[Climate change] is a global market failure, in the sense that we by our emissions damage other people wherever they are in the world. And it means that countries have to act together...the challenge to us all, to really go forward and turn this into a collective action on an international scale.
-- Sir Nicholas Stern on the BBC News Hour, 30 Oct. 2006
NYSE, NASDAQ, NYMEX, NYBOT, Wall Street: New York City is the world's financial capital (although London is breathing down Lady Liberty's neck...). In this era of global climate disruption, New York's financial community has a special responsibility to lead the world's markets and business moguls in curtailing the warming of the planet. And it can harness a powerful economic opportunity in the process.
The Stern Review on the Economics of Climate Change, released Monday, makes it clear that while largely ignoring the impending impacts of global warming will lead to a major world economic downturn, spending just a tad of the world's gross domestic product now on shifting quickly into low-carbon economies will spur significant economic growth.
The Stern Review is causing a stir, in large part because Stern himself is no treehugger; he was Chief Economist of the World Bank from 2000-2003. Yet his comments marry the earth sciences to the dismal science in a way that should warm a deep green environmentalist's heart: "... the climate sets the environment for all economic activity," Stern told the BBC. "It influences the way we use water, it influences the agriculture. It comes in through the role of storms and sea level rises. All of these things influence economic activity in a very direct way."
The average Wall Street professional may experience a spinal chill, however, at the Stern Review's stark economic predictions if climate disruption is allowed to progress unabated. As Alan AtKisson wrote on WorldChanging global earlier in the week,
The numbers underscore the point: addressing the problem now will cost about 1% of GDP per year. Doing nothing, say the economic models, will cost the world the loss of 5% GDP per year -- "now and forever" says the report, evoking an almost religious tone. That 5% figure is actually the best case scenario for doing nothing: if all the risk factors are taken into account, and they all hit home (an appropriate phrase in this case, since our homes are what they will hit), then the figure could be as high as 20%.
But as Alan goes on to note, those "costs" can really be framed as investments -- in energy use reduction, developing and deploying of clean energy, and producing new materials, for example. All these activities will create growth: tens of thousands of new jobs, a slew of profitable products and industries, and the simple savings that will come from having relatively undisrupted global agriculture, water supply, and infrastructure, more or less in the manner we've been accustomed to for past several thousand years.
Wall Street can play a huge role in both easing and hastening the "decarbonisation" of the world economy. We've seen signs of such a shift in the past year or so in corporate actions like GE's commitment to "ecomagination", and DuPont's to a new slate of sustainability goals. But the U.S., in both policy and economic practice, remains well behind cohorts in Europe and Asia in taking action on global warming. Indeed, it's partly the economic activity generated by the European Climate Exchange (the ECX) that may let London nudge New York aside as the world's financial capital.
What will it take to bring the whole of NYC's financial community around to factoring climate risk into business as usual? It's a compelling opportunity to lead the globe in definitive, effective action to avoid the worst impacts of a disrupted climate.
Image: U.S. Fish and Wildlife Service