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The challenge is clearer than ever - the response has yet to come

A review of The Economics and Politics of Climate Change, edited by Dieter Helm and Cameron Hepburn. Oxford University Press 2009 538 pp. Published in the Financial Times 28 November 2009.

The United Nations Conference on Climate Change in Copenhagen is almost upon us. Preparations for it have attracted unprecedented public debate on climate change and what should be done about it. There is always a long and unsteady bridge between the science underlying a problem and the economics and politics involved, the more so when the issues are truly global. Everything is further complicated by the continuing financial and credit crisis.

There has already been a deluge of books on climate change. The present book brings together over 30 experts, nearly all economists, who in different ways set out a kind of primer for Copenhagen on the economic, political and social implications. Even if they do not always agree with each other, they well illustrate the immense complexity of the problem, and its connection with such other global issues as human population increase, resource depletion, economic development in its crudest sense, in short the human impact on the Earth since the industrial revolution.

The sheer scale of the problem is well brought out by Dieter Helm. The science is now reasonably clear, but its messages have yet to be fully understood, even by other contributors to the book. There is for example little reference to the extent of human vulnerability to climate change.

The arguments ranging back and forth in the preparations for Copenhagen, with all the posturing that precedes international negotiations, cover a wide range: how to limit emissions of greenhouse gases; how to mitigate and adapt to the consequences; how best to wean ourselves from dependence on fossil fuels and develop alternative sources of energy; how to allocate responsibility for what has happened (here the industrial countries are in the firing line); how to set up the right kind of international institutions to manage, regulate and enforce whatever system is created; and more widely how to prevent climate change from widening the gap between rich and poor.

On most of these issues the contributors to this book have something useful to say, and we must hope that their messages get through, particularly on the institutional shape of the future, and even the hazards of geo-engineering. A good example is the suggestion that rather than put the emphasis on measuring the quantity of greenhouse gases involved in production, we should look instead at those who consume the goods produced. It is easy to blame China for increasing its emissions (it is now the biggest emitter in the world), but in doing so we forget that many countries, including Britain, have transferred some of their manufacturing base to China. There is a particularly useful analysis of the Stern report of 2007 which represents a somewhat conventional view of the economic and social impacts of climate change.

Indeed if there is a reproach to be made it is that the economics of this book are too conventional. The units of measurement are too often growth and GNP, and too much is made of the distinction between developed and developing countries. As well brought out in the Stiglitz Commission report of September, we need new methods of measurement to make sense of what is going on. There is also a depressing amount of economists' jargon and infuriating use of acronyms which together obscure otherwise reasonable arguments and conclusions. The book is not made for easy reading. It is still a valuable compendium.

It is obvious that if things are as dire as here suggested, a lot more than negotiations or haggling in Copenhagen will be necessary. Copenhagen is only part of a process which will continue over the years. As Gordon Barrett says in this book, "Climate change is arguably the greater collective-action problem the world has ever faced." The challenge is clearer than ever. The response has yet to come.


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