The cost of global warming can no longer be quantified solely in terms of gross domestic product as the changes the world will experience and the resulting loss of life will be so immense, climate economist Nicholas Stern said on Wednesday.
In 2006, Stern published a major report on the economics of climate change which said average global temperatures would rise by 2 to 3 degrees centigrade in the next 50 years and could reduce global consumption per head by up to 20 per cent.
"That particular calculation had the one good model based on consumption and GDP but I would look at it now more broadly," Stern, who is chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, told Reuters in an interview.
"One simple measure of cost in terms of loss of GDP or consumption is a fairly narrow way of looking at things. It doesn't get at the full nature of the risk management question," he added, referring to the massive loss of life which would likely arise from billions of people being displaced due to floods and droughts if emissions are allowed to rise.
The latest climate science shows the planet has warmed by 0.8 degrees centigrade above last century but if left unmanaged, the world could face temperatures of 4, 5 or 6 degrees higher this century, Stern said.
The planet has not experienced such temperature rises for millions of years, he added.
If countries deliver the top end of emissions cut targets, emissions would plateau at 50 billion tonnes per annum carbon dioxide equivalent but they need to fall below 35 billion tonnes by 2030 and 20 billion by 2050 to have a 50-50 chance of limiting temperature rise to below 2 degrees this century.
"We are not really starting to bring emissions down, at best we might be holding them," Stern said.
A 4, 5 or even 6 degree world is difficult to describe, but many areas will turn into deserts, countries will submerge and the whole pattern of the north Indian monsoon might change which shapes the activity of hundreds of millions of people in the most densely populated parts of the world, he said.
"Southern Europe looking like the Sahara desert, Bangladesh under water – these are the kinds of things that could happen."
Most climate models have underestimated the risks as they omit the timing and consequences of "tipping points", or thresholds beyond which a small additional rise in average temperature results in irreversible changes, Stern warned.
Stern said investment equivalent to 2 per cent of global GDP was needed to limit, prevent and adapt to climate change.
Rich countries have pledged to find $100 billion a year by 2020 to help poorer countries adapt to climate change. The United Nations' Green Climate Fund is designed to channel some of that money but is so far an empty vessel.
"We always argued $100 billion was on the low side. In terms of the extra investment needed, figures of $200-300 billion are probably in the right ballpark," Stern said.
While waiting for the money to materialise, some of the countries most vulnerable to climate change are making plans. Ethiopia aims to move to middle-income status by 2025 without increasing its carbon emissions and China's twelfth five-year economic plan represents a radical change, Stern said.
Stern is a member of the high level advisory group on climate finance which recommended various funding sources for the Green Climate Fund, like the auctioning of carbon permits, taxation on aviation and shipping activities and the abolition of fossil fuel subsidies.
These could deliver around half the $100 billion needed by 2020, based on an assumption of a $20-25 a tonne carbon price.
"Over time we argued carbon markets would be building up, but it has gone slower than many including ourselves would have wished," Stern said.
On the plus side, progress on clean technology development is moving very quickly.
The capital cost of solar photovoltaic has come down by a factor of five in the past 5-6 years and will probably fall by a further factor of two in the next two years.
The cost of onshore wind has become much more competitive and China is planning 200 more nuclear power stations in the next 20 years.
"The good news since the Stern Review is the way in which technological change has set in and governments around the world are taking this issue enormously seriously," Stern said.