Initially I assumed that this Bjorn Lomborg critique of the Stern Review was another voice nit-picking the numbers, another update to the earlier post Jobs Programs. But it seems truly devastating to the Stern Review, which increasingly seems to be the worst sort of politicized crap.

Mike Hulme, director of the Tyndall Centre for Climate Change Research, U.K., lamented that politicians, activists and the media have pushed climate alarmism so over the top that climate scientists have become the new climate sceptics, those who dispute and debunk popular hysteria.

Now it's time for economists to step up and join climate scientists in the effort to control this blaze which threatens far worse harm to the world than climate change.

We all want a better world. But we must not let ourselves be swept up in making a bad investment, simply because we have been scared by sensationalist headlines. . .

The review tells us that we should make significant cuts in carbon emissions to stabilize the concentration of atmospheric carbon dioxide at 550 ppm (parts per million). Yet such a stark recommendation is not matched by an explicit explanation of what this would mean in terms of temperature.

The U.N. Climate Panel estimates that stabilizing at 550 ppm would mean an increase in temperature of about 2.3 degrees Celsius in the year 2100. This might be several degrees below what would otherwise happen, but it might also be higher. Mr. Nordhaus estimates that the stabilization policy would reduce the rise in temperature from 2.53 degrees Celsius to just 2.42 degrees Celsius. One can understand the reluctance of the Stern review to advertise such a puny effect.

Like Kyoto, the Stern recommendations are worthless; even if all the pain is endured the effect on climate change is near zero.

On the face of it, Mr. Stern actually accepts Mr. Nordhaus's figure: Even including risks of catastrophe and non-market costs, he agrees that an increase of four degrees Celsius will cost about 3% of GDP. But he assumes that we will continue to pump out carbon far into the 22nd century--a rather unlikely scenario given the falling cost of alternative fuels, and especially if some of his predictions become clear to us toward the end of this century. Thus he estimates that the higher temperatures of eight degrees Celsius in the 2180s will be very damaging, costing 11% to 14% of GDP.

The Stern review then analyzes what the cost would be if everyone in the present and the future paid equally. Suddenly the cost estimate is not 0% now and 3% in 2100--but 11% of GDP right now and forever. If this seems like a trick, it is certainly underscored by the fact that the Stern review picks an extremely low discount rate, which makes the cost look much more ominous now.

But even 11% is not the last word. Mr. Stern suggests that there is a risk that the cost of global warming will be higher than the top end of the U.N. climate panel's estimates, inventing, in effect, a "worst-case scenario" even worse than any others on the table. Therefore, the estimated damage to GDP jumps to 15% from 11%. Moreover, Mr. Stern admonishes that poor people count for less in the economic calculus, so he then inflates 15% to 20%.

This figure, 20%, was the number that rocketed around the world, although it is simply a much-massaged reworking of the standard 3% GDP cost in 2100--a figure accepted among most economists to be a reasonable estimate.

The echo chamber of pseudo-leftist elitism rang like a gong when Stern's 20% claim struck. This is precisely the sort of false narrative they like to use to advance their ideology. The media went wild, politicians crowed, activists preened but society will suffer, or more accurately, continue to suffer as resources are squandered that could be used to far better effect.

. . . spending just 1% of GDP or $450 billion each year to cut carbon emissions seems on the surface like a sound investment. In fact, it is one of the least attractive options. Spending just a fraction of this figure--$75 billion--the U.N. estimates that we could solve all the world's major basic problems. We could give everyone clean drinking water, sanitation, basic health care and education right now. Is that not better?

The details . . .

The Stern review's cornerstone argument for immediate and strong action now is based on the suggestion that doing nothing about climate change costs 20% of GDP now, and doing something only costs 1%. However, this argument hinges on three very problematic assumptions.

First, it assumes that if we act, we will not still have to pay. But this is not so--Mr. Stern actually tells us that his solution is "already associated with significant risks." Second, it requires the cost of action to be as cheap as he tells us--and on this front his numbers are at best overly optimistic. Third, and most importantly, it requires the cost of doing nothing to be a realistic assumption: But the 20% of GDP figure is inflated by an unrealistically pessimistic vision of the 22nd century, and by an extreme and unrealistically low discount rate. According to the background numbers in Mr. Stern's own report, climate change will cost us 0% now and 3% of GDP in 2100, a much more informative number than the 20% now and forever.

In other words: Given reasonable inputs, most cost-benefit models show that dramatic and early carbon reductions cost more than the good they do. Mr. Stern's attempt to challenge that understanding is based on a chain of unlikely assumptions.

Moreover, there is a fourth major problem in Mr. Stern's argument that has received very little attention. It seems naive to believe that the world's 192 nations can flawlessly implement Mr. Stern's multitrillion-dollar, century-long policy proposal. Will nobody try to avoid its obligations? Why would China and India even participate? And even if China got on board, would it be able to implement the policies? In 2002, China decided to cut sulfur dioxide (SO2) emissions by 10%--they are now 27% higher despite SO2 being nationally a much bigger health and environmental problem than climate change.

Just as those who signed up for Kyoto are failing to make improvements. The world is awash with bureuacrats and regulations but there is no associated improvement. It is only by fudging the numbers - counting the collapse of industry in the x-Soviet Union and East Germany, and the switch from coal to natural gas in the UK for economic reasons - that the huge increase in European emissions is masked.

Why does all this matter? It matters because, with clever marketing and sensationalist headlines, the Stern review is about to edge its way into our collective consciousness. The suggestion that flooding will overwhelm us has already been picked up by commentators, yet going back to the background reports properly shows declining costs from flooding and fewer people at risk. The media is now quoting Mr. Stern's suggestion that climate change will wreak financial devastation that will wipe 20% off GDP, explicitly evoking memories of past financial catastrophes such as the Great Depression or World War II; yet the review clearly tells us that costs will be 0% now and just 3% in 2100.

It matters because Gordon Brown, Tony Blair and Nicholas Stern all profess that one of the major reasons that they want to do something about climate change is because it will hit the world's poor the hardest. Using a worse-than-worst-case scenario, Mr. Stern warns that the wealth of South Asia and Sub-Saharan Africa will be reduced by 10% to 13% in 2100 and suggests that effect would lead to 145 million more poor people.

Politics is stupid, dangerous and when looked at closely immoral as well . . . or at least unethical. People will suffer in the name of relieving suffering. As Brad Allenby put it: "[B]y oversimplifying reality, catastrophic visions encourage adoption of policies and perspectives which are dysfunctional and fragile, rather than contributing to the complicated but stable governance systems appropriate to complex situations". "[T]he single minded focus on catastrophic global warming increasingly turns the complex and multifaceted challenge of environmental management in an increasingly anthropogenic world into a single issue discourse, and one which is increasingly being based on power politics rather than rational dialog. Such oversimplification trivializes their respective discourses."

In the past few years saner voices predicted that this sort of foolishness would result from the exaggerations and outright deceits of politicians, activists and the media. They were vilified, but they were right. I wonder if we are as far gone as it appears? I wonder if this is just a lot of noise, a screeching tantrum that will be ignored and soon forgotten by a public too worldly wise to take such antics seriously? Perhaps this mess will be cleaned up after the coming elections.

Update:

Philip provides context.

. . . it is important to place his report in political context. The report was partly commissioned to counter the so-called Copenhagen Consensus of eminent economists brought together by the sceptical environmentalist, Professor Bjørn Lomborg. This group placed 'global warming' low down a list of world priorities and they argued that most actions, such as Miliband-style 'Green' taxes and carbon trading, would have only a negligible effect at the margins of climate change. . .

Stern has built a mighty economic edifice on shifting and unmanageable sands.

I predict that Stern will sink quite quickly to join the now-forgotten Population Bomb and Limits to Growth, and many other such doomsday tracts.