Climate change: The cost of global warming

The Stern Review is the most comprehensive study ever performed on the economics of climate change. According to the report commissioned by the UK Chancellor, pre-industrial level of greenhouse gases in the atmosphere was 280 ppm CO2 equivalents (CO2e) and today's level is 430 ppm CO2e and increasing by over 2 ppm per year. If actions are not implemented, this level will continue to rise and in the long term could induce climate change involving a 5°C rise in the global average temperature. Such a scenario would inflict damage costing 5-20% of GDP or more (depending on the range of risks and impacts examined) and would reshape the Earth's geography: agricultural productivity would probably drop in most parts of the world, flooding, storms and droughts would increase and doing nothing to address climate change is predicted to be far more costly than taking measures to reduce greenhouse gas emissions. According to Stern, the latter would cost roughly 1% of GDP per year. It is estimated that by shifting the world onto a low-carbon path, benefits could add up to USD 2.5 trillion per year. Emissions reductions can be achieved by increased energy efficiency, promotion of sustainable forestry, changes in demand and the adoption of clean power, heat and transport technologies including the use of biofuels. The power and transport sectors will need to implement major changes in strategy in order to stabilize emissions levels at or below 550 ppm by 2050.