Climate change is a bigger economic risk than banking crisis
October 30, 2008
Unmitigated climate change will hurt the global economy more than the current banking crisis, said a leading environmental economist.
Nicholas Stern, a British economist who authored an influential report on the economic impacts of climate change, told reporters at an climate meeting in Hong Kong that the costs of climate change will dwarf those of the current financial crisis.
“One thing we should have learned from this experience of the financial crisis is if we ignore risk building in the system, that risk will get much more difficult to manage than if we recognize it and tackle it early,” he was quoted as saying by Reuters.
“We have seen the consequences of ignoring risk in the current economic and financial crisis. It has already led to negative growth in rich countries. The risk consequences of ignoring climate change will be very much bigger that the risk consequences of ignoring risk from the financial system.”
“These kinds of changes will transform the physical geography of the planet. They will transform where people will live,” he continued. “You will see movements of billions of people, the result of that will probably be extreme conflict.”
In his 20006 Review, Stern concluded 1-2 percent of global GDP should be invested per year to avoid the worst effects of climate change. A failure to do so could reduce global GDP by 20 percent.