Rapid growth and global warming

“The Platinum Age could also be disrupted by poorly thought out approaches to mitigation.

“Stern has presented the results of work that suggests that the global costs of effective mitigation need not be large. On the basis of the application of this analysis to the central forward-looking scenarios of the IPCC, the continuing costs of holding global emissions to levels that greatly reduced the risks of dangerous climate change would be about 1 per cent of GDP, or a modest fraction of one year’s increase in global output. The costs would be somewhat greater if, as I think likely, the underlying rates of emissions growth in the Platinum Age are much greater than presumed in the IPCC scenarios and the Stern Report.

“But the costs of mitigation in practice would depend on the nature of the policies applied to it, and the manner of their implementation. Costs would be minimised within steady policies over long periods that provided incentives that placed with private parties the full external costs and benefits of decisions taken by people and businesses everywhere. Such approaches would allow private decisions within market contexts efficiently to shape the processes of change.

“Poor design, or tardiness in implementation, would increase the costs of mitigation immensely, and compromise the mitigation effort.

“Progress that is later judged to be inadequate is likely to be associated with policy panic, instability and belated concentration of adjustment into disruptively short periods. And there is the ever-present danger of mitigation policies, with their potential to have large effects on the distribution of incomes, being encrusted with the usual political economy of rent-seeking behaviour by vested interests, and becoming intertwined with the familiar distortions in public policies related to trade and investment. For individual countries, and for the world as a whole, such policy distortions can make the difference between strong economic growth and stagnation.

“Income distribution effects will need to be taken into account in design of policies. It is important that there is analytical rigour in design and discipline in implementation of policies designed to secure equitable distribution of the effects of mitigation. Inefficient distribution - an indiscriminate straying of ‘compensation’ towards interests that press strongly for it - would greatly increase the ultimate costs of mitigation.

“Climate change and poorly designed responses to it could bring the Platinum Age to an end. But if they do, it will represent failures in the design and execution of policies.”

Garnaut’s work is vitally important. Read the full discussion here. It will almost certainly lead you to support the Rudd government's attempt to do something about Australia's contribution to the problem.