The Economics of Climate Change A Case for Urgent Action Pavan Sukhdev Founder & Author, Corporation 2020 Study Leader, TEEB UNEP Goodwill Ambassador Global Environment Facility Scientific and Technical Advisory Panel 20 March 2013

The Greatest Challenge Scientific Assessment for the GEF by STAP team: Climate change is “one of the single greatest challenges – perhaps the greatest challenge – facing humanity” (Nov 2012). “We have it in our hands to overcome these problems through sound policy, collaborative behaviour, a more far-sighted approach to the consequences of our action, and the processes of discovery about technology, organisation and policy.” –Sir Nicholas Stern, in foreword to Corporation 2020 “[W]hat we do in the next 10 or 20 years can have a profound effect on the climate in the second half of this century and in the next.” –Stern Review of the Economics of Climate Change

What will it cost? Stern Review (2006): “If we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year, now and forever. If a wider range of risks and impacts is taken into account, the estimates of damage could rise to 20% of GDP or more.” “In contrast, the costs of action – reducing greenhouse gas emissions to avoid the worst impacts of climate change [stabilizing between 500 and 550ppm CO2e] – can be limited to around 1% of global GDP each year.” Range is: –1% (net gains) to +3.5% of GDP In 2008, Stern revised his estimate up to 2% of global GDP. And earlier this year, he said that, in contrast to the 2006 report, which said that there is a 75% chance of 2-3 degree rise, he now believes we are “on track for something like four.” We already see 400,000 premature deaths/year from climate change, costing $1.2 trillion, or 1.6% of global GDP.

Summary: What will it cost? Stern: 2% of GDP = $1.4 trillion/year International Energy Agency: $38 trillion over 25 years World Economic Forum: $500 billion/year UNEP: $1.05 to $2.59 trillion/year to meet MDGs and IEA “Blue Map Scenario”. T-21 model scenario used = $1.3 trillion Reasonable estimate: $1.5 trillion/year

How much money is available? Millions of $. Cumulative since Pledged donations. Fund to Fund Transfers Excluded. Data from

From Macro to Micro: Why the transition to a “Green Economy” needs evolution to “Corporation 2020” 2010 data. Source: U.S. Bureau of Economic Analysis

Micro-Policy Reforms to Make Business Deliver a Green Economy Source: “Why Corporation 2020?”, Island Press, 2012 Resource Taxation : Taxing the “bads” more & taxing the “goods” less Limiting Leverage : Introducing rules & limits to govern financial leverage Accountable Advertising : Making advertising responsible & accountable via norms & standards Disclosing Externalities : Measuring & disclosing all major corporate externalities (+ve & -ve) Read more at:

Thank You ! Pavan Sukhdev Founder & Author, Corporation 2020 Study Leader, TEEB UNEP Goodwill Ambassador