Focus should shift to market-based adaptation, not hairshirts and witch hunts
The authors argue that the Stern Review is seriously flawed. A small change in the discount rate used would slash the estimated economic impact of climate change from 5% of GDP to 1.4%. In a recent interview Lord Stern has himself suggested just such a change in the discount rate. This completely undermines the report’s original case for urgent and radical action that damages the economy in the short term.
It is also suggested that the IPCC, the internationally-recognised, UN-established panel on climate change, no longer has the participation of mainstream professional economists and has been captured by “true believers”. According to David Henderson, former Head of Economics and Statistics at the OECD, “The professional advice which governments continue to rely on has been, and still is, suffused with bias.”
The authors conclude that climate policy has become subject to a quasi-religious mindset, driven by the desire to maintain consensus and defend its dogma, rather than seeking the best policy for the future. They point to the failure of past catastrophic predictions and the damage pre-emptive precaution has caused, notably the 100 million deaths from malaria that resulted from Rachel Carson’s fears about DDT.
The authors claim that government intervention today over climate change is likely to harm our economy and unlikely to save the planet. Julian Morris, head of the International Policy Network, observes that “We have already seen enormous damage as a result of the attempt to implement the Kyoto Protocol.” Sir Ian Byatt writes, “Such an approach would impoverish us economically, damage individual freedom and, paradoxically, reduce our ability to deal with the consequences of climate change.” He quotes Sir Isaiah Berlin’s argument that “disregard for the preferences and interests of individuals alive today in order to pursue some distant social goal that their rulers have claimed is their duty to promote has been a common cause of misery for millions of people throughout the ages.”
Practical policy options are offered as a counterweight to the prophets of doom. All stress the adaptive power of markets and the weakness of centralised planning. They range from exploiting future technological advances, to modified carbon taxes, to an insurance-based “climate catastrophe fund” to pay for remedial geo-engineering projects.
* Sir Ian Byatt, David Henderson, Russell Lewis, Julian Morris, Sir Alan Peacock and Colin Robinson
**Climate Change Policy: Challenging the Activists, edited by Colin Robinson, Readings 62, Institute of Economic Affairs (2008).