The economics of tackling climate change
Authors: Ian Roberts
Journal: BMJ (2008)

Tony Blair welcomed the publication of the Stern review on the economics of climate change calling it a wake up call to the world.1 Its message was clear. The costs of taking action to stabilise the climate will be high but much less than the costs of inaction. Delay would be dangerous. Action is needed now. The review also exposed the economic cause of climate change. Climate change is market failure on the greatest scale the world has ever seen.1

Markets fail to provide the right quantity of goods and services when important costs are left out of our private economic decision making. In general, the extent to which people engage in activities that result in the emission of greenhouse gases depends on the cost of those activities. For example, when deciding whether to travel by car we might consider the cost of the time, petrol, parking, and wear and tear on the vehicle. Londoners might include the congestion charge, but few people would take into account the costs to the world and future generations of the emissions that their journey will produce. Costs on others that do not (without public action) enter into the private arithmetic of how we allocate resources are called externalities and are the economic basis of one of the greatest threats humanity has ever faced.

While economists have been grappling with the resource implications of policies to tackle climate change, the public health implications of these policies have also come under scrutiny.2 The message this time is that they present unrivalled opportunities for improving public health. Policies that reduce greenhouse gas emissions could also substantially reduce obesity, diabetes, heart disease, cancer, road deaths and injuries, and air pollution.2

Take food production for instance, which results in substantial greenhouse emissions, similar in magnitude to those from transport or industry.1 Livestock rearing for meat and dairy produce is a major source of emissions, including methane from enteric fermentation and carbon dioxide as a result of land clearance for cattle farming.3 Polices that internalise the environmental costs of livestock production would reduce the consumption of animal products. This would help stabilise the climate, but would also—by reducing the amount of saturated fat and meat in the diet—reduce the incidence of cardiovascular disease and bowel cancer.3 Similar policies on other foods might decrease the consumption of the carbon intensive fats and refined sugars that are helping to fuel the obesity pandemic.4

The transition to a low carbon transport system that involved more walking and cycling would substantially benefit health.5 Road traffic crashes account for 1.2 million deaths worldwide each year and 10 times as many serious injuries. Their incidence is a function of the use of fossil fuels by the transport sector.6 After all, the kinetic energy that breaks bones and tears soft tissues comes from the chemical energy stored in the fuel tank, the burning of which emits carbon dioxide. Death rates for pedestrians and cyclists exhibit steep social gradients, and reducing traffic volumes and speeds would have important equity implications.7 Urban air pollution—much of which is related to transport—causes a further 800 000 premature deaths each year.5 Walking, cycling, or using public transport instead of travelling by car would reduce the use of energy from fossil fuels; it would also reduce traffic injuries and air pollution. By increasing physical activity it would tackle the output side of the personal energy balance equation, again with implications for obesity.

Improvements in the efficiency of home energy will reduce mortality and morbidity from the extremes of heat and cold and reduce the vulnerability of the poor to fluctuations in the price of energy.8 Greater use of renewable energy sources will also reduce urban air pollution. In generating electricity, the energy sources with the highest carbon dioxide emission profiles also have the greatest effect on air pollution and the incidence of occupational injuries.9

Providing access to clean energy for the 2.4 billion people who use biomass fuels for cooking would reduce the burden of mortality and morbidity from indoor air pollution, and universal access to clean electricity could initiate a tidal wave of human creativity and accelerate the pace of human development.2 10

Like Tony Blair, Gordon Brown also welcomed the Stern review calling it “the most comprehensive analysis yet” and commenting that “above all environmental policy is economic policy.” Stern acknowledged that any positive effects of tackling climate change over and above those detailed in his review would strengthen the economic argument for stabilising the climate. The full extent of the health benefits is only now coming to light.

Climate change, a globally important externality, is at least partly the result of leaving environmental impact out of economic decision making. To leave out health when considering the benefits of policies that tackle climate change would be a second serious omission. Environmental policy is economic policy. It is also health policy. Economists and health professionals must work together to ensure that the effects of environmental policies on health and development are quantified and included in the economic models that inform our collective response to the threat from climate change.

It would not be the first time that environmental policy had substantial benefits for health. Two hundred years ago the streets of London were awash with sewage. In 1858 the smell from the Thames was so strong that MPs declared the House of Commons “unusable.”11 Infectious disease was a deadly scourge, but it was the “great stink” of 1858 that helped secure the funds needed to sort out London’s sewage. Policy on sewage did more to improve the health of Londoners than any health policy that century. Indeed, in a recent BMJ poll, sanitation was voted the greatest medical advance in the past 166 years.12 Could tackling climate be the next great medical advance?