2009
Blue Planet Prize
Professor Hirofumi Uzawa(Japan)Lord (Nicholas) Stern of Brentford(UK)

Member of The Japan Academy
Professor Emeritus, The University of Tokyo

Professor, The London School of Economics

GIFT:
This Blue Planet we live on
Is blessed to hold life
In the universe full of stars brilliantly
shining
We humankind
Are we spending the days by embracingfrom deep in our heart?
The happiness of being born on this blue
planet of life
As a tiny life born on this planet
Caring other lives, cherishing eachother
Are we pursuing in full, the meaning of
our lives?
By truly giving our appreciation
To the blessings of the “planet of life”
Earth
It is our great pleasure
If the film this time
Served you to think
About the happiness of living on thisblue planet
By extending your thoughts
To the gifts from the “planet of life”
Earth

Selected from the Slide Show Presented at the Openingof the Awards Ceremony151

His Imperial Highness Prince Akishino congratulates
the laureates

Their Imperial Highnesses Prince and Princess Akishino
congratulate the laureates at the Congratulatory Party

The prizewinners receive their trophies from Chairman Seya

Professor Hirofumi Uzawa

Lord (Nicholas) Stern of Brentford
Dr. Hiroyuki Yoshikawa,
Chairman of the Selection
Committee explains therationale for the determination of the year's winners

Hiromichi Seya, Chairman of the Foundationdelivers the opening address

152

Professor Ichiro Kanazawa, President, Science Council ofJapan (left) and Mr. David Warren, United Kingdom
Ambassador to Japan, congratulate the laureates

Profile

Lord (Nicholas) Stern of Brentford
Professor, The London School of Economics
Education and Academic and Professional Activities
1946
Born in U.K.
Bachelor of Arts degree in mathematics at Cambridge (1967) , and Doctor ofPhilosophy in economics at Oxford (1971)
1970-1978 Lecturer in Economics, Oxford University
1978-1986 Professor of Economics at University of Warwick
1986-1993 Professor of Economics at London School of Economics
1994-1999 Chief Economist and Special Counsellor to the President of the European Bankfor Reconstruction and Development
2000-2003 Chief Economist and Senior Vice-President of the World Bank
2003-2007 Second Permanent Secretary at H. M. Treasury,
Head of the Government Economic Service, appointed to lead the writing of theReport of the commission for Africa 2004-5, conduct a review of the economics
of climate change, which led to the Stern Review 2006: The Stern Review was
released on 30 October 2006
2007I.G. Patel Professor of Economics and Government at London School of
Economics, Director of the newly created India Observatory within the Asia
Research Centre at LSE, and Chair of the Grantham Research Institute on
Climate Change and the Environment
Lord Stern of Brentford, cross-bencher in the House of Lords(As of June, 2009)
Lord Stern released the Stern Review on the Economics of Climate Change on October 30,
2006, which discusses the effect of climate change and global warming on the world economy
with the aid of recent scientific data and economic models, and has since published extensivery
on the subject, including the Richard Ely Lecture at the American Economic Association(American Economic Review May 2008) and his recent book (entitled The Global Deal in the
USA and A Blueprint For A Safer Planet, UK) To avoid the devastating effect of global
warming, the Review made it clear that the world requires urgent action to implement global
policies: cooperation from all countries is crucial. The Review stresses the concept of equity,
including, both the responsibility of developed countries to developing countries andintertemporal considerations, the responsibility of the current generation to provide asustainable planet for future generations.
The Review was discussed at the Conferences of the Parties to the United Nations
Framework Convention on Climate Change in 2006 and 2007 (COP12 and COP13) and176

received much public attention. Backed by the recent scientific data and economics, Lord
Stern’s work makes a significant contribution, not only through promoting the understandingof academic research, but also by informing the public about the potentially immense toll ofglobal warming. The Review also had a significant impact on governments and policy makers
by proposing viable policies to mitigate and adapt to climate change. Lord Stern continues totake every opportunity to discuss and influence policy makers across the globe, this includes
assisting concerned parties to understand the consequences of global warming andunderstanding of the necessity of urgent action.
From Mathematics to Development Economics
Lord Stern was born on 22 April 1946 in London UK. He earned his Bachelor of Arts degree
in mathematics at Peterhouse, Cambridge, and his Doctor of Philosophy in economics at
Nuffield College, Oxford. His experiences in Mexico in 1964, Turkey and Iran in 1966 andEthiopia in 1967 generated a lifelong interest in development economics, and particularly
with poverty and the study of the development process in low-income countries. From 1969,early on his career, he began research in development economics, based first in Kenya andthen in India, including the Uttar Pradesh village of Palanpur which he has visited regularly
since 1974, researching the economic transformation of the village and the close relationshipbetween overcoming poverty and environmental issues and climate changes have been key
issues for his work, including in the Stem Review.
He was a lecturer at Oxford University from 1970 to 1977, and served as a Professorof Economics at the University of Warwick from 1978 to 1987. He taught from 1986 to
1993 at the London School of Economics, becoming the Sir John Hicks Professor of
Economics. From 1994 until 1999 he was the Chief Economist and Special Counsellor to
the President of the European Bank for Reconstruction and Development. He was the Chief
Economist and Senior Vice-President of the World Bank from 2000 to 2003 where continued
his work on the problems of world poverty.
In 2003 Lord Stern became Second Permanent Secretary at H. M. Treasury, initiallywith responsibility for public finances, and head of the Government Economic Service. He led
the writing of the Report of the commission for Africa 2004-5 and in July 2005 he wasappointed by the UK government to conduct a review on the economics of climate change,
which led to the publication of the Stern Review on 30 October 2006. The Review gained
global media attention for its stark assessment of climate change and examination ofcomprehensive policies to prevent the likely outcomes of unmitigated climate change. Lord
Stern attended COP-13 in Nairobi in Kenya in 2006 and COP-14 in Bali, Indonesia (2007
United Nations Climate Change Conference) to promote the understanding of the Review
worldwide.
In June, 2007 Lord Stern became the first holder of the I. G. Patel Chair at the London
School of Economics and Political Science. In 2008 he was appointed Chair of the Grantham
Institute for Climate Change and the Environment, and head of the newly created India
Observatory within the Asia Research Centre at LSE. Sir Nicholas Stern became Lord Sternof Brentford in December 2007, appointed to the House of Lords.

177

Measures Proposed to Deal with Global Warming
The Stern Review is the most comprehensive review on the economics of Climate change. The
Review analyses the economic costs of climate change, the costs and benefits of actions to
reduce emissions, and considers policies to address climate change. The Review provides
clear conclusions concerning the consequences of unmitigated climate change: if we take noaction to control emissions and continue along a business as usual (BAU) pathway, we run
severe risks of a transformation of the planet which would lead to large-scale migration
involving hundreds of millions of people and global conflict. This is a challenge of risk
management of the highest order of importance. Expressed in more narrow cost-benefit
analysis terms the Review estimated total costs over next two centuries equivalent to at least
5% (up to 20%) of world GDP each year.*1 Moreover, given the direct impact on the environmentand human health, some recent scientific evidence suggests a disproportional share of theclimate change burden will fall on the poor regions of the world.
By contrast, if we act now, the cost of action to avoid the most severe impacts of climatechange are estimated at around 1% to*2 of world GDP each year. New technologies andinnovation can enable the world to avoid a climate disaster and maintain strong economic
growth. Attempting to continue with high-carbon growth will not only severely damage theplanet and humans and other life, it will stop or reverse growth.
To cope with the significant challenge of climate change, the Review concluded thata shared global perspective on the urgency of the climate change is required; long-term
policy goals to address global warming, and an international approach based on multilateralframeworks and coordinated action, are essential to respond to the vast scale of the
Challenge.
To control global warming, the Review examines national and international policies
and indicates that four elements of policy are required. The first is carbon pricing policy
worldwide, through taxation, emission trading or (an implicit price) regulation. The second istechnology development policy, to encourage low-carbon and high-efficiency product technologies. Third is the policy to remove barriers to energy efficiency, and to inform and educate
firms and individuals on possibilities. The fourth policy response is adaptation policy to deal
with the climate change to which we are already committed.
An effective response to climate change will depend on creating the conditions forinternational collective action, for example effective policies to halt deforestation across theglobe. After the release of the Review, Lord Stem has traveled extensively across the world topromote policy to curb emissions.*3
Lord Stern argues that developed countries are responsible for the bulk of the current
stock of greenhouse gases in the atmosphere. They are also richer and have better access totechnology. Therefore, they have a responsibility to lead efforts to reduce emissions and to findways of sustaining development in a more hostile climate. They must do this directly throughtheir own action and providing finance, directly or through trading for action in developing
countries. In addition, given that developing countries will be responsible for the majority of
the increase in greenhouse gas emission in the future, the sharing of low-carbon technology

178between developed countries and developing countries is an essential requirement of any
effective policy response.
Preservation of the global environment is indispensable to sustain the development of
the world economy and the future welfare of society. It is the responsibility of the current
generation to hand a safe and sustainable planet to future generations. Stern’s work, includingin The Stern Review, clearly defines what must be achieved to fulfill our responsibility foravoiding a major climate disaster. If disastrous climate change does occur, the developing
countries and the world’s poorest will be hardest hit; to prevent this tragedy the world must act
with urgency. The clear messages in Lord Stern’s work concerning developing countries
coincide with his profound understanding of the severe situation of poor people in developing
counties and his serious concern over the bleak future in the case of climate inaction.
As an economist, Lord Stern has engaged in studies of economic development,
economic theory, tax reform, public policy, the role of the state, and the economic transition
from command to market economies. In the year 1974 and 1975, he spent 8 months in a ruralvillage in north east India; and he wrote books about development of tea plantations in Kenya
and agricultural change in India. In addition, he has written books on crime and criminal
statistics in UK, financial affairs, public development, “A strategy for development” 2002,“Growth & Empowerment: Making Development Happen” 2005, “A Blueprint for a Safer
Planet” 2009, and over 100 published academic papers.
Lord Stern expressed the pressing situation of climate change as following:“There is still time to avoid the worst impacts of climate change, if we act now, we act
strongly and we act internationally.” Already three years have passed since the Review wasmade public, urgent action to combat global warming is long overdue.
Notes*1: After the Review was published, scientists concluded that the capacity of the planet to absorb CO2 is lessthat the level assumed in the Review.
Considering this fact, Lord Stern now warns that the impact of climate Change is much larger than thereview predicted.
Guardian 25 March 2008
*2: Lord Stern mentioned that the evidence now shows that climate change is happening faster than had beenpreviously thought. Therefore emissions of greenhouse gases need to be reduced even more sharply. Owing
to this increase in greenhouse gases, it will cost up to 2% of global GDP each year to address climatechange.
Guardian 26 June 2008, New Scientist 21 January 2009
*3: Detailed policy. Developed countries to reduce their greenhouse gas emissions by at least 80%, in order for
the world to achieve an overall reduction in global emissions of 50% by 2050.
Substantial trade between countries, including rich and poor countries, in greenhouse gas emissions, to keep
down costs and help finance climate investment in developing countries.
A major reform of the Clean Development Mechanism, a Kyoto protocol mechanism that allows developing
countries to sell emission reductions, but does not penalize them for emissions themselves.
A programme, $10-15bn per year, could stop up to half the deforestation. Urgent promotion of technologies
such as Carbon Capture and Storage (CCS) is needed to curb the emissions from coal-fired electric power
generation.
Rich countries honour 0.7% GDP in aid, by 2015 to developing countries for mitigating the impact ofclimate change.
Guardian 29 November 2007179

EssayClimate Change, Public Policy anda New Wave of Technological Change
Lord (Nicholas) Stern of Brentford
Science tells us that the problems created by the accumulation of emissions of greenhousegases (GHGs) are potentially immense. Under anything approximating business-as-usual(BAU) there is a substantial probability (perhaps as high as 50%) that in a century or so global
average temperatures could reach 5ºC above the 19th century, temperatures not seen on theplanet for around 30 million years. The potential climate change associated with suchtemperatures would likely transform the lives and livelihoods of billions of people, including
where hundreds of millions could live. Resulting population movements could lead toextended, severe and widespread conflict. These are the scale of the stakes that follow from thescience.
The potential effects are subject to major uncertainties, they appear with long lags,
and the effect of a kilogram of GHG emissions is independent of whom or where are theemitters (emissions are “public bads” in the language of economics). The combination of
the magnitude, the uncertainty, the lags in the consequences, and the ‘publicness’ of thecauses, all of which follow from the science, makes the politics and economics of policy
supremely difficult (Stern, 2012).
It is hard for people to understand the scale of risk from climate change. More generally,
misunderstanding of the meaning of uncertainty and how to respond are pervasive in bothpublic and private decision-making. And the lags are compounded by ratchet effects andirreversibilities: once carbon-dioxide, the most important of the GHGs, is in the atmosphere,
it is likely to stay for many decades. Further, capital equipment and infrastructure can last fora few decades, locking in high-carbon structures. Thus if decisions are postponed until theeffects are very clear and the scale is demonstrated, it may be difficult, extremely costly, or
impossible to extricate ourselves. Or we may have to consider very risky and badly understoodalternatives such as geoengineering, which themselves may carry immense and potentiallydamaging consequences. The publicness of the cause may tempt people to leave action toothers on the articulated grounds that each individual contribution is small or they may decline
to act because they do not have confidence that others will act.
We have a problem of risk management and public action of immense importance
whose scientific logic makes the formulation, decision-making, and implementation of policy
extremely difficult. The policy challenge is, however, far from insoluble; indeed if it were, it islikely that the future for our children and grandchildren would be dire.
The building of the political will to take the radical decisions necessary will require
the widespread and shared understanding of two fundamental propositions. So far, we as
180

scientists, social scientists, and communicators have not made sufficient progress in
explaining and demonstrating these propositions. The two propositions concern first, thescale of the risks and the urgency of action and second, the nature and attractiveness of the
new energy-industrial revolution which is required. They are the subject of the second andthird sections of this brief paper. The remainder of this first section is devoted to the key
elements of economic policy for the management of climate change and broader issues ofsustainability beyond climate change.
Emissions of GHGs are not the only market failure relevant to the management ofclimate change. There are crucial market failures concerning: research, development anddeployment; networks and grids; long-term risk and capital markets; property markets; andinformation more generally. Further, there are failures in the valuing and understanding of cobenefits of action on climate change (beyond the fundamental benefits of reducing the risks ofclimate change) and embedding these in policy. These arise especially around the valuation of
ecosystem services and biodiversity issues which require close attention in their own right aswell as being profoundly affected by action or inaction on climate change.2
Each of these requires careful attention: thus the problems of market failure associatedwith promoting action on GHGs go beyond the fundamental market failure of the unpriced“externality” of emissions. That market failure is indeed fundamental and is a first and crucial
element of any policy foundation, but policy will fail to generate the scale and urgency of the
response required if it stops there. The demonstration of ideas and new techniques helps others
and thus should be fostered; networks depend on interaction and require government policy towork effectively and so on. Policy in relation to each of the failures described should be basedon careful analysis of the origins of the failure itself and thus how it can best be tackled.
Scale of the Risks and the Dangers of Delay
Global GHG emissions are currently around 50 billion tonnes of carbon dioxide-equivalent(CO2e) per annum and are growing strongly, mainly due to carbon intensive growth in thedeveloping world. As the carbon cycle is unable to absorb all of the world’s annual emissions,concentrations (stocks) of GHG emissions in the atmosphere have increased, to around440ppm of CO2e today. We are currently adding at a rate of around 2.5ppm per year. This rate
is rising. Thus if we continue with something like BAU over the course of this century wewould likely add at least 300 ppm, taking concentrations to around 750 ppm CO2e or higher atthe end of the century or early in the next. Such a path could bring somewhere in the regionof a 50-50 chance of an eventual warming of more than 5ºC relative to mid-19th century
levels3. A rise of 5ºC is immense: the planet has not seen these temperatures for more than
30 million years.
The world’s current commitments to reduce emissions, as pledged in the Appendices to
the Copenhagen Accord and confirmed in the Cancun agreement and recently at Durban, areconsistent with at least a 3ºC rise (again with roughly a 50-50 chance of above or below). The
world has not seen 3ºC for around 3 million years. Homo sapiens has experienced nothing like
this, being present for only around 200,000-250,000 years, and our civilisations, in terms ofarable farming, villages, towns and so on, have been here for only 8,000 or 9,000 years, since181

the emergence from the last ice age, i.e. during the Holocene period, during which time averagetemperatures have fluctuated in a quite narrow range of between ±1ºC.
Such warming would likely cause disruption on a huge scale to local habitats andclimates, for example through flooding, desertification, and water scarcity. Hundreds ofmillions of people, perhaps billions, would probably have to move, with the associated risks ofsevere and extended conflict. The great advances in development of the last few decades,
which have seen hundreds of millions of people in developing countries rise out of income
poverty, substantial improvements in health and life expectancy, large reductions in fertility
rates, and major advances in education and literacy, would likely be put at risk.
The scale of the risks and the inherent uncertainty around these projections clearly
imply that policy analysis of climate change must be framed in terms of risk-management.
The potential risks are huge and the associated probabilities are not small.
The uncertainty present in these projections may suggest to some that delay whilst welearn more is the best response, rather than early and strong action to reduce emissions. Thatwould be a profound mistake. First, the flow-stock process, from emissions to increasing
concentrations of GHGs in the atmosphere, with CO2, in particular, very long-lasting in theatmosphere, implies that we have a ratchet effect. Processes to remove emissions from theatmosphere or prevent solar energy reaching the earth, known as geoengineering, areundeveloped, largely untested and are also likely to involve significant risks. See the 2009
Royal Society report and Reekie and Howard (2012). Second, much of infrastructure andcapital investment can result in technological “lock-in”. With little action the long life times ofmuch of the relevant high-carbon infrastructure and network investment could imply that thelock-in could last for many decades to come. Delay is clearly very dangerous: we are alreadyat a difficult starting point in terms of concentrations of GHGs and weak action or inaction fora decade could make stabilisation of concentrations at levels that reduce the risks to acceptablelevels, in particular 2ºC, very difficult.
To embark on strong action now, if the science turns out to be wrong and the risks are
small, would leave us with a more energy efficient and bio-diverse economy and newtechnologies, even though ex post we might have wished there had been somewhat smaller
investment in these areas. On the other hand, if the science turns out to be right, and we ignore
the risks, we would be in an extremely difficult position from which it would be very hard to
extricate ourselves. Given this logic, basic decision theory or common sense points to strong
action, particularly since the science is very likely to be right. To argue for weak or delayed
action involves claiming to be pretty sure the risks are small—an extraordinary position given
200 years of cumulative scientific analysis—and/or that delay has only modest downside.
Size of the Response and the New Energy-industrial Revolution
Most nations now agree, as expressed in the current global negotiations (the agreement
at Cancun at the UNFCCC meeting of December 2010), that limiting the rise in global
temperature to 2ºC is necessary in the sense that levels above this are (sensibly) regarded as
dangerous. To achieve this goal, with a 50-50 probability, global emissions would need to fallfrom current levels to pass well below 35 billion tonnes of CO2e in 2030, and well below 20

182

billion tonnes of CO2e in 2050. These “global constraints” should be at the heart of discussions
and of the understanding of action.
Reducing absolute emissions levels by a factor of at least 2.5 in 40 years would requirea reduction in emissions per unit of output by a factor of around 8 if the world economy grows
over 40 years by a factor of around 3 (equivalent to an annual world GDP growth rate ofaround 2.8%). Emissions reductions on this scale should surely be regarded as a new energyindustrial revolution. The transition to low-carbon growth and the energy-industrial revolution
represent a far more attractive path than the high-carbon, dirty and environmentally destructive
path that has gone before. The transition is likely to be a period of innovation, creativity andgrowth, and will involve substantial investment across the economy. And low-carbon growthis likely to be cleaner, safer, quieter, more energy secure and more bio-diverse. Low-carbon
growth is the genuine growth option; an attempt at high-carbon growth will self-destruct.
The study of past periods of economic/technological transformation has much to teachus here. Past industrial revolutions, e.g. steam and the railways, and much more recently the
information, communications and technology (ICT) revolution, which continues (Figure 1),
involved a transformation that saw two or more decades of strong innovation and growth, withinvestment flowing to those pioneer countries and businesses that showed leadership andembraced the transition (see, for example, Perez, 2002 and 2010). Such transformations
involve periods of ‘creative destruction’ (in the tradition of the economist Joseph Schumpeter),where new firms and ideas drive out the old, generating a dynamic period of innovation,
opportunity, employment and economic growth. Countries and states such as China, Korea,
Germany, the Scandinavian countries, and California are leading the transition with the size of
their low-carbon markets growing strongly. The costs of low-carbon technologies, such as
solar PV and off-shore wind power have declined rapidly over recent years and similar cost
reductions are expected in the future as their deployment accelerates.

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Cleantech& Biotech (2009-)

Information& Telecom(1971-)

6TH WAVEINNOVATION

Oil, Automobiles& Mass Production(1910-1975)
Steel, Electricity& Heavy Engineering(1875-1920)
Steam & Railways(1830-1870)

Industrial(1770-1830)

5TH WAVE

4TH WAVE

3RD WAVE

2ND WAVE

1ST WAVE

1785

1845

1900

1950

1990

2020

Figure 1
Waves of Innovation
Source: DONG Energy (2009); diagram based on Perez (2002) drawing on report by
Merrill Lynch (2008) (schematic not precise quantitative vertical axis).

The transition will require strong action to reduce emissions across all countries and all
economic sectors. Energy efficiency will be central to the response, as will the introduction of
new low-carbon technologies and strong and determined action to slow and halt deforestation.
This will involve the implementation of transparent, long-term and credible public policies (toaddress the market failures) and public investments that create a positive environment for
innovation and change. They should take careful account of and be integrated with policies toprotect ecosystems and biodiversity.
As this transformation progresses the world must also be prepared to adapt to theclimate change to which we are already committed from past and future emissions. We haveto manage the unavoidable as well as avoiding the unmanageable. We are already outside thetemperature range of the Holocene period when our societies developed. Another 1-1.5ºC
which appears very likely will require major adaptation to changing weather and climate
patterns. There should be close intertwining with mitigation and development—indeed it is a
mistake to separate them excessively in terms of organization and implementation. Much of
irrigation and water management should combine mitigation, adaptation and development,
similarly buildings, city management, power and so on. The stronger the emissions reduction,
the less the necessary scale of adaptation but given what we have already done and are doingon emissions the scale of adaptation will have to be large.
We are already starting to see emissions reduction policies introduced in many
countries. But action will have to be stronger and more rapid, more coordinated, and extend
more broadly across the many relevant market failures if the level of investment and pace184

of change necessary to avoid dangerous climate change are to be achieved. Delay isdangerous and now is the time to accelerate. The world economy risks a prolonged slow
down as a consequence of the financial and economic crises of the last few years. Lowcarbon growth is the only sound basis for a sustainable recovery.

References
Bowen, A. & N. Ranger, 2009, Mitigating Climate Change Through Reductions in Greenhouse Gas Emissions: The
Science and Economics of Future Paths for Global Annual Emissions, Policy Brief, December, Centre for
Climate Change Economics and Policy, and Grantham Research Institute on Climate Change and theEnvironment. www2.lse.ac.uk/GranthamInstitute/publications/Policy/docs/PBMitigatingBowenRangerDec09.
pdf.
Bruntland, et al, 2012, Environment and Development Challenges: The Imperative to Act, Blue Planet Laureates,
Background Paper prepared for a submission to the Rio+20 UN conference in June 2012.
DONG Energy, 2009, Rethinking energy. Ascent Business Leadership Forum 2009, Presentation, 22 October.
Merrill Lynch, 2008, The sixth revolution: the coming of Cleantech clean technology, Industry Overview. Online
at: www.responsible-investor.com/images/uploads/resources/research/21228316156Merril_Lynch-_the_coming_of_clean_tech.pdf.
Perez, C., 2002, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages,
Edward Elgar, UK.
Perez, C., 2010, Full Globalisation as a Positive-Sum Game: Green Demand as an Answer to the Financial
Crisis, www2.lse.ac.uk/publicEvents/events/2010/20100518t1830vOT.aspx.
Royal Society, 2009, Geoengineering the climate: Science, governance and uncertainty, September.
Reekie, T. and W. Howard, 2012, Geoengineering, Occasional Paper Series, Office of Australia’s Chief
Scientist, Australian Government, Issue 1. http://www.chiefscientist.gov.au/wp-content/uploads/47019_
Chief-Scientist-_OccassionalPaperSeries_lores.pdf.
Stern, N., 2012, Climate Change and the New Industrial Revolution: What we risk and how we should cast theeconomics and ethics, Lecture 1, Lionel Robbins Memorial Lecture Series, London School of Economics
and Political Science, February 21. http://cep.lse.ac.uk/_new/events/event.asp?id=140.
The Economics of Ecosystems and Biodiversity: Ecological and Economic Foundations, 2011, (ed.) Pushpam
Kumar, Earthscan Volumes.
The Economics of Ecosystems and Biodiversity in National and International Policy Making, 2011, (ed.) Patrickten Brink, Earthscan Volumes.
The Economics of Ecosystems and Biodiversity in Business and Enterprise, 2011, (ed.) Joshua Bishop,
Earthscan Volumes.
The Economics of Ecosystems and Biodiversity in Local and Regional Policy Management, 2012, (eds) Heidi
Wittmer, Haripriya Gundimeda, Earthscan Volumes.
UNFCCC, 2011, Report of the Conference of the Parties on its sixteenth session, held in Cancun from 29
November to 10 December 2010, March. http://unfccc.int/documentation/decisions/items/3597.
php?such=j&volltext="cancun%20agreements"#beg.

Notes
1. I am very grateful to James Rydge for his guidance and support.
2. The Rio+20 conference of June 2012 rightly places strong emphasis on these bio-diversity issues. See The
Economics of Ecosystems and Biodiversity (TEEB) Volumes.
3. See, for example, Bowen and Ranger (2009).

185

Lecture

Creating a Global Agreement on Climate Change:
Responsibilities and Opportunities
Lord (Nicholas) Stern of Brentford
Introduction
Avoiding dangerous climate change and overcoming global poverty are the two defining
challenges of the 21st century. The global responses to these challenges must be carefully
designed, but if strong action is taken now, they will be both manageable and affordable.
Rich countries are largely responsible for the causes of the current climate crisis, but it
is developing countries that are being hit earliest and hardest by the consequences. Thus, richcountries must take strong action now and provide significant mitigation and adaptation
assistance to developing countries. Developing countries must also play a leading role indesigning and implementing a global deal. However, it is reasonable that developing countries
place strong conditions on the performance of rich countries both in cutting their emissions
drastically and in providing financial and technological support to developing country action;with such performance they could provide a “commitment to commit” to emissions reductions.
Rich country support can and should start now with substantial help with finance for the
climate change action plans which developing countries are now constructing.
I begin by briefly discussing the problem of climate change and what it implies fortargets to reduce emissions of greenhouse gases. This leads to a discussion and analysis of how
to achieve emissions targets and the likely costs involved. I conclude with the main elementsthat must be part of any global deal negotiated in Copenhagen in December 2009. If that
global deal is to be built and sustained it must be effective, efficient and equitable.
From People to Emissions
The rate of growth of economic activity in the industrialising parts of the world accelerated
dramatically from the mid-19th century onwards, while the form of that activity (the rise ofindustry and the relative decline of agriculture, for example) became much more hydrocarbonintensive. These three effects-growth, industrialisation and hydrocarbon use-combined toincrease greenhouse gas emissions. The second half of the 20th century saw a sharp increasein the rates of growth of emissions as the world recovered from the Great Depression and theSecond World War, and more countries industrialised.

186

Figure 1
From People to Emissions 1

Figure 2
From People to Emissions 2

187

From Emissions to Temperature
As a result of this hydrocarbon-intensive growth, the world has been emitting carbon dioxide
and other greenhouse gases at a faster rate each year than the planet can absorb, especiallyduring the rapid and energy-intensive growth of the last 60 years.
Concentrations of greenhouse gases in the atmosphere have grown from 285 parts per
million (ppm) in pre-industrial times to over 435 ppm of carbon-dioxide-equivalent (CO2e)
today, and we are adding at a rate of over 2.5 ppm per year (and if there is little or weak action
this is likely to accelerate to around 3 ppm per year or higher over the coming decades). As aresult, continuing with ‘business-as-usual’ (BAU) is likely to take us to over 750 ppm CO2e by
the end of the century.1
This level of concentration, even if there were no further increase, would result in asignificant probability, around 50% or more, of an eventual temperature increase of more than
5ºC compared with the pre-industrial era (our benchmark for temperature increases unlessotherwise stated). The planet last experienced such temperatures more than 30 million years
ago, long before the appearance of humans, 100 to 200,000 years ago. The most recent warm
period was around 3 million years ago when the world experienced temperatures 2ºC or 3ºC
higher than today. Humans have never experienced temperatures anywhere near a 5ºC increase.
From Temperature to Climate Change and Impacts on People
Thus ‘business-as-usual’ emissions of greenhouse gases would profoundly change the climateof the planet. Global sea level would rise by several metres and many low-lying coastal areas,such as much of Bangladesh, would be inundated. Many areas, probably including southern
Europe would turn into deserts. The physical and thus human geography (where we can live
and how we live our lives) would be transformed, leading to the migration of hundreds ofmillions of people, and intense competition for scarcer resources, such as water.2 This would
probably lead to intense and prolonged international and national conflicts. The stakes are
immense: we are essentially gambling the planet.
The Fourth Assessment Report published by the Intergovernmental Panel on Climate
Change (IPCC) in 2007 includes a review of recent research on the impacts of climate change
in Japan. Average temperature in Japan increased by about 1ºC in the 20th century and by 2ºC
to 3ºC in the largest cities. This is consistent with evidence of an increase in the number ofdays over 35ºC and a decrease in extremely low temperatures. There is also evidence ofincreased extreme rainfall events over the past 100 years, including serious flooding in 2004
which was the result of 10 typhoons. Migration of plants and animal species has also beenreported, the flowering date of the cherry has changed and alpine flora in Hokkaido havedecreased.
The IPCC also reports that heatwave conditions and extreme precipitation will increaseover Japan as atmospheric moisture content increases. Significant decreases in rice production
are also predicted; an atmosphere with carbon dioxide concentrations that are double those of
pre-industrial times (i.e. around 560ppm CO2e) could decrease rice yields in irrigated lowland
areas of central and southern Japan by up to 40%. Sea level rise will also have powerful
impacts on Japan. Over 4 million people could be at risk from a rise in sea level of 1 metre.

188

But remember that ‘business-as-usual’ will imply far higher concentrations than 550 or560ppm CO2e. The consequences for Japan both in terms of direct effects and migration of
550ppm CO2e would be very unpleasant; for 650ppm CO2e or more they are likely to bedevastating.

Figure 3
From Stocks to Temperature

What our Emissions Targets Should Be
In order to reduce the risk of climate change the world must act together and commit to targets
for emissions reductions. Most assessments of sensible risk management imply that we should
hold greenhouse gas concentrations at or below 500 ppm CO2e, and try to reduce them fromthere. Holding concentrations below this level would expose the planet to a probability of
global average temperature rising by 5ºC or more of around 2% or 3% compared with a huge
50% or more under ‘business-as-usual’.
Looking longer term, we should recognise that holding concentrations below 500ppm
CO2e and bringing down to 450 ppm or below, would still carry a serious risk of passing a
number of potential tipping points, like the destruction of rainforests and the release of
methane from thawing permafrost. It makes sense, therefore, to interpret ‘holding
concentrations below 500 ppm’ as eventually allowing a very long-term stabilisation markedly
below that level. The learning we have to do to hold levels below 500 ppm will tell us muchabout how to go further. Just where around 500 ppm CO2e, and then lower, we should aim is189

a matter of balancing the costs and the avoided risks. As the scientific evidence accumulates
the risks look ever larger; on the other hand the technology of emissions reductions is alreadymoving so quickly that costs of action and the benefits of new technologies may look evenmore attractive.
Annual global emissions of greenhouse gases were about 40 gigatonnes (Gt) CO2e in
1990; they are over 50 today. If the world is to hold concentrations below 500ppm CO2e andthen try to reduce from there, then we must ensure annual global emissions peak within thenext 10 years and reduce to half 1990 levels, or about 20 Gt CO2e at most, by 2050. As theglobal population will probably be around 9 billion in 2050, this would be equivalent toemissions of around 2 tonnes CO2e per capita. Given that there will be very few countries withactual emissions below this level there can be very few above.3
At the Italy summit (L’Aquila) in 2009, G8 leaders for the first time acknowledged theimportance of avoiding an increase in global average temperature of more than 2ºC comparedwith pre-industrial times. They also agreed a goal for developed countries of reducing theirannual emissions of greenhouse gases by at least 80% or more by 2050 compared with 1990.
This would take actual emissions in Europe and Japan to around 2 tonnes per capita, themaximum sustainable for any major country as argued above.
In addition to these distant objectives, explicit intermediate targets for 2020 and 2030
are necessary now for the rich countries and very soon for all countries. The immediacy of the
problem allows no delay, and businesses, markets and developing countries require strong
signals now and powerful examples of what is possible. The longer we delay, the more difficultand more costly it will be to stay below 500 ppm CO2e.

190

Figure 4
What our targets should be.

How to Achieve the Targets and Costs Involved
To be on a path to halve annual global emissions by 2050 from 1990, and allow eventual
stabilisation at 450 ppm CO2e, total world emissions in 2030 would have to be around 35 Gt
CO2e. Table 1 outlines six scenarios that demonstrate the extent of cuts necessary to achieve
this interim 2030 target.
The scenarios focus on five nations or regional groups: USA, EU/Japan, China, India
and the Rest of the World.4 I have put the EU and Japan together since they start with similar
emissions per capita and have similar emissions per unit of output. For all scenarios the overall
economies grow at 2.5% for the USA and EU/Japan and 7% for each of China and India. The
scenarios then look at different assumptions concerning emissions per unit of output. In thefirst block of 3 scenarios we have both the US and EU/Japan halving emissions per unit ofoutput and in the second block, dividing by 4.
Within the blocks, the scenarios vary according to different assumptions concerningemissions per unit of output in India and China: India and China both constant; India constantand China halving; India halving and China dividing by 4. The assumptions concerning India
relate to her much lower emissions per unit of output in 2010 (close to 2 tonnes versus around
6 for China) and to her lower standard of living (also her ‘starting’ emissions per unit of output
are substantially lower than China’s).
The table shows that only scenario 6 has any plausibility in terms of implications for the
4.3 billion people in the Rest of the World in 2030. Even that scenario would imply that the percapita emissions of the USA, EU/Japan and China would substantially exceed those of the 4.3
billion in the Rest of The World by 2030. Scenario 6 would require China to have peakemissions around 9 or 10 tonnes per capita with a peak around 2020 and India to peak ataround 4 or 5 tonnes per capita well before 2030. Rich countries would have to reduce
drastically starting now.
The architecture is clear: unless the USA, EU/Japan and China reduce emissions perunit of output by a factor of 4 it will not be possible to reach the goals that sensible risk
management requires. The alternatives would be to cut growth or be reckless with the climate.
Surely the right answer is to cut right back on emissions per unit of output. No major country,
least of all a rich one, can claim to have good reason to ‘contract out’. We must do this
together.

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Table 1: Emissions Scenarios Consistent with Global Emissions of 35 GtCO2e in 2030
Emissions in 2030
Scenario for emissions (em)change to 2030
Scenario 1: Overall growth:
India & China 7%, US, EU27
& Japan 2.5%.
em/output: India & China
constant; US, EU27 & Japanhalving.
Scenario 2: Overall growth:
India & China 7%, US, EU27
& Japan 2.5%.
em/output-India constant;
China, US, EU27 & Japanhalving.
Scenario 3: Overall growth:
India & China 7%, US, EU27
& Japan 2.5%.
em/output-India halving, China
decrease by factor of 4; US,
EU27 & Japan halving.

Scenario 4: Overall growth:
India & China 7%, US, EU27
& Japan 2.5%.
em/output: India & China
constant; US, EU27 & Japandecrease by factor of 4.
Scenario 5: Overall growth:
India & China 7%, US, EU27
& Japan 2.5%.
em/output-India constant,
China halving; US, EU27 &Japan decrease by factor of 4.
Scenario 6: Overall growth:
India & China 7%, US, EU27
& Japan 2.5%.
em/output-India halving;
China, US, EU27 &Japandecrease by factor of 4.

USA

China

India

Rest of the World

16.6

6.2

9.9

6.2

20.8

31.3

5.3

7.9

-3.8

-16.5

16.6

6.2

9.9

6.2

10.4

15.6

5.3

7.9

-0.2

-0.9

16.6

6.2

9.9

6.2

5.2

7.8

2.6

4.0

2.5

10.9

8.3

3.1

4.9

3.1

20.8

31.3

5.3

7.9

-2.4

-10.3

8.3

3.1

4.9

3.1

10.4

15.6

5.3

7.9

1.2

5.3

8.3

3.1

4.9

3.1

5.2

7.8

2.6

4.0

4.0

17.1

Assumptions:
China
India
USA
EU27 & Japan
Rest of the World
Source: UN 2008 World Population Prospects

192

EU 27 & JapantCO2e per Total tCO2e per Total tCO2e per Total tCO2e per Total tCO2e per Total
capita (GtCO2e) capita (GtCO2e) capita (GtCO2e) capita (GtCO2e) capita (GtCO2e)

Population (bn)
E2010
1.4
1.2
0.3
0.6
3.4

E2030
1.5
1.5
0.4
0.6
4.3

Emissions per
Total emissions
capita (CO2e)(GtCO2e)
E2010
E2010
6.0
8.1
1.7
2.0
25.1
7.5
12.1
7.5
7.8
26.8
Sources: Climate Analysis Indicators Tool (CAIT) &Global Carbon Budget Project.

There will of course, be other countries such as the USA, Canada, Australia which mustbring emissions down much more strongly than Japan or Europe-these 3 countries are currently
well over 20 tonnes CO2e per capita. In terms of technology and geography however Japan ismuch closer to Europe and the fact that others have still farther to go is no excuse for major
and technologically advanced countries like Europe and Japan, and Japan is the world’s second
largest economy, to fail to take a strong lead. If a poor country like China, with much lower
emissions per capita than Japan, is likely to have to cut emissions per unit of output by a factor
around 4 in 20 years, it is hard to argue that Japan cannot also cut emissions per unit of output
by a factor 4 and thus halve its per capita emissions to around 5 or 6 tonnes in the next two
decades.
We should not be rigid about the precise figures for annual emissions in 2030 or any
other particular year. There could be a little more emissions in one year and a little fewer inanother. But the limits imposed by the overall arithmetic for total emissions over the next few
decades are very real and give a very powerful indication of the scale of action required.
The key areas of actions to reduce emissions will be (i) energy efficiency (ii) lowcarbon technologies and (iii) halting deforestation. All will require investments which will
have to start strongly now across the world in order to achieve the annual emissions reductions
required by 2030. At the start of the process of stabilising atmospheric concentrations there isgreat scope for energy efficiency improvements. Energy efficiency varies across developed
countries. In 2005 Japan consumed 1.94 kWh of energy per dollar of GDP, expressed in(2000) USD. The EU consumed 2.29 kWh per dollar of GDP (there is significant variation
within the EU from 4.4 kWh in Bulgaria to 1.33 kWh in Ireland). In contrast, the US consumed
2.68 kWh of energy per dollar of GDP in 2005. While Japan is more energy efficient than the
US and some EU states, other major developed economies have achieved similar (Germany,
France) or better (UK) levels of energy efficiency.
Developing and deploying low-carbon technologies and activities will also be essential,
and Japan is in an excellent position to lead. Japan has shown great technological leadershipin the past; the Toyota Prius is a prominent and important example of ‘green’ innovation andleadership by a Japanese company. Another, less well-known, example is the development anddeployment of home-use fuel cells by Tokyo Gas Company and Panasonic Corporation. The
success of these technologies, especially hybrid drive technology, demonstrates the rewards
and opportunities available to those who lead.
The global emissions reductions necessary require there to be many more examples
like these. We need a rapid and widespread advance in the development and diffusion of awide range of technologies. Technology policy is essential to achieve this and is a powerfulstimulus. Japan has great experience in this area of policy.
As with all policy that creates the incentives to drive major change, it is important toavoid overconcentration on the many lobbyists and vested interests that will seek to delay and/or reduce the effectiveness of policy. The world needs Japan’s proven track record oftechnological innovation. Japan has a significant opportunity to lead the world again, just as
she did with the development of the semi-conductor during the 20th century.
Halting deforestation will require major advance in agricultural productivity and in193other parts of the economies of the regions where the trees stand. Governance and enforcementof laws on deforestation will require investment too. And peoples dependent on forests invarious ways must have a strong and direct stake in their protection. Policies must be
constructed by the countries where the trees stand but strong external support should be an
obligation on us all. Japan is playing its role in helping to reduce deforestation. For example,
it is an active participant in the Asia Forest Partnership (AFP) that aims to combat illegal
logging and reduce forest loss and degradation. We all gain from avoided deforestation. We
should be clear however that it will require substantial and sustained financial and othersupport.
The cost of stabilising at or below 450 ppm CO2e (and implementing these different
mitigation options), if the world acts now, is relatively small, compared to the cost of thedamages avoided. Both the bottom-up and the top-down studies in the Stern Review, Chapters
9 and 10 respectively, arrived at mitigation costs in similar ranges-around 1% (between -1%
and 3%) of world GDP for stabilisation below 550ppm CO2e. With ever clearer evidence thatrisks from unmanaged climate change are even worse than was assumed by the Stern Review,
it is clear that concentrations should be held below 500ppm CO2e and eventually brought
down to no higher than 450ppm CO2e. The annual costs of mitigation over the next few
decades might now be around 2% of world GDP.
Since the Stern Review was published there have been a number of new studies, bothbottom-up and top-down. Significant examples of the former are those from McKinsey(Enkvist et al., 2007) and the IEA (2007), both of which indicated mitigation costs consistent
with or lower than the Stern Review. Similar conclusions on costs of action are drawn in the
Fourth Assessment Review of the IPCC (AR4, IPCC 2007).
These costs will mostly take the form of new investments and will appear, for a while,in terms of higher costs for energy to industrial and domestic consumers. But there will bepotentially major savings from energy efficiency and the new low-carbon technologies, relative
to those displaced, are likely to have strong benefits (energy security, cleaner air, less noise,etc.) beyond the reductions in emissions. Stopping deforestation carries great co-benefits tooin terms of avoided soil erosion, silting and flooding and better watershed management,
maintaining patterns of rainfall, bio-diversity and so on.
Thus, we should not see the route to the low-carbon economy merely or mostly in termsof cost and burden-sharing. There are investments and opportunities. The transition to the lowcarbon economy over the next two or three decades is likely to be one of the most dynamic andexciting periods in economic history with strong discovery and growth. This will be wider anddeeper in terms of technology and geography than the arrival of the railway and electricity inindustrialising countries in the 19th and 20th centuries. And when low-carbon growth is achieved
it will be more energy secure, cleaner, quieter, safer, and more bio-diverse than its predecessor;
in other words much more attractive. High-carbon growth has no future: it will kill itself if wetry to continue-first on high hydrocarbon prices and second and more fundamentally, on thevery hostile physical environment it will create.

194

A Global Deal
The 15th Conference of the Parties (COP15) to the United Nations Framework Convention on
Climate Change, to be held in Copenhagen in December 2009, will be decisive in determining
the policies for the period beyond 2012 that succeed the Kyoto Protocol. The Copenhagenmeeting will be the most important international gathering since the Second World War. The
risks it must grapple with and the policies it agrees must be truly global. A delay in reachingan agreement would be dangerous. First, the relentless flow of emissions would continue toincrease the stock of greenhouse gases in the atmosphere, taking us into ever more difficult
territory and second, delay could undermine the market confidence that will be crucial for thenecessary investments in the low-carbon economy.
It is important that the agreement in Copenhagen be guided by clear principles basedon rigorous analytic foundations and a common understanding of the key challenges. The
following provides a brief outline of a possible global deal based on the preceding analysis.5 It
also draws on intensive public discussion during the work of the Stern Review in 2005 and2006 and on continual interaction internationally over the last three years.
Any global deal must be based on three basic principles:
Effectiveness-it must lead to cuts in emissions of greenhouse gases on the scale required toreduce the risks from climate change to acceptable levels;
Efficiency-it must be implemented in the most cost-effective way, with mitigation being
undertaken where and when it is cheapest; andEquity-it must take account of the fact that it is poor countries, with fewer resources andtechnologies, that are being hit earliest and hardest by the consequences of climate change,
while rich countries have a particular responsibility for the cause through their past emissions.
Effectiveness
There are several requirements for 'effective' action:• Global annual emissions to fall by at least 50% relative to 1990 levels by 2050, to at
most 20 GtCO2e;• Global average per capita emissions that will need to be around two tonnes per yearby 2050 (20 Gt divided by nine billion people);6• Agreement by developed countries to take on immediate and binding national targets,and to commit to reductions of at least 80% by 2050 compared with 1990;• Well before 2020, demonstration by developed countries that they can deliver credible
reductions, without threatening growth, and that they can design mechanisms andinstitutions to transfer funds and technologies to developing countries;• Subject to this and to strong support with finance and the sharing of technology, aformal expectation that developing countries would make a ‘commitment to commit’
to take on binding national targets of their own by 2020;

195

• All developing countries with or without immediate formal targets would require
climate change action plans;• A commitment by all countries, regardless of targets, to develop the institutions, data
and monitoring capabilities to assess progress in a transparent way, and to put in placepolicies to avoid the locking-in of high-carbon infrastructure.
Efficiency
Only sound, measured and coordinated policy, and timely international collaboration, candeliver strong and clean growth for all at reasonable cost. The essence of efficiency is to getemissions reduced where the cost is lowest. If any mass sector, technology or country is leftout, costs will rise. In principle, efficiency requires that the marginal cost of reducing emissions
is the same everywhere.
Backed by very strong targets for cuts in emissions by developed countries, carbon
prices can be maintained at levels which will provide incentives both for reductions at homeand purchases from abroad, and will guide action towards the lowest cost options. The cheapest
mitigation options often reside in developing countries, which should take advantage of carbon
markets from the outset. The current structure of the Clean Development Mechanism (CDM)
makes it difficult to create market flows to developing countries on the scale required. Movingfrom a project-based to a wholesale mechanism, perhaps based on sector-specific efficiency
targets and credible sector decarbonisation plans, would permit scaling-up in a number ofemissions and energy-intensive industries.
EquityAny global response to climate change must be equitable; responsibilities and costs should beallocated in ways that take account of wealth, ability, and historical responsibility.
However, we start in a very difficult and inequitable position. The numbers are stark.
Rich countries are responsible for around two-thirds of the existing stock of greenhouse gasesin the atmosphere and their emissions per capita are much higher than those of poor countries.
Therefore developing countries have a strong and understandable sense of injustice. They see
rich countries having first relied on fossil fuels for their development, and thus being largely
responsible for the existing stocks of greenhouse gases in the atmosphere, then tellingdeveloping countries to find another, and possibly more costly, route to development.
Given the inequities of the history of emissions, and the implications of climate change
for future development, rich countries must demonstrate the feasibility of low-carbon growthand set an example for others. However, they should do much more than this. There is a strong
imperative for the rich countries to provide more funds to developing countries, in addition to
current development commitments, to fund the extra costs created by climate change.
Delivering additional funds on an appropriate scale is crucial. The long-standing target
for development aid, set out in the Monterrey Consensus on Financing for Development in2002 and reaffirmed in December 2008 in the Doha Declaration on Financing for Development,
is for developed countries to provide at least 0.7% of GNP as Official Development Assistance(ODA). The EU gave itself, in June 2005, just before the G8 meeting at Gleneagles in the UK,196

until 2015 to reach the target.
Adaptation to a more hostile climate, however responsible we are in cutting emissions,will increase the burden on developing governments. Therefore the targets for support fromthe public budgets of rich countries are likely to be closer to 1.0% of GNP than 0.7% for the
coming two decades. With the private flows that could come with them and the growth andpoverty reduction they could help foster, these flows of public funds would constitute very
wise investments for the world as a whole, as well as the fulfilment of our duty as citizens of
the world.
Developing countries should challenge the rich countries to commit to very strong cutsin emissions. They could place the following conditions on rich countries and, on condition of
their fulfilment, the developing world should give a ‘commitment to commit’ to targets within
5-10 years:(i) strong performance by the rich countries over the next decade towards meeting targets for
2020, 2025 and 2030, which are tough and fully consistent with a path to reductions inemissions of at least 80% by 2050 relative to 1990;(ii) financial support through the markets and elsewhere for action in the developing world,and strong support in the battle against deforestation; by the 2020s the necessary flows to
support reductions in emissions by developing countries are likely to be in the region of$100bn per annum.7(iii) rich countries to develop new technologies for low-carbon economic growth, whichshould be shared with developing countries; and(iv) substantial assistance in adaptation to those impacts of climate change which are now
inevitable over the next few decades; by the 2020s the necessary additional support (over andabove existing ODA countries) is likely to be in the region of $100bn per annum.8
This would be a framework where the developing world would explain to the rich world
what is necessary and place the conditionality and performance requirements on them.
Conclusion
If the world allows climate responsibility on the one hand, and growth, development and thefight against world poverty, on the other, to become set against each other, the argument is lostfrom the start. The world has both the technology and the economic understanding to move
forward strongly on both simultaneously. In other words the two defining challenges of ourcentury must be tackled together. If we fail to manage climate change we will derail
development and if we try to manage climate change by blocking development we will fail tobuild the global coalition necessary to reduce emissions.
Japan is in a strong position be in the vanguard on climate change. Japan has an enviable
track record of leadership in technological innovation and the world looks to Japan to again
demonstrate this leadership. Strong and effective climate change policy that sets a clear andinstructive example for the rest of the world is crucial. If not the world will ask “if a country
like Japan cannot do this, then how can we?” Japan is pivotal.
At Copenhagen in December 2009, leadership must come from the top; that means
heads of government. The problems of climate change are too wide to be confined only to one

197

or two individual government departments, ministries or negotiators. It is vital that united anddecisive leadership is displayed by heads of government. And if we learn to collaborate on thenecessary scale in this fundamental area we will surely do much better in the many otherimportant areas of international policy.
Rich countries must recognise their responsibilities, especially to developing countries
and take strong action now. Developing countries should place conditions on rich countries,
and on condition of their fulfilment, ‘commit to commit’ to substantial cuts in emissions of
their own. The arithmetic is crystal clear, only a comprehensive agreement that involves bothrich and developing countries can achieve the cuts in emissions necessary to avoid dangerous
climate change.
Action is not led only from the top: it will be the individual understanding of citizens,
communities, companies and NGOs that will drive forward this debate. The understanding
and demands of members of the public are the most fundamental drivers of political change.
It will be this voice that will carry us through to a more responsible future.

Notes
1. For references the reader may wish to consult my recent book “A Blueprint for a Safer Planet”, publishedby Bodley Head in April 2009 (title in the USA is “A Global Deal” and published by Public Affairs), theStern Review on “The Economics of Climate Change” published by Cambridge University Press in January
2007, or the Fourth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC).
2. Note that the effects of climate change operate mostly through water in some shape or form: storms, floods,
drought, sea-level rise.
3. The base of 1990 for emissions reductions is not always stated-but it should be. The 20 Gt CO2e upper limit
in 2050 already involves substantial risk and should not be revised upwards.
4. EU refers to the 27 member countries of the European Union.
5. The reader may wish to consult my recent book “A Blueprint for a Safer Planet”, for a detailed description.
6. We should note that this applies to actual emissions and there are strong arguments for rich countries to not
only limit their actual emissions to these levels but also to fund emissions reductions elsewhere.
7. See, for example, “A Blueprint for a Safer Planet”, Stern, 2009.
8. See, for example, the analysis of the Human Development Report 2007-08 which indicated costs around$85bn p.a. by 2015.

198

Major Publications
Lord (Nicholas) Stern of Brentford
Books
An Appraisal of Tea Production on Smallholdings in Kenya, published by the OECD, Paris, January 1972.
Theories of Economic Growth, edited with J.A. Mirrlees. Proceedings of a conference of the International
Economic Association in Jerusalem, April 1970), Macmillan, 1973.
Crime, The Police and Criminal Statistics (with R.A. Carr-Hill), Academic Press, May 1979.
Palanpur: The Economy of an Indian Village (with C.J. Bliss), Oxford University Press, 1982.
The Theory of Taxation for Developing Countries (edited with D.M.G. Newbery), (Chapter 1, with D. Newbery),(Chapter 2), (Chapter 3), (Chapter 5 with D. Newbery), (Chapter 11, with E. Ahmad), (Chapter 25, with D.
Newbery), World Bank and Oxford University Press, 1987.
The Theory and Practice of Tax Reform in Developing Countries (with E. Ahmad), Cambridge University Press,
1991.
Development Experiences in China and India: Reforms and Modernisation (edited with S.P. Gupta, A. Hussain andW. Byrd), Allied Publishers, Delhi, 1991.
Le Rôle de l'Etat dans le Développement Économique, Editions Payot, Lausanne, 1992. The first annual Conférence
Walras-Pareto delivered at the University of Lausanne, 1-3 May 1991.
Tax Policy and Planning in Developing Countries (with Amaresh Bagchi), Oxford University Press, Delhi, 1991.
Development Experiences in China and India (ed with S.P.Gupta, A,Hussain and W.Byrd), Allied, Delhi, 1991.
Editor of the Transition Report (the EBRD's main annual publication) and the Transition Report Update from 19941999.
Growth Theories Old and New, and the Role of Agriculture in Economic Development, FAO, Rome 1996.
Development Strategy and Management of the Market Economy, Volume I, (with Malinvaud et al.), 1997.
Economic Development in Palanpur over Five Decades (with Peter Lanjouw), Oxford University Press, 1998.
A Strategy for Development, The World Bank, 2002.
A Case for Aid (with Ian Goldin and Halsey Rogers), the World Bank 2002.
State-level Reforms in India, (ed. with Stephen Howes and Ashok Lahiri), Macmillan, Delhi, 2003.
Growth and Empowerment, Making Development Happen, (with Jean-Jacques Dethier and F. Halsey Rogers),
MIT Press, 2005.
Our Common Interest, Report of the Commission for Africa, (as Director of Policy and Research) Commission for
Africa, 2005.
Economics of Climate Change, Cambridge University Press, 2007.
A Blueprint for a Safer Planet: how to manage climate change and create a new era of progress and prosperity,
London: The Bodley Head, 2009 (Also printed as A Global Deal: climate change and the creation of a new eraof progress and prosperity, New York: Public Affairs, 2009.
Articles/Book Chapters
On Fairly Good Plans (with J.A. Mirrlees), Journal of Economic Theory, 4, 268-288, April 1972.
Optimum Development in a Dual Economy, Review of Economic Studies, 39, 171-184, April 1972.
The Optimal Size of Market Areas, Journal of Economic Theory, 2, 4, 154-173, April 1972.
The Optimal Structure of Market Areas (with B. Bollobas), Journal of Economic Theory, 4, 174-179, April 1972.
Experience With the Use of the Little/Mirrlees Method for an Appraisal of Smallholder Tea in Kenya, Bulletin of
the Oxford University Institute of Economics and Statistics, 34, 93-123, April 1972.
Delinquent Generations Revisited (with R.A. Carr-Hill and K. Hope), The European Journal of Methodology:
Quality and Quantity, 2, 327-352, 1972.
An Econometric Model of the Supply and Control of Recorded Offences in England and Wales (with R.A. CarrHill), Journal of Public Economics, 2, 289-318, 1973.
Homogeneous Utility Functions and Equality in 'The Optimum Town': A Note, The Swedish Journal of Economics,
2, 1973.
Pigou, Taxation and Public Goods (with A.B. Atkinson), Review of Economic Studies, 41, 119-128, January 1974.
Determinants of Shadow Prices in Open Dual Economies (with A.K. Dixit), Oxford Economic Papers, 26, 42-53,

199

March 1974.
Professor Bauer on Development: A Review Article, Journal of Development Economics, 1, 191-211, 1974.
Optimum Savings with Economies of Scale (with A.K. Dixit and J.A. Mirrlees), Review of Economic Studies, 42,
303-325, July 1974.
Some Aspects of the Theory of Economic Policy, paper delivered to a conference of the Institute of Mathematics
and its Applications, June 1974, published in the Journal of the I.M.A. in 1975.
On the Specification of Models of Optimum Income Taxation, presented to conference of International Seminar in
Public Economics in Paris in January 1975 and published in the Journal of Public Economics, 6, 123-162, July/
August 1985.
Welfare Weights and the Elasticity of the Marginal Valuation of Income. Published as Chapter 8 in Proceedings of
the AUTE Edinburgh Meeting of April 1976, M. Artis and R. Nobay (eds.), Basil Blackwell, 1977.
Theory and Estimation in Models of Crime and its Social Control and their Relations to Concepts of Social Output(with R.A. Carr-Hill), presented to the International Economic Association Conference on The Economics of
the Public Services, in Turin, April 1974 and published (Chapter 6) by MacMillan for the IEA, Feldstein andInman (eds.), 1976.
Taxation and Labour Supply—A Partial Survey, presented to the Institute for Fiscal Studies Conference on Taxation
and Incentives, January 1976 and published by the IFS, 1976.
Productivity, Wages and Nutrition: Part I Theory, (with C.J. Bliss), Journal of Development Economics, 5, 331-362,
December 1978.
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Optimally Uniform Commodity Taxes, Taste Differences and Lump-sum Grants (with A.S. Deaton), Economics
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The Effects of Taxation, Price Control and Government Contracts in Oligopoly and Monopolistic Competi-tion,
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Comment on 'Social Sector Pricing Policy Revisited' by E. Jimenez, Proceedings of the World Bank Conference on
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Uniformity versus Selectivity in Indirect Taxation, Economics and Politics, 2(1), 83-108, March 1990.
Tax Reform and Shadow Prices for Pakistan (with E. Ahmad), Oxford Economic Papers, 42, 135-159, 1990. Also
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Principles of Taxation for Developing Countries (with E. Ahmad) in Public Policy and Economic Development:
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Comments for the Closing Panel presented at the World Bank Conference on Tax Policy in Developing Countries,
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How Should Ignorance of Response to Incentives Affect Tax Rates?, Economics Letters, 32(4), 335-338, April
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The Employment of Married Women in the UK; 1970-1983 (with J. Gomulka), Economica, 57, 171-199, May
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Policy Reform, Shadow Prices and Market Prices (with J. Drèze), Journal of Public Economics, 42, 1-46, June
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Spending on Alcohol—Evidence from the Family Expenditure Survey 1970-1983 (with A.B. Atkinson and J.
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Effective Demand, Enterprise Reforms and Public Finance in China (with A. Hussain), Economic Policy, 12, 141186, April 1991.
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