Ian Castles has been a frequent and welcome poster here. It must be very gratifying for him to see the following announcement on Oct. 12, 2005:
The [U.K.] Chancellor announced on 19 July 2005 that he had asked Sir Nicholas Stern to lead a major review of the economics of climate change, to understand more comprehensively the nature of the economic challenges and how they can be met, in the UK and globally.
The Terms of Reference for the review have now been announced and are annexed to this Press Notice. A call for evidence has also been issued.
The review will be taken forward jointly by the Cabinet Office and HM Treasury, and will report to the Prime Minister and Chancellor by Autumn 2006. It takes place within the context of existing national and international climate change policy.
Ian’s associate, David Henderson, has written the following background note on the Stern Review, which I’ve reproduced here.
David Henderson writes:
Over the past three years I and an Australian colleague, Ian Castles, have presented and developed a critique of the treatment of economic issues by the Intergovernmental Panel on Climate Change (IPCC). The Panel, through its Chairman, has dismissed us as purveyors of disinformation and described us as “Åso-called “two independent commentators”‘.
A feature that we have consistently stressed in our critique is the strange and culpable failure of treasuries and finance ministries to involve themselves in questions of climate change and policies relating to it. Despite the large amounts that are at stake, these ministries, including Her Majesty’s Treasury, have been content to leave the economic aspects to be dealt with exclusively, as they have seen fit, by environmental departments and agencies.
Whitehall showed no interest in what we had written. But in April 2004 Lord Taverne asked in the House of Lords “ÅWhether [the Government] are satisfied with the economic and statistical work of the Intergovernmental Panel on Climate Change’. On behalf of the government, Baroness Farrington replied:
“ÅMy Lords, we are satisfied that the economic work of the IPCC is the most comprehensive assessment available. We note that it represents consensus between governments based on careful analysis’.
This long-established official position remained unchallenged until this summer, when a new element appeared on the scene.
The new element is an impressive report, entitled “ÅEconomic Aspects of Climate Change’, from the House of Lords Select Committee on Economic Affairs, a high-powered body. The report was unanimous. In the opening paragraph of the Abstract, the Committee “Åcalls on the Government to give HM Treasury a more extensive role, both in examining the costs and benefits of climate change and presenting then to the United Kingdom public, and in the work of the [IPCC].’ The decision to launch the Stern Review was almost certainly prompted by this and other criticisms of the official government line, as also of the IPCC, voiced by the Select Committee.
Does the decision imply that government polices on climate change have been, or are about to be, radically recast? In my view, this is not the case. All the same, the government has shifted its position in one important respect, though without saying so.
The complacent words that her officials put into the mouth of Baroness Farrington in April last year, as quoted above, have been tacitly eaten. If the IPCC’s handling of economic issues was truly beyond challenge, the Stern Review would have no point. By commissioning the review, and by suggesting that it could contribute usefully to the IPCC’s Fourth Assessment Report which was launched almost two years ago, a British government has conceded for the first time that the IPCC process is less than wholly authoritative and could be improved from outside. This is a welcome though belated development.
Westminster Business School
David Henderson CMG was formerly Head of the Economics and Statistics Department of the Organisation for Economic Cooperation and Development (OECD). In 1985 he gave the BBC Reith Lectures. [Currently he is a Visiting Professor at the Westminster Business School in London.]