No climate action may spark economic crisis - report

LONDON - Ignoring climate change could lead to economic upheaval on the scale of the 1930s Depression, underlining the need for urgent action to combat global warming, a report on the costs of climate change said.

The report by chief British government economist Nicholas Stern, a 27-page summary of which was obtained by Reuters, says the benefits of determined worldwide steps to tackle climate change would greatly outweigh the costs.

The 700-page report, to be published on Monday, said that no matter what we do now the chance "is already almost out of reach" to keep greenhouse gases at a level which scientists say should avoid the worst effects of climate change.

It said the world does not have to choose between tackling climate change and economic growth, contradicting US President George W. Bush who pulled out of the Kyoto Protocol against global warming in part because he said it would cost jobs.

"The evidence gathered by the review leads to a simple conclusion: the benefits of strong, early action considerably outweigh the costs," said the report, prepared for Prime Minister Tony Blair and Chancellor Gordon Brown.

"Our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century," it said.

It precedes UN climate talks, starting in Nairobi on November 6, focussing on finding a successor to Kyoto which ends in 2012.

Blair is pushing for a post-Kyoto framework that would include the United States - the world's biggest producer of greenhouse gases that cause climate change - as well as major developing countries such as China and India.

Kyoto obliges 35 rich nations to cut emissions of greenhouse gases - which come mainly from burning fossil fuels in power plants, factories and cars - by some 5 per cent from 1990 levels by 2008-12. Many Kyoto nations are above target.

Stern said that, on current trends, average global temperatures will rise by 2-3 degrees centigrade within the next 50 years or so, compared with temperatures in 1750-1850.

If emissions continue to grow, the earth could warm by several more degrees, with severe consequences that would hit poor countries most, the former World Bank chief economist said.

Melting glaciers would initially increase flood risk and then reduce water supplies, eventually threatening one-sixth of the world's population, mainly in the Indian sub-continent, parts of China and the South American Andes, he said.

Declining crop yields, especially in Africa, could leave hundreds of millions unable to produce or buy enough food, he said. Rising sea levels could result in tens to hundreds of millions more people flooded each year.

The report estimates stabilising greenhouse gases in the atmosphere will cost about 1 per cent of annual global output by 2050. But if the world does nothing, it could cut global consumption per person by between five and 20 per cent.

Stern called for a coordinated international approach to combat climate change, saying the effort must be shared fairly by rich and poor. He suggested rich nations take responsibility for emissions cuts of 60-80 per cent from 1990 levels by 2050.

Countering global warming would bring new opportunities to industry, he said, estimating the market for low-carbon energy products could be worth at least US$500 billion ($1,432) a year by 2050.

He advocated a doubling of worldwide public spending on research and development into low-carbon technologies and a sharp increase in incentives to encourage people to use them.

Stern said a global carbon price was needed, affixing a clear cost to pollution, and this could be created through tax, trading or regulation.

- REUTERS