In this discussion paper Clive Spash of the University of Economics and Business in Vienna critiques the much publicised document released in September: “Better Growth, Better Climate: The New Climate Economy Report” . This report, in which Lord Nicholas Stern was a leading author, is the elite perspective on climate change – that of the most senior politicians, bankers and financiers. The report is a call for continued growth and, as Spash shows, it is deeply flawed theoretically.
“Instead their target, like that of international world leaders, is not preventing climate change but rather risk reduction and management. Conflicting with a basic understanding of uncertainty they adopt a probabilistic approach for strong uncertainty and so make this equivalent to risk. As Keynes pointed out long ago there are important distinctions here. Strong uncertainty is not the same as weak uncertainty or risk. The future is not reducible to a set of objective probabilities and well defined states. Recognising concepts of ignorance and indeterminacy (not least in social, economic and political systems) makes the idea of claiming quantitative probabilities for future states totally absurd. Yet the rhetoric of over optimistic, self-assured, risk management from the business, banking and finance world is prevalent in the technocratic discourse; the same risk management that brought on the financial crises and never saw it coming. Strong uncertainty calls for precaution and avoiding pathways that lead to disastrous scenarios, not deliberately walking down them on the basis of an expert gamblers roll of the risk management dice.”
There’s a lot more in this critique which is well worth a read: