Six years after the release of the landmark Stern Review on the Economics of Climate Change, Lord Nicholas Stern revealed yesterday the most challenging hurdle ahead for international climate action. Overcoming this obstacle is not a matter of figuring out the scientific or policy pathways needed to curb climate change—nor is it determining what technologies to adopt or what investments must be made. “What’s missing is the political will,” said Stern.

The famed economist elaborated on this problem during an address yesterday hosted by WRI and the International Monetary Fund (IMF), “Fostering Growth and Poverty Reduction in a World of Immense Risk.” Dr. Andrew Steer, WRI’s president, and Christine Lagarde, managing director of the IMF, provided opening remarks, articulating the serious economic and human risks climate change poses. Stern focused on the main hurdle to mitigating these risks—political will.

The problem, according to Stern, reflects a lack of understanding in three main areas: climate change’s real risks, the benefits of an alternative pathway, and the need for collaboration and mutual understanding.

Notable Quotes

Yesterday’s event featured some of the leading voices in the environmental and development spaces: Andrew Steer, president of WRI; Christine Lagarde, managing director of the IMF; Lord Nicholas Stern, chair of the Grantham Research Institute; and Rachel Kyte, vice president of sustainable development at the World Bank. Here are a few notable quotes from their discussions:

  • “Most of the effects of climate change will happen in the future, but most scientists believe they are already beginning. You might feel that March was a bit chilly, but it was actually the 336th month in a row where global temperatures were above 20th-century averages.” –Andrew Steer, WRI

  • “If climate change issues are not adequately addressed—if we keep running those nice energy subsidies, if the price on carbon is not adequately set, if policymakers don’t have it on their radar screens—then financial stability in the medium and long-term is clearly at stake.” –Christine Lagarde, IMF

  • “We can’t represent this as an artificial horse race, with economic growth on the one hand and climate stability on the other.” –Lord Nicholas Stern

  • “Climate change is the rug that’s going to be pulled out from under every one of our clients unless we get our arms around it. And it’s going to be pulled out unevenly—it will be the poor and the vulnerable who suffer the most.” –Rachel Kyte, World Bank

The Real Risks of Climate Change

By Stern’s own admission, the Stern Review greatly underestimated climate change’s risks and impacts. “Emissions are at the top or above the projections we talked about six or seven years ago. Some effects are coming through faster," he said. "We didn’t say enough about the interactions between climate and ecosystems.”

Dr. Steer outlined how these risks are already presenting themselves today—and are poised to worsen in the future. “Insurance companies tell us that weather-related catastrophes have tripled since 1980,” he said. “The United States last year experienced 11 extreme weather events each costing more than $1 billion. And the current drought may turn out to be the most expensive natural disaster in U.S. history.”

Stern believes that a key component of mobilizing political will, then, is a stronger risk narrative driven by a new breed of scientific models. These models should not only reflect the severity of climate risks, but the human and environmental costs that are typically ignored in data-driven models—like the thawing of permafrost and extreme weather events’ impacts on development.

The Benefits of an Alternative Path

According to Stern, the world needs to view the next several years as a new era, the “New Energy Industrial Revolution.” Like the eras of innovation that preceded it—the industrial revolution, expansion of steam and railways, the information and telecommunications technology revolution, etc.—this period will be full of growth, investment, creativity, and emerging markets. It’s important to see it as a time of economic opportunity rather than a time focused solely on scaling back greenhouse gas emissions.

It’s also a time to adopt win-win-win strategies that integrate development, adaptation, and mitigation into one package. For example, decentralized solar powerbrings affordable electricity to poor communities, reduces emissions, and is less vulnerable than traditional, grid-based power. These are the types of solutions that will drive economic growth and climate stability.

Andrew Steer, WRI's president, led a Q&A session with Lord Nicholas Stern. Photo credit: James Anderson, WRI
Andrew Steer, WRI's president, led a Q&A session with Lord Nicholas Stern. Photo credit: James Anderson, WRI

Learning from Collaboration and Mutual Understanding

It’s important to point out that some people are moving on climate change, even if they’re moving too slow. “We’re seeing radical change in China with the 12th Five-Year Plan,” Stern said. “The EU has stuttered recently, but has been moving along. Ethiopia and Mauritius both have ambitious plans. Understanding what others are doing is a crucial part of collaboration.”

Stern went on to explain how institutions like the IMF and the World Bank can play a key role in fostering this collaboration. Collectively, these organizations work on poverty reduction, growth, sustainability, and development. If they better align their individual missions, they can foster international collaboration and ensure that economic development happens in harmony with climate mitigation and adaptation.

2013: A Year of Opportunity

An hour-long discussion of underestimated climate risks was certainly a sobering experience. But despite the discouraging data of late, Stern is hopeful. In fact, he believes that this year presents an unprecedented opportunity to ramp up the political will for international climate action.

“You have John Kerry and new leadership in China raising the issue of climate change,” Stern said. “The head of the IMF and the World Bank today made very strong public commitments. You look at plans in Ethiopia, South Africa, Mexico, and other parts of the world, and leadership is taking these issues seriously. My own view is that 2013 is the best possible year to re-double our efforts to create the political will that so far has been much too weak.”