E3G

The Stern Report makes waves in Paris

By Marina Brutinel

On Monday 5th February, Sir Nicholas Stern visited Paris to present the results of his widely acclaimed report on the economics of climate change.

Responding to the invitation of Iddri (Institut du développement durable et des relations internationales), Nick Stern undertook two engagements during the day. In the morning he took part in a meeting with figures from the world of science to discuss the key issues raised in his report.

Later in the afternoon, Stern’s presence was the focus of a public debate at Sciences Po entitled ‘The climatic challenge: an opportunity for Europe?’. This open forum was the occasion to link his global findings to the specific role of Europe. He was accompanied by a rich panel of French personalities from the fields of energy, economics and politics.

A global solution for a global threat

Facing a swarming audience of students, scientists and top French civil servants alike (and also including former Prime Minister Lionel Jospin), Stern presented the main lines of his report, reminding the assembly that the costs of action, if undertaken early, would be very modest compared to the business as usual impacts.

Stern went on to emphasise the nature of climate change as a global public good; international cooperation is needed to avoid ‘free-rider’ countries benefiting from actions taken by others without committing to any shift themselves. Their reluctance to join efforts also undermines the overall effectiveness of initiatives to tackle climate change.

In response, Claude Mandil, the Executive Director of the International Energy Agency, showed some optimism about multilateral solutions on climate change. According to him, things have been moving very rapidly recently – particularly in the USA and China, but less so in India and Russia.

Arguing that growth and climate stabilisation are fully compatible objectives, Nathalie Kosciusko-Morizet MP warned against complacency for those defenders of the market as the ultimate tool to solve climate change. She highlighted the role to be played by public policies in accelerating the emergence of clean energy technology.

Caring about future generations

Economists decide upon the value they give to the future in a subjective way, based on their choice of discount rate. The use of a low discount rate in the Stern Report, which contributes to the estimates of high future costs of the impacts of climate change, was saluted by Claude Henry, Professor at Sciences Po, Ecole Polytechnique and Columbia University. He suggested that this use was well chosen as it reflects the care we do show for future generations. In doing so it also highlights how the current generation must internalise the costs of the climate liabilities that future generations will have to bear.

Christian de Boissieu, Head of the Conseil d’Analyse Economique, agreed that this is an essential assumption. If instead we were to project a very low level of intergenerational solidarity, then there would simply be no viable solution to the challenge of climate change. By orienting the choice upon the kind of society one wants to build for the future, tackling climate change is therefore equally an economic and a political choice.