10 years after The Stern Review, and its still ahead of its time

Commissioned by the British Government in 2005, The Stern Review shook the world with its searing examination of manmade climate change. Its predictions have been spectacularly vindicated by the evidence, and it remains among the most influential works of scholarship on global warming. On the Review’s tenth anniversary, its author, Nicholas Stern, Baron Stern of Brentford, spoke in Mumbai at the invitation of the Sanctuary Nature Foundation. A leading global authority on development economics, Lord Stern served from 2000-2003 as Chief Economist of the World Bank, and is currently the IG Patel Professor of Economics and Government at the London School of Economics, Chair of the LSE’s Grantham Research Institute on Climate Change, and President of the British Academy.

The programme, Ten Years After The Stern Review, drew a gathering of diplomats, conservationists, economists and leading figures from industry and business, among them Ravneet Gill, CEO of Deutsche Bank India, Sir Richard Stagg, former British High Commissioner to India, and Sunil Alagh, former chairman of Britannia. Abhishek Padnis offers a review of the evening.

Introduced by former HSBC India chairperson Naina Lal Kidwai as “a great friend of India”, Lord Stern spoke thoughtfully about the challenges of a planet warming faster than even he predicted. Instructive without being academic, and speaking with the wry humour for which he is known, he described climate change as “the greatest market failure the world has seen”. Markets fail, he explained, when they give the wrong price signals – for instance, when emissions that have huge global costs are financially cheap to those responsible.

His warning was stark – the human race has at best 20 years to arrest climate change. If it fails (and there’s every chance it will), the devastation and chaos will be unprecedented. It’s a warning that is increasingly being heeded in global capitals. As Lord Stern said, “the Kyoto Protocol [1992] took 4 years to agree, but the Paris Agreement [2015] took just 11 months”. Even India and China, the perennial dissenters, had been “very constructive at Paris and Marrakech [2016]”.

Debunking an old chestnut, Lord Stern argued that development and climate initiatives are not antagonistic – indeed, he argued, they must go together, because “if we fail on one, we fail on the other”. He reminded investors that the empirical evidence showed that divestment of polluting companies lowered the investor’s overall risk, since a disregard for the environment often signalled disregard for other governance norms.

On an optimistic note, Lord Stern noted how carbon pricing now prevailed in over 40 countries, and how large corporations like Mahindra and Unilever had committed to turning carbon-neutral and even carbon-positive. He said the growth of renewables, low-energy-consumption technology and robotics offer the means to pursue growth and development goals and tackle climate change, all at once.

The lecture was followed by a lively panel discussion featuring Lord Stern with Pravin Pardeshi, Chief Secretary to the Chief Minister of Maharashtra; Naina Lal Kidwai; Bittu Sahgal, Editor of Sanctuary Asia; Usha Thorat, former Deputy Governor of the Reserve Bank of India; and Namita Vikas, Group President & Managing Director, Climate Strategy, YES Bank.

The panel agreed on the need for carbon pricing, but Chief Secretary Pardeshi, the hardened realist on the panel, argued that the real problem with climate initiatives wasn’t lack of awareness but political unpopularity, especially with job losses in existing industries. In response, Lord Stern demonstrated convincingly that new jobs in renewable energy far outnumbered job losses in existing energy industries.

The panel was especially concerned about water scarcity. Bittu Sahgal argued that the consequences of climate change, such as water salinity in coastal Bengal, would create migration chaos that would dwarf current crises. Chief Secretary Pardeshi said his government was already awake to the crisis, recounting its efforts in distributed water harvesting, which had made over 5,000 villages water-neutral.

Naina Lal Kidwai steered the water discussion back to market failure, musing that the poor actually paid more for water than the rich, who got it free. India, she lamented, was not water-scarce, but too much of its water was lost to agriculture or waste discharge.

Lord Stern closed with a startling statistic. Civilisation, he said, had emerged in a narrow band of +/- 1°C of our current climate. Even with mitigated climate change, the earth now faced a 3-4°C fluctuation, bringing temperatures last seen 3 million years ago. Our very civilisation, he said, is at stake in this inter-generational battle. We ignore it at our peril.

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