Paying for Climate Change

December 6, 2006

Offers an overview of a British government study and an IPCC February 2007 report on climate change.

The recent Stern Report on the Economics of Climate Change, which was commissioned by the British government, received little attention in this country, where, according to the Pew Research Center, less than half of American citizens regard global warming as "a very important issue."

Certainly, Americans have heard plenty of warnings about the growing impact of climate change, but perhaps not so many about its economic consequences, which is a major subject of the Stern Report. Student readings below provides an overview of that report's chief conclusions, as well as a brief summary of the report released by the Intergovernmental Panel on Climate Change in February 2007.

Suggestions for student activities follow the reading. A number of others are offered in earlier materials available on this site, notably "The Unpleasant News About Global Warming" and "Youth Action on Climate Change." Also available on this site are three other sets of materials bearing on climate change: "Problems at the Pump," "Oil and the Bell-Shaped Curve" and "The Controversial Bush Energy Program."


Student Reading 1:

Is climate change "a very important issue"?

When you switch on an electric light, you know that your power company will charge a price. And you know that to fill a car with gas means paying the gas station. But you probably don't know that in each case you aren't being charged enough—and neither are those who produce and dispense electric power and gasoline.

That is the conclusion of a recent report commissioned by the British government, the Stern Report on the Economics of Climate Change. According to the report, the prices we pay for electric power, gas, and other energy products do not reflect their "true costs." Those costs should include the impact of the greenhouse gases they emit. The report's author, Sir Nicholas Stern, the head of Britain's Government Economic Service, presented the report with this declaration: "Our emissions affect the lives of others. When people do not pay for the consequences of their actions, we have market failure. This is the greatest market failure the world has seen." (See,,2-2429399,00.html, 10/31/06 for a link to the complete Stern Report.)

Today many Americans in hurricane-prone areas like New Orleans are paying insurance companies much higher premiums. Many others can't afford the premiums and are taking the risk of leaving their homes uninsured. The premiums are up sharply because hurricanes in 2005 were frequent, powerful, and very destructive, and insurance companies want more money to offset what they view as increased risk.

Global temperatures in 2005 were the warmest ever recorded, and warmer waters in the Gulf of Mexico helped to generate the power of Hurricane Katrina. Several years ago a UN panel of worldwide representatives reported that "most of the warming observed over the last 50 years is attributable to human activities." (

The emissions produced by your power company to generate the power necessary for you to turn on a light contribute to climate change. So do the emissions produced by both a company selling gas and any car using it. So when you turn on a light or buy gas, you are among those responsible for higher insurance premiums paid by other people. This is what Sir Nicholas Stern meant when he talked about the "market failure" that results from people not paying "for the consequences of their actions."

"Precisely the same fuels that gave us our growth now threaten our civilization. Burn a gallon of fuel and you release five pounds of carbon into the atmosphere." (Bill McKibben, National Geographic, August 2006.) Twenty-five percent of these greenhouse gas emissions come from a country with just 3 percent of the world's population: the United States.

The Stern Report said, "Our actions over the coming few decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century." (

Arctic ice is melting, the glaciers in Glacier National Park are disappearing. Climate change is expected to cause sea levels to rise and rivers to dry up. The experts predict major flooding in coastal cities from New York to Shanghai; contamination of drinking water; and the disappearance of low-lying, inhabited islands. The Stern Report states that rising sea levels will threaten one-sixth of the world population, about 1 billion people.

And yet the U.S. has rejected participation in the Kyoto Protocol, a first-step agreement by most nations worldwide to cut emissions. President Bush said the mandatory cuts would harm the American economy.

But the Stern Report asserted that the cost of not cutting emissions by 2050 to 60 percent to 80 percent below 1990 levels could be five to twenty times higher than the cost of cutting them. It estimated the cost of stabilizing greenhouse gas emissions at about one percent of the annual global gross domestic product—that is, one percent of the world's total production and services—or about half a trillion dollars.

By comparison, the world's spending on military defense is about 2.5 percent of global gross domestic product or just over $1 trillion, according to the Stockholm International Peace Research Institute. Military spending in the United States is about 3.7 percent of gross domestic product. ( New York Times, 10/30/06)

What can be done? The report urged a number of actions, including:

  • Taxing corporations and other organizations to pay for the side effects of their activities, such as environmental pollution
  • Doubling global investment in climate-friendly energy research
  • Reducing consumer demand for goods and services responsible for heavy pollution
  • Promoting non-carbon, cleaner energy technology—wind farms, solar cells, nuclear reactors
  • Halting deforestation

Such actions will be expensive. But if the world continues on its present course, even more expensive problems will emerge, including: higher property-insurance premiums in Florida; devastation of the Great Barrier reef that will also devastate the Australian tourist business; the spread of insect-borne diseases like malaria, which has already reached higher altitudes in Africa as temperatures rise; water shortages in the Mediterranean region that will lower crop yields for Italian farmers; and forced migration from places like Bangladesh, which will be partly under water.

According to a recent Pew Research Center survey, less than half of the American public regards global warming as a "very important issue." ( George Schaller asks, "We are supposed to have an educated public, but where is it? Our schools and universities have failed to instill an environmental awareness." ( National Geographic, October 2006)


For discussion
1. What questions do students have about the reading? How might they be answered?

2. What does Sir Nicholas Stern mean by "market failure"? How are you contributing to market failure?

3. In rejecting U.S. participation in the Kyoto Protocol, an international agreement whose goal is to reduce greenhouse gas emissions, President Bush said that compulsory reductions by U.S. corporations and organizations would have a negative effect on the American economy. How would Sir Nicholas Stern answer the president?

4. Consider the report's action suggestions. How might a corporate tax for environmental pollution be determined and implemented? How would we double global investment in energy research? How would we reduce consumer demand for polluting goods and services? How would we promote cleaner energy technology? How would deforestation be halted? What problems can you envision arising from any of these actions? What solutions might there be?

5. Do you think that your school has "failed to instill an environmental awareness"? Why or why not?


Student Reading 2:

A New and Authoritative Report on Global Climate Change

The most recent authoritative assessment of global climate change (2/2/07) is a product of the Intergovernmental Panel on Climate Change (IPCC). This panel, created by the United Nations in 1988, is the most important international network of climate scientists.

Its conclusions are clear, powerful and unpleasant:

1. Human activities since the beginning of the industrial revolution are the main force behind the global build-up of concentrations of atmospheric greenhouse gases.

2. It has been confirmed by many observations that these concentrations are causing global warming.

3. As a result of the buildup of greenhouse gases, we will continue to see climbing temperatures, rising seas, and changing weather patterns for centuries.

4. If human activities do not result in significant cuts in greenhouse gas emissions, further warming will occur and cause additional changes in the global climate system.

5. Prompt action can reduce some of the harmful results of climate change.

Quotes from the report:

  • "Global atmospheric concentrations of carbon dioxide, methane, and nitrous oxides have increased markedly as a result of human activities since 1750 and now far exceed pre-industrial values determined from ice cores spanning many thousands of years. The atmospheric concentrations of carbon dioxide in 2005 exceeds by far the natural ranges over the last 650,000 years."
  • "Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of ice and snow, and rising global mean sea level. Eleven of the last twelve years [1995-2006] rank among the 12 warmest years in the instrumental record of global surface temperatures [since 1850], long-term changes in climate have been observed [and] include aspects of extreme weather including droughts, heavy precipitation, heat waves, and the intensity of tropical cyclones."
  • "Continued greenhouse gas emissions at or above current rates would cause further warming and induce many changes in the global climate system during the 21st century that would very likely be larger than those observed in the 20th century."
  • The IPPC reports declares "very high confidence" that the globally averaged net effect of human activities since 1750 has been one of warming."
  • "Most of the observed increase in globally averaged temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic [human-influenced] greenhouse gas concentrations. Discernible human influence now extends to other aspects of climate, including ocean warming, continental-average temperatures, temperature extremes and wind patterns."

These and other conclusions "came after a three-year review of hundreds of studies of past climate shifts; observations of retreating ice, warming and rising seas, and other changes around the planet; and a greatly expanded suite of supercomputer simulations used to test how the earth will respond to a growing blanket of gases that hold heat in the atmosphere." (Elisabeth Rosenthal and Andrew C. Revkin, "Science Panel Says Global Warming Is 'Unequivocal," New York Times, 2/3/07)

This report is intended to provide scientific findings on global climate change, not make recommendations for action. However, the IPCC will provide recommendations in a later report.

Achim Steiner, executive director of the United Nations Environment Program, which, along with the World Meteorological Organization, administers IPPC, said, "In our daily lives we all respond urgently to dangers that are much less likely than climate change to affect the future of our children. February 2 will be remembered as the date when uncertainty was removed as to whether humans had anything to do with climate change on this planet. The evidence is on the table."

John Holdren, an energy and climate expert at Harvard and president of the American Association for the Advancement of Science, said the report "powerfully underscores the need for a massive effort to slow the pace of global climatic disruption before intolerable consequences become inevitable." ( New York Times, 2/3/07)

Note: The IPCC report of 2001, as well as the current one, are available online at


For discussion

1. What questions do students have on the IPCC report? How might they be answered?

2. What has the industrial revolution, which began around 1750, got to do with global climate change?

3. Why does the report say the climate change is "unequivocal"?

4. Why might continued greenhouse gas emissions at or above current rates be "very likely" to induce changes larger than those that occurred in the 20th century?

5. The IPCC report has received much attention. Why do you think it has?


For inquiry and group discussion

Ask students to keep a week-long log of the sources of greenhouse gas emissions generated by the actions of people in their family, including themselves. Teachers might also keep their own log. At the end of the week organize small-group discussions for sharing of information. Then have a class discussion of findings and how families might change their behavior to curb their greenhouse gas emissions.

For writing

Discuss one of the following:

1. Is climate change "a very important issue"?

2. Sir Nicholas Stern: "When people do not pay for the consequences of their actions, we have market failure."

3. Bill McKibben: "Precisely the same fuels that gave us our growth now threaten our civilizations."

4. George Schaller: "We are supposed to have an educated public, but where is it?"

For citizenship

See suggestions in "The Unpleasant News About Global Warming" and "Youth Action on Climate Change."

Th is lesson was written for TeachableMoment.Org, a project of Morningside Center for Teaching Social Responsibility. We welcome your comments. Please email them to: