The economics of climate change

The Stern Review

Nicholas Stern, Cambridge, paperback, 692 pages, £29.99

This highly publicised book describes climate change as the greatest market failure ever seen and compares the potential scale of disruption it will cause with the world wars and the depression between 1914 and 1945.

It presents the long-term consequences of climate change over the next hundred years as temperatures rise by 5°C: hundreds of millions will be left without food, the Amazon will disappear, the ice caps will melt and Bangladesh and London will flood.

Unless carbon emissions are cut, global gross domestic product will be reduced by 5-10%, with income per head in poor countries dropping by as much as 20%.

Despite the scale and causes of this devastation, the author believes the answer lies in developing markets for low-carbon energy products and argues that "with the right incentives, the private sector will respond and can deliver solutions". But can we seriously entrust the future of the planet to multinationals like Exxon, Ford and Shell?