The Stern Review says that climate change represents the greatest and widest-ranging market failure ever seen. And on the basis of this intellectually rigorous and thorough report, it is hard to disagree.
Sir Nicholas Stern, a distinguished development economist and former chief economist at the World Bank, is not a man given to hyperbole.
Yet he says "our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th Century".
His report gives prescriptions for how to minimise this economic and social disruption.
His central argument is that spending large sums of money now on measures to reduce carbon emissions will bring dividends on a colossal scale. It would be wholly irrational, therefore, not to spend this money.
However, he warns that we are too late to prevent any deleterious consequences from climate change.
The prospects are worst for Africa and developing countries, so the richer nations must provide them with financial and technological help to prepare and adapt.
He believes it is practical to aim for a stabilisation of greenhouse gas levels in the atmosphere of 500 to 550 parts per million of carbon dioxide equivalent by 2050 - which is double pre-industrial levels and compares with 430ppm today.
Carbon dioxide itself stands at about 380ppm, but Sir Nicholas has used the higher figure of 430 which incorporates other greenhouse gases such as methane.
But even stabilising at that level will probably mean significant climate change.
Even to stabilise at that level, emissions per unit of gross domestic product (GDP) would need to be cut by an average of three-quarters by 2050 - a frightening statistic.
As well as decarbonising the power sector by 60%-70%, there will also have to be an end to deforestation - emissions from deforestation are estimated at more than 18% of global emissions, more than transport. And there will have to be deep cuts in emissions from transport.
The costs of these changes should be around 1% of global GDP by 2050 - in other words the world would be 1% poorer than we would otherwise have been, which would be significant but far from prohibitive.
To be clear, this does not mean we would be 1% poorer than we are today, but that global growth will be slower.
The way to look at this 1% is as an investment. Because the costs of not taking this action are mind-bogglingly large.read on
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