A landmark review of the economics of climate change cites Beijing’s ambitious policies on greenhouse gases, but says much more needs to be done. Maryann Bird sifts through the report.
The job of the Stern Review: The Economics of Climate Change, released in London on 30 October 2006, was to assess the economics of moving to a low-carbon global economy, the potential of different adaptation approaches and the specific lessons for the UK. Although it was commissioned by the British government – back in July 2005 – Nicholas Stern’s report takes a necessary international perspective. Indeed, the former chief economist for the World Bank and members of his team visited numerous countries and institutions in the course of their inquiry.
One of their stops was China, the emerging global giant which could hardly have been overlooked in such a study. (A short version of the review’s executive summary has already been published in Chinese.) China was cited among the countries and regions already taking action and which have “the most ambitious policies that will reduce greenhouse gas emissions”. But more ambitious action is now required, globally.
In its executive summary, the review stated that, on current trends, average global temperatures will rise by 2 to 3º C within the next 50 years or so. If greenhouse-gas emissions continue to grow, this global warming will have many severe impacts. “Melting glaciers will initially increase flood risk,” the report said, “and then strongly reduce water supplies, eventually threatening one-sixth of the world’s population, predominantly in the Indian sub-continent, parts of China and the Andes in South America.” One-sixth of the global population, today, is over one billion people.
Discussing -- in a section on the impacts of climate change on growth and development -- how climate change will affect people around the world, the document warned: “Climate change will have serious consequences for people who depend heavily on glacier meltwater to maintain supplies during the dry season.” That would affect some 250 million people in China, given that 23% of the country’s population “lives in the western region that depends principally on glacier meltwater. Virtually all glaciers are showing substantial melting in China, where spring stream-flows have advanced by nearly one month since records began.”
“Initially, water flows may increase in the spring as the glacier melts more rapidly. This may increase the risk of damaging glacial lake outburst floods, especially in the Himalayas, and also lead to shortages later in the year. In the long run, dry-season water will disappear permanently once the glacier has completely melted.” Glacial lake outburst floods are described as catastrophic discharges of large volumes of water following the breach of the natural dams that contain glacial lakes – and China’s neighbour Nepal is considered particularly vulnerable.
On the key issue of food, the report stated that production will be particularly sensitive to climate change; in large part, crop yields depend on prevailing climate conditions – temperature and rainfall. In tropical regions, Stern says, “even small amounts of warming will lead to declines in yield. In higher latitudes, crop yields may increase initially for moderate increases in temperature, but then fall. Higher temperatures will lead to substantial declines in cereal production around the world.” In some parts of China, “low levels of warming in mid to high latitudes may improve the conditions for crop growth by extending the growing season and/or opening up new areas for agriculture. Further warming will have increasingly negative impacts … as damaging temperature thresholds are reached more often and water shortages limit growth.”
The economic and social consequences may well prove catastrophic: agriculture takes up 40% of the planet’s land area, accounts for 24% of world economic output, and employs 22% of the global population. And Stern adds, 75% of the poorest people in the world rely on agriculture for their livelihood.
Additionally, sea-level rise as a result of global warming will “increase coastal flooding, raise costs of coastal protection, lead to loss of wetlands and coastal erosion, and increase saltwater intrusion into surface and groundwater.” Rising sea levels, which began in the last century, will “increase the amount of land lost and people displaced due to permanent inundation”. Coastal areas are not only densely populated – 200 million people reside in coastal floodplains worldwide -- but they also support important ecosystems on which local communities depend. And they often also are home to critical infrastructure projects, including oil refineries, nuclear power stations and port and industrial facilities.
Many of the world’s major cities, including Shanghai, are at risk of flooding from coastal surges. In addition to these coastal areas’ populations, some two million square kilometres of land and $1 trillion in assets exist less than one metre above current sea level. Those most vulnerable live in south and east Asia, along the African coast and on small islands. Estimates of the number of global environmental refugees by 2050 extend as high as 200 million.
Development – and poverty reduction – is threatened by climate change. Climate models predict a range of (chiefly) negative impacts on developing countries, from a decline in agricultural output and food security to a loss of vital river flows. While climatic patterns vary significantly across a country as large as China, its average surface air temperature has risen by between 0.5 and 0.8º C over the 20th century; the increases have been more noted in northern China and the Tibetan plateau than in the south.
“Temperature rise will lead to temperate zones in China moving north,” the review states, “as well as an extension of arid regions. Cities such as Shanghai are expected to experience an increase in the frequency and severity of heat waves causing significant discomfort to fast-growing urban populations.”
In addition to existing water shortages in China, water scarcity is expected to grow more critical, particularly in such northern provinces as Ningxia, Gansu, Shanxi and Jilin – exacerbated by economic and population growth. In the next 50 to 100 years, though, an increase in average rainfall in southern provinces – including Fujian, Zhejiang and Jiangxi – is expected to lead to more flooding, which will bite into the country’s GDP. Agricultural output and productivity across different regions will vary as a result of climate change, depending on water availability. Overall, a net decrease is anticipated in seven northern and north-western provinces deemed particularly vulnerable (accounting for roughly 25% of total arable land and 14% of China’s total agricultural output by value).
Projecting the growth of the greenhouse gas (GHG) emissions linked to climate change, the report says that most future rise will come from today’s developing countries and their energy-intensive industries. By 2030, China alone is expected to account for more than one third of the increase. The generation of power and heat (used mostly by domestic and commercial buildings and by industry) has been the fastest-growing source of emissions worldwide, growing by 2.2% per year between 1990 and 2002. By the end of this decade, China’s emissions are likely to overtake those of the United States, driven partly by its heavy use of coal.
Additionally, says the report: “Population growth rates will be higher among the developing countries, which are also likely in aggregate to have more rapid emissions growth per head. This means that emissions in the developing world will grow significantly faster than in the developed world, requiring a still sharper focus on emissions abatement in the larger economies like China, India and Brazil.”
Stern found that, in the case of climate change, some types of pollution which usually decline with rising income levels do not occur. “At a global level, there has been little evidence of large voluntary reductions in emissions as a result of consumers’ desire to reduce emissions as they become richer” – although “this may change as people’s understanding of climate-change risks improves.” Furthermore, with the relocation of manufacturing to developing countries, the shift within richer nations has less impact on total emissions. And, as incomes rise, the demand for air and car transport as well as some other carbon-intensive goods and services will keep growing.
Globally, says the report, “in the absence of policy interventions, the long-run positive relationship between income growth and emissions per head is likely to persist. Breaking the link requires significant changes in preferences, relative prices of carbon-intensive goods and services and/or breaks in technological trends.” Stern sees such change as possible “with appropriate policies”. Without them, though, “incremental improvements in efficiency alone will not overwhelm the income effect. For example, a review of projections for China carried out for the Stern Review suggests that energy demand is very like to increase substantially in ‘business as usual’ scenarios, despite major reductions in energy intensity.”
Stern also determined that increasing the levels of carbon finance -- the resources provided to purchase GHG emission reductions – for developing countries, to support effective GHG-cutting policies and programmes, would speed up the transition to a low-carbon economy. The review noted that developing countries already are “taking significant action to decouple their economic growth” from GHG growth. For example, “China has adopted very ambitious domestic goals to reduce energy used for each unit of GDP by 20% from 2006-2010 and to promote the use of renewable energy.”
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Maryann Bird is a London-based journalist with a special interest in environmental and human-rights issues. A writer and editor, she was previously a staff member at Time magazine (Europe), The Independent, the International Herald Tribune and The New York Times.