‘There are great opportunities for clean growth’

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Nicholas Stern was in India last week to deliver a series of lectures on climate change. The British economist shot into fame last year with the publication of the Stern Review of the Economics of Climate Change. The report concluded that the cost of action is cheaper than inaction. It was based on the calculation that an investment of1% of global GDP per annum in reducing the emission of greenhouse gases can help avoid the worst effects of global warming, which can cause loss of up to 20% of the global GDP. Though the calculations have come in for criticism from some economists for the discount procedure used, the report has become arguably the most important reference work on the economics of climate change. Stern also holds the first IG Patel Chair of Economics and Government at the London School of Economics and Political Science (LSE). Besides, he is director of the school’s India Observatory. Excerpts from an interview with FE’s Rajiv Tikoo:

It’s exactly one year since you came out with the climate change report. Has anything changed in this year to merit revising the methodology used or conclusions arrived at?

The evidence and analysis that have come in during the last year have strengthened still further the conclusion that the cost of action to combat climate change is much less than the cost of inaction in terms of the damage climate change will cause. The International Energy Agency and McKinsey have also published works showing the cost of action a little below our estimates. The fourth Assessment Report of the IPCC has demonstrated that the risks of uncurtailed climate change are even greater that those stated in our analysis. And the policies we have recommended—carbon pricing, support for clean technology and so on—are being increasingly implemented.

You have been meeting Indian politicians, policymakers and thought leaders to discuss the issue of climate change. What is you take on the their position?

I have come as an academic and have delivered lectures in this capacity. I have also had the opportunity to talk to ministers and civil servants on climate change policy. India is very vulnerable to climate change and will, I hope, support the Heiligendamm objective of cutting emissions by 50% by 2050. But India should also emphasise very strongly its very low emissions and the responsibilities of rich countries to lead.

Is it realistically possible for India to balance its economic growth with carbon emission reduction?

India’s growth ambitions are understandable and desirable in the fight to raise living standards, particularly of poor people. I think India can find a way to achieve low-carbon growth, particularly with support from rich countries through clean technology at reasonable prices and carbon financing. And it has a right to such support.

Will it help to position climate change more as a market opportunity than a low-carbon growth?

There are great opportunities to deliver and implement clean technologies that will create economic opportunities and deliver much clean growth than that followed by rich countries. And it will also bring in many other associated environmental benefits such as biodiversity and forest preservation.

What is the kind of role you see for India in helping to negotiate a post-Kyoto regime?

India has a special position with its international respect and low-emissions to lead the building of an equitable and efficient global deal on climate change. It should insist on strong actions, as in Heiligendamm, because it’s very vulnerable. Climate change will bring increased problems of floods, droughts, storms and sea level rise. Water management will be vital but difficult. Precious resources will become increasingly scarce. India could also become much more energy efficient.

You hold the IG Patel Chair at the LSE. You are also head of the India Observatory? What does it mean to you? Will it help you influence Indo-British bilateral cooperation in dealing with climate change?

Dr IG Patel was a very distinguished national and international statesman and a much admired and regarded director of the LSE. He was a guide and friend to me. The RBI and the SBI have not only endowed the chair, but also supported the India Observatory. It will foster and encourage research on India, including on climate change, and I hope it will contribute to mutual understanding and good policy.

How has Palanpur, Uttar Pradesh, changed since you lived and worked there in early seventies?

Palanpur has grown in a similar way as the rest of rural Uttar Pradesh. It has seen growth, but at a much slower rate than the rest of India. Rural India requires strong investment in infrastructure and agriculture if it’s to avoid falling still further behind and Palanpur is no exception.

How does it feel being called the rock star of climate change?