several pronounced periods of warming in the past, although none as great as we are seeing to day. What brought them about? What brought about the ice ages?

Nick Stern replies: William, an overwhelming body of scientific evidence indicates that the Earth’s climate is rapidly changing, predominantly as a result of increases in greenhouse gases caused by human activities.

Human activities are changing the composition of the atmosphere and its properties. Since pre-industrial times (around 1750), carbon dioxide concentrations have increased by just over one-third from 280 parts per million (ppm) to 380 ppm today, predominantly as a result of burning fossil fuels, deforestation, and other changes in land-use. This has been accompanied by rising concentrations of other greenhouse gases, particularly methane and nitrous oxide.

There is compelling evidence that the rising levels of greenhouse gases will have a warming effect on the climate through increasing the amount of infrared radiation (heat energy) trapped by the atmosphere: “the greenhouse effect”. In total, the warming effect due to all (Kyoto) greenhouse gases emitted by human activities is now equivalent to around 430 ppm of carbon dioxide (hereafter, CO2 equivalent or CO2e) and rising at around 2.3 ppm per year. Current levels of greenhouse gases are higher now than at any time in at least the past 650,000 years.

But I am not a scientist and am not qualified to give you the answers to your more complex scientific questions. However, I can recommend the websites of renowned scientific institutions such as the Intergovernmental Panel on Climate Change, the UK’s Hadley Centre and Tyndall Centre, the Royal Society, and the US National Academy of Sciences.

I am sorry that I have to stop here. I have very much enjoyed answering your questions. Thank you to everyone who wrote in.