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GLOBAL WARMING'S £10 TRILLION COST
By ALLISTER HEATH
The Scotsman
August 22, 2005

http://business.scotsman.com/economy.cfm?id=1821742005

Preventing global warming would cost the world economy a devastating $18
trillion (£9.9 trillion) even under the most conservative assumptions, a
report out this week will warn.

The cost, equivalent to 45 per cent of world gross domestic product for a
year, is much greater than any conceivable benefit, according to the report
from top economic consultants Lombard Street Research.

Charles Dumas, author of the study, said: "This is orders of magnitude
greater than the cost of dealing with higher sea levels and freak weather,
net of land gains in Canada, Siberia and other cold areas in thousands of
square miles."

The costing is based on the assumption that cutting global warming would
require reducing the world's consumption of oil and energy, and that this in
turn would reduce global growth by 0.5 percentage points a year for five
years. The $18 trillion figure is the net present value of that reduction.
Growth is then assumed to get back to its long-term rate, an estimate which
the author says is very conservative and probably hugely underplays the true
cost of attempting to deal with climate change.

During the past 20 years, world oil consumption has averaged approximately
70 million barrels a day (mpdb). In 2005, consumption is expected to be just
under 84 mbpd, 20 per cent up. So to have any measurable impact on global
warming, oil consumption would have to be cut hugely and quickly, Dumas
said. Two thirds of oil demand growth is in developing Asia, as China, where
dirty coal is the chief form of fuel and greenhouse gas emission, India and
the Pacific Tigers are taking over much of the world's manufacturing and
construction output.

The report warns: "Either this Asian release of record numbers of people
from poverty - one of the great achievements of the past 20 years - will
have to be reversed, or cuts in oil usage will have to be extremely sharp in
developed economies".

No serious economic cost-benefit analysis will ever recommend taking the
radical steps required to prevent global warming, the Lombard Street
Research study says.

Dumas said: "The proposed Kyoto treaty limits would in no way prevent global
warming. In reality, nobody seriously proposes a cure for global warming,
because adequate measures would cause economic catastrophe and probably
world war."

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Published by David Sunfellow
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