Posted by: Grant | September 19, 2012

Nigel Lawson Attacks The Old Stern Review

Fancy a Little High-brow Philosophy?

Nigel Lawson suddenly attacks the laughable old Stern Review which was brought out to “prove” that it was much cheaper to fix Global Warming than to just adapt to it.

Psuedo-science meets psuedo-economics!

Nigel Lawson chides them of their folly.

Nigel Lawson : Rational Climate Economics
Posted on Wednesday 5 September 2012
Paper presented at the Erice conference “The Role of Science in the Third Millennium” –
Erice, 20 August 2012: Session ‘Climate and Climate Economics’

Read Full Transcript Here – PDF –

‘This is an economic session within a conference organized by the World Federation of Scientists. So it is appropriate, perhaps, to begin by asking who, so far as climate change is concerned, have let us down more – the scientists or the economists. In my judgment it is the scientists, not least because we expect so much more of them.
Science is so much greater than economics, and – as a result – the achievements of scientists have, over the years, benefited mankind so much more than the achievements of economists.
Those achievements have been based on one overarching principle: the application of reason, rather than authority, to our understanding of the natural world.
The long march from the middle ages to the enlightenment was the transition from relying on religion and the authority of the church to explain the natural world to relying on the application of reason and the open-minded study of empirical evidence. That is what science is, or should be, about. But in the case of climate science that is no longer the case.
There is now a new religion – the AGW religion, of which scientists are the new priesthood, preaching their dogma with precisely the same claim to authority as the mediaeval catholic church.
The truth is, as the best scientists recognise, that the greenhouse effect is a highly complex phenomenon, and the scale of the climate sensitivity of carbon is hugely uncertain. Moreover, the greenhouse effect is only part of an even more complex and only partially understood overall climate system, and the notion that this can be reliably captured in a computer model is arrogant folly.
But if we have been let down badly by the scientists, the economists are not free from blame, either.
The most culpable economist of all is surely Nicholas Stern, now Lord Stern, whose 700-page review of the economics of climate change purported to show that the cost of a crash programme to reduce carbon emissions would be far outweighed by the benefits of doing so. Although the Stern review is now almost six years old, it remains the explicit basis on which my own country’s damaging climate and energy policies are officially justified, and Stern is taken seriously as an authority worldwide. And although a number of economists – unlike the politicians, the media, and the environmentalists, few of whom had even read it – found fault with it when it was first published, few have stepped up to the plate since.

On 4 September, the Global Warming Policy Foundation, the think-tank I founded some three years ago, will be publishing the most comprehensive examination of the Stern Review to have appeared anywhere. It shows the economic analysis of the Stern Review to be so shoddy as to border on the fraudulent, and wholly unfit to be used as a basis for important policy decisions. I have time today to mention only a few of the defects the GWPF study exposes:

  • It calculates the long-term benefits of decarbonisation by using an abnormal and ludicrously low discount rate, while assessing the costs of this policy by using a normal discount rate.
  • It compares the cost of limiting the extent of global warming with the benefit of eliminating warming altogether.
  • It assumes that there will be no behavioural adaptation that would reduce the adverse effects of a warmer planet, even using existing technological resources, let alone as a result of future technological development while it also assumes that future technological development will greatly reduce the cost of non-CO2-emitting energy.
  • In particular, it assumes the adoption of large-scale carbon capture and storage, a technology that does not at present exist and, which, on present evidence, if it ever were to exist, would be prohibitively costly.
  • It ramps up the alleged cost of warming on the basis of wholly unreliable non-peer-reviewed alarmist literature. A subsequent World Bank study, for example, has shown that Stern’s forecasts of damage to infrastructure from more powerful storms are up to 100 times too large.
  • It suggests that the losses from global warming (it wholly ignores, incidentally, any offsetting benefits from global warming) will be at least 5% of global GDP – and I quote – “each year now and forever”; concealing the fact that even on Stern’s own phoney figuring the cumulative costs of the crash programme he advocates would exceed the cumulative benefits for the next 100 years and more….

 …..But it is immediately clear that this is absurd, for two compelling reasons.
First, as Peter Lilley, the author of the GWPF study, points out, this climate Armageddon can occur only if the climate sensitivity of carbon is very high indeed. The fact that there has been no recorded global warming trend for the past 15 years or so, during which CO2 emissions have grown very rapidly indeed, thanks in large part to remarkable economic growth in China, suggests that the climate sensitivity of carbon is in fact less than is incorporated in the models on which, for example, the IPCC relies. But we cannot entirely rule out the possibility that, over the past 15 years, purely temporary and short-term climate factors have offset and obscured the true underlying warming trend. If so, however, these will by their very nature before long come to an end, and we shall very soon discover whether the climate sensitivity of carbon is in fact as high as Weitzman fears it might be, and will be able to act accordingly.

The second reason why the Weitzman thesis is absurd, is that there are a host of possible planetary emergencies, the principal subject matter of this conference. We simply cannot spend unlimited resources on seeking to eliminate them all. And common sense suggests that the menace of manmade global warming, so far from being, as Weitzman claims, in a league of its own, is probably the least of them.
But there is another and even more fundamental reason why Stern’s decarbonisation prescription (whether based on his own phoney cost-benefit analysis or on Weitzman’s ‘dismal theorem’) is – or should be – a non-starter. Unlike physics, economics is not a science; and the attempts by economists to pretend that it is renders them both ridiculous and of diminishing use to policy makers. Economics is an important aspect of the study of human behaviour. And, unlike the case with science, which is concerned with the natural world, in considering human behaviour we have always to take also into account two non-economic dimensions: ethics and politics…..

….And solar? According to the plan, by 2020 this will meet – wait for it – less than 0.1 per cent of China’s total energy consumption.

In short, climate economics – present company excepted – has been hijacked by a mixture of pseudo-scientific quasi-religion and political fantasy.
It is time to return to reason. Rational climate economics means, quite simply, that, should there be global warming, for whatever reason, and of course there might well be, we will do, in the most cost-effective way that developing technology permits, what humankind has always done.
We will adapt.
In that way we will minimise the disbenefits of any warming that occurs, and pocket the benefits. In the words of the poet, “That is all ye know on earth, and all ye need to know.”

Nobody read the Stern Review because it was patently absurd – if any economist could actually predict the economic future with certainty he would keep it to himself and become fabulously rich and powerful – but some serious economists were stung into actually picking the Stern Review Apart. Here is one –


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