24 June 2015

Why Are We Waiting? The Logic, Urgency and Promise of Climate Change

Nicholas Stern
2015, MIT Press, 376 pages, £16.56
ISBN 9780262029186

Reviewer: Ian Roderick, Director, The Schumacher Institute

June 2015 and the award ceremony for the European Green Capital 2017 is underway,[1] with a city director from Stockholm explaining what inspired them to attain this prize five years ago: “It all started with Nicolas Stern.” There was no further explanation, just an assumed recognition of the powerful work he produced in the 2006 Stern Review, a 700 page document that, for the first time, laid out the economic arguments and implications of tackling climate change.

This new book from Lord Stern has a question for its title: Why Are We Waiting? Nearly ten years after the Stern Review work, this question has a tone of puzzlement and exasperation, especially for those who have worked in sustainability since well before the warnings in The Limits to Growth came out in 1972. The title brings to mind the play Waiting for Godot. What we mean here by Godot is concerted, global action to forestall the end of civilisation. The world is frozen: “Let’s go.” “We can’t.” “Why not?” “We’re waiting for Godot.” 

Now the danger of using a question for a title is the expectation that somewhere there is an answer, or at least an explanation as to why an answer is impossible. Does Stern do this?

The book has three parts. The first covers, as would be expected, the science and economics of climate change. Through an extrapolation of business-as-usual we learn that we are on a perilous path but Stern quickly moves on to present alternative pathways to a low-carbon world and these are surprisingly attractive. He suggests a new energy-industrial revolution, much along the lines promoted by Jeremy Rifkin and The Third Industrial Revolution, but Stern extends this to how we invest in forests, land and ecosystems, all positive ideas about the potential benefits, if we change tracks.

The second part of the book gets into detailed economic analysis and examines what is needed to effect rapid change (the sense of urgency for action builds up throughout the book). We travel through the lessons of market failures and Schumpeterian disruption to arrive at a critique of the economic and scientific models used so far in climate change debates. Stern argues strongly that they underestimate the risks and potential damage, that they “omit important catastrophic risks that are difficult to model.” He continues to critique the methods used for cost benefit analysis and discounting, putting the blame for errors not only on the underestimation of damage but also on our inability to consider the ethics of valuing the future. These ethical arguments for action form a main theme in the book – climate change requires going beyond the standard perspectives embraced in economics.

The third part of the book considers policy making and negotiations for global and national agreements to reduce emissions. Many examples of action in both developing and developed countries are given to show that things are happening but “the world is moving far too slowly.” The importance of success at the next UNFCCC Paris conference in late 2015 is stressed, for although agreement there is unlikely to be anywhere near sufficient but failure would seriously jeopardise what has been achieved.

Possibly the most important issue tackled in the book is international equity and how previous attempts to share the burden across nations to reduce emissions has been a static redistribution of costs and not a dynamic process of appropriate growth. Here Stern is talking about true convergence, seeing the power of a philosophy of equity within the limits of the planet. He states clearly the principle of “equitable access to sustainable development.”

Readers will understand a great deal more about the economics of climate change from reading this book, and it demonstrates that what was written in the Stern Review was not strong enough on the dangers ahead and significantly underestimates the cost. Here he corrects many errors in standard economic thinking. They way forward suggested by Stern is to embrace an energy-industrial revolution and to address all the barriers to action on climate change for which he gives many examples.

Does Stern answer his question, then?

He explores clearly, and with great detail, the reason why we are moving so slowly. These reason are: analytical difficulties and failures, communication deficits, psychological issues, and structural/institutional barriers. He points out how to correct the errors in economic analysis to give a true picture of the risks and cost and throughout the book he stresses that we can know the problems and we can understand what needs to be done. So, yes, there are part-answers to his question but maybe not enough.

Perhaps the weakest element of the book is the discussion of the structure of business, politics and finance we are locked in. How do we escape path dependencies, how do we switch tracks?

There are three types of path dependency. The first type is benign, or efficient, where the outcome of following one path rather than another is equivalent, you reach pretty much the same destination. The second type is where some paths have better outcomes than others but you had no way to determine in advance which one was best: chance and a slight early advantage selected one path over any other and sometimes the choice was definitely not the best overall outcome. The third type is like the second but where knowledge of the different outcomes was foreseen from the beginning yet no action was taken to select the overall better path when events were moving towards the poorer, less efficient outcome that unfortunately had the early advantage. Having this foresight transforms decisions from technical into ethical ones.

This is where we are now. It is summed up well in this quote from Dennis Meadows one of the authors of Limits to Growth:

“The problem that faces our societies is that we have developed industries and policies that were appropriate at a certain moment, but now start to reduce human welfare, like for example the oil and car industry. Their political and financial power is so great that they can prevent change. It is my expectation that they will succeed. This means that we are going to evolve through crisis, not through proactive change.”

The story of responding to climate change exhibits all of the characteristics of this third type of path dependency. There is ample foresight yet we are incapable of resisting short term advantages. Meadows accuses us collectively of the third type of path dependency – an almost wilful disregard of the outcome when we do have enough knowledge of what will occur and we can choose a different way forward yet we follow the path of easy wins today, we take the early advantage.

Having succeeded in asking the right question and answering it so many ways, Lord Stern is as stumped as we all are over this perennial trap of choosing the short term gain to ourselves over the long term survival of others – and ultimately ourselves. It should not stop us. There is an old cartoon showing a delegate at a climate change summit looking at the list of measures needed to combat climate change, things like renewable energy, better healthcare, liveable cities, green jobs etc., and he says, “What if it’s all a hoax and we create a better world for nothing?”



[1] The city chosen for 2017 European Green Capital is Essen in Germany.