UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 177-iv

House of COMMONS

MINUTES OF EVIDENCE

TAKEN BEFORE

INTERNATIONAL DEVELOPMENT

 

 

SUSTAINABLE DEVELOPMENT IN A CHANGING CLIMATE

 

 

Wednesday 11 March 2009

PROFESSOR LORD STERN OF BRENTFORD

Evidence heard in Public Questions 192 - 222

 

 

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Oral Evidence

Taken before the International Development Committee

on Wednesday 11 March 2009

Members present

Malcolm Bruce, in the Chair

John Battle

Hugh Bayley

Richard Burden

Mr Mark Hendrick

Daniel Kawczynski

Mr Marsha Singh

Andrew Stunnell

________________

Witness: Professor Lord Stern of Brentford, a Member of the House of Lords, gave evidence.

Q192 Chairman: Good afternoon, Lord Stern. Thank you very much for coming to give us evidence. Clearly your report has had quite a lot of reverberations around the world in terms of stimulating debate, and not everybody, obviously, agrees with all of your conclusions and recommendations, but since you published it first, clearly the economy worldwide has moved into downturn. I wonder if you might initially indicate how you feel that that is going to affect both your recommendations and, given that you are just about to go off to Copenhagen, what you think it does to the likelihood, or not, of securing agreement in Copenhagen given, as an add on, the suggestion this morning that what America would be required to do is undeliverable because it would promote a revolution if they tried it, and that might prejudice anybody else's preparedness to agree to deeper cuts.

Professor Lord Stern of Brentford: The first thing that has happened since the report came out that I would want to underline is that the scientific evidence is telling us that the problem is more severe than we described in the report. Emissions are growing faster, the absorptive capacity of the earth is less and some of the effects seem to be coming through faster, so from that perspective, looking back, I think I underestimated the risks. The second thing that has happened since it came out is that technical progress has been spectacularly rapid and the number of new ideas coming to forward on low carbon technologies is quite remarkable, and that is moving at a very encouraging rate. The third thing is the development of international commitment on this issue has been strong whether you look in the developing world or particularly in the United States of America. So I think those three pieces of context are crucial before stepping into the global downturn, which is, indeed, very important, but I think the risk story and the movement of technology and the deepening commitment, all those three things, have made it more likely that we will get a deal. I am not saying that that probability is anywhere near 200 per cent, it absolutely is not, but those three things have made it more likely. What is the role in that context of the most serious economic crisis we have seen for 80 years? My own view is that, if we think carefully, we would recognise this as an opportunity to accelerate towards the low carbon growth path that we as a world are going to have to follow. Why? Because resources are cheaper when some of them are idle. So resources are cheaper and there is opportunity to bring forward investments in low carbon energy. Insulation is a striking example, but so is various aspects of green infrastructure. To introduce taxes or prices through trading is also easier when prices of hydrocarbon are lower, as they are during a recession, so there are some aspects of this that should make policy-making easier. We should be drawing a conclusion from this that, if we delay action on risk, the consequences of our delayed action become more serious. That surely would be one lesson that we learn from this economic crisis. Another lesson we should learn from this economic crisis is that we should be looking for a way out of this which lays the foundation for a continued period of growth. After the .com crisis, we ended up creating the bubble conditions which took us into the next crisis. My own view is that there is a whole collection of powerful reasons, along the lines I have just described, why this should be an opportunity to accelerate action. So I think the crisis would become a difficulty, which of course is a fundamental difficulty for everything, but the crisis would become a particular difficulty for the climate change agenda and the agreement in Copenhagen only if we let it become so by not recognising the logic of the argument. In other words, it would be confused analysis that would take us to the view that we had to postpone until we sorted this one out.

Chairman: So you remain resolute in proving that economics does not have to be a dismal science in that context. I am going to ask Mark Hendrick to come in, because he has got a supplementary which follows on from what you have just said.

Q193 Mr Hendrick: Would you say that the economic downturn in itself will provide incentives for countries to cut greenhouse gas emissions, and, if so, which countries do you think could make best use of it and what particular sectors of industry do you think could take action?

Professor Lord Stern of Brentford: There is one unwelcome reason for cutting greenhouse gases, which is a sharp reduction in output and economic activity, and I would not want to recommend that as a way of cutting greenhouse gases - this is about low carbon growth, not about low growth - but your question was about the incentives to cut. I think I gave part of the answer in my earlier remarks, that some of the kinds of things you would want to do, for example, insulation, make sense still more strongly now when the resources used in investing in that insulation have a lower value but the returns that to that insulation, which would last over many, many years - things like that, by lowering the cost in a context where the returns to that investment would be likely to be fairly similar - would give an incentive in countries where that kind of energy efficiency investment is there, and Northern Europe and, indeed, the UK would be examples of that one, but otherwise I think it would be largely of the kind of examples I gave in my answer to the previous question, which is that this is a good time to invest more generally and that we ought to be, as we are thinking through the recession, thinking about the longer term growth path, but everybody has an incentive to be energy efficient - the United States, China, Europe. We all have an incentive to find low carbon growth; we all have an incentive from the perspective of the world to help fight deforestation. Those are the three very big areas of activity, and I think we all share quite strong incentives, so I am not sure I would go too strongly about how this radically shifts the pattern.

Chairman: Stop there. We will vote and return as quickly as possible. As soon as we are quorate we will recommence.

The Committee suspended from 2.11 pm to 2.19 pm for a division in the House.

 

Chairman: Could we resume? There is the threat of another division, so we will just have to do our very best.

Q194 Mr Hendrick: Lord Stern, I am sorry about the interruption. Following on from our previous question in terms of action that can be taken, obviously the committee's focus is on developing countries. I know you mentioned China and particularly one of the measures you mentioned was energy efficiency and loft insulation. Obviously that is not as much of an issue in places like Africa, where they do not have heating, they are looking at possibly cooling. What particular technologies do you think could be of best use at this moment in time and do you think that there are incentives there given the current economic downturn?

Professor Lord Stern of Brentford: In Africa there would be opportunities, where the infrastructure investment is mostly to come, to invest in much lower carbon infrastructure. So it would seem the arguments for switching now to solar energy, concentrated solar, for new power stations in much of Africa would be pretty powerful, and some people have looked at that and said that they are already, even without a carbon price, looking more attractive than coal-fired power stations. So for countries in which, as it were, the infrastructure is much less strong and whose investments there will be coming strongly in the future particularly if they have a lot of solar potential, I think that would be one area, but I would not link that so much to the depression, or the recession, or the slowdown, whatever word we are allowed to use, because I think this is a story of basic growth and development decisions. Looking forward to the context of low carbon growth, countries are highly differentiated in their opportunities and where they start, but I think that is a more medium-term, basic strategic development question than a slow-down question.

Q195 John Battle: I wonder if I could ask you about the repayments, if you like, for the polluter. If the polluter should pay, who should pay the cost of the damage? Recently there have been some remarks in the press that, for example, we import things from China. For simply saying that China is behind us in their effects in polluting and not doing enough to combat climate change, we should pay the price for the clean up of China because we import their goods. What would be your response to those interlocking arguments that are really saying we are the cause of the problem? It starts to echo a bit like the reparation payments for history, but I wonder what your response would be.

Professor Lord Stern of Brentford: There are a number of bits to that. The first thing is to get the incentives right. Without some kind of price on greenhouse gases, and there are various ways of doing that which we could discuss, you have an enormous market failure. So the first part of the story is to correct the market failure and get the markets to work well, and you need a price on the damage to do that. That is for efficient operation of markets from now on, that is an argument about market incentives and fixing markets; there is a separate story, which has more to do with rights and justice, which is looking backwards and saying: who is responsible for what? The way in which I think that best comes in is through the rich countries taking very strong targets, because they are responsible for more of the stuff that is in the atmosphere, they are pumping it out much more rapidly because they have much higher emissions per capita and they have got the technologies and they have got the wealth, but I think they are two separate kinds of questions, although they have some relationship. The last part is how do we get an understanding of what the consequences of my actions now really are in terms of the production that comes forward to meet the demands that I expressed? I think both production and consumption are relevant. I would not turn it into a horse race, one against the other. When the international division of labour changes, as it has changed quite dramatically over the last two or three years, there are gains to the producer and there are gains to the buyer; so those people who produce stuff which is more polluting than elsewhere have some gains from that international division of labour. On the other hand, those people who are consuming and demanding are demanding those products. So I actually think that we should look both at the emissions that originate in a country and that come afterwards.

Q196 John Battle: I think I agree, because I think we are still living in a nineteenth century version of what produce and consume is, and by that I mean there is a kind of traditional view, particularly in the media, that China is now a factories place, whereas Leeds is a service sector, for example. They will be the heavy producers, we import from them and, therefore, we should help them clear up. If I give another example to push the point a bit further, because I am looking at whether a framework of consumer accounting would help at all to provide direct benefits to developing countries. If I give the example of soy production in Brazil, the rain forest is being cleared for soy production which is for export to fatten up pigs, cattle, hens and chickens here for us to consume. If you push the carbon footprint back or, rather, the analysis of that food production, obviously soy production is destroying the rain forest, which is the carbon sink, so who should pay there? I am looking to see whether, accepting your point, and producers are the consumers, but should there be a framework of consumer accounting that would provide some direct benefit back to developing countries, for example?

Professor Lord Stern of Brentford: I tried to describe that in what I said. If you are looking at how much each country emits, I think it would be quite valuable to have two sets of accounts. One would be the production side and the other would be the consumption side. In the case of the UK, I myself have not run the numbers, but some people have, and you would find that from the consumption point of view of the accounting the UK's emissions per head, which are 11 or 12 from a production point of view, would be considerably higher from a consumption point of view. I think both those figures are relevant to assessing what our contribution is going forward and what our responsibility is looking backwards.

Q197 John Battle: It might mean that that would be a much greater price on the north world than the south world in the end.

Professor Lord Stern of Brentford: It would be. If you decided that each person had a fixed amount, there are many ways of doing this but, for the sake of this argument, if you decided that people would have, say, a roughly similar amount of quotas, then how much would we have to buy as the UK, we would have to buy more if the calculations on what we were actually emitting were done on a consumption base than a production base.

Q198 John Battle: It would also mean as well as switching the light switches off and making personal contributions, some people might have to ask questions about how many over fed chickens they consume at the expense of the rain forest. So putting the chain right back through, there could be some quite big questions.

Professor Lord Stern of Brentford: Yes, but if you are not a vegetarian, then the ranking on the meat you should worry about is that beef is the most problematic, then pork, then chicken, and then, of course, not eating meat at all.

Chairman: A supplementary from Hugh Bayley.

Q199 Hugh Bayley: Your report was based on the best science available at the time, but my instinct is that the scientists are predicting greater impacts. There was a report on The Today Programme suggesting that sea levels will rise further than was predicted against a two degree average increase in global temperatures. Do you share that view, that the scientific base is harsher now than it was at the time you wrote your report, and to what extent would it be possible to update periodically, as the science changes, the findings in your report? For instance, on the basis of the science at the time you wrote the report, you said that 145 to 220 million additional persons could fall below the two dollar poverty line - updating indicators like that.

Professor Lord Stern of Brentford: In my opening remarks I did emphasise that emissions are increasing faster than we thought, the absorptive capacity of the planet is less than we thought, therefore the stocks are going up faster than we thought and, further, given any stock or temperature level, some of the effects seem to be coming through faster than we thought. So I do, indeed, agree that the emergence of further evidence on the science over these past two or three years has made it look more worrying than we set out - I should say, even more worrying than we set out in the report - and that is why I think that our targets for the levels below which concentration should be held should be stronger than we suggested in the report. In the report we suggested trying to make sure concentrations stayed in the region of 450 to 550 parts per million CO₂ equivalent, and I think I would now argue that 500 is the maximum emission, to try to keep things below that, and then over time bring it on down from there. We are 435 at the moment and we will be at 450 in six or seven years, but I think we could keep it below 500 and bring it down from there. So I would both argue that the risks are bigger and because of that the targets should be tougher than was set out in the report. Do we plan to periodically update it? I have got a book coming out on 2 April called The Blue Print for a Safer Planet. Doubtless the committee will buy copies and circulate them around the membership! I have tried to articulate the kinds of things I have just described in that book, but it is only 200 pages. It is supposed to be a wider circulation. Do we plan update all the numbers in the Stern Review periodically? I think that probably would be beyond me, but I do know that the work continues and there is a tremendous amount coming out, but I think one has to rely on the profession more generally. I do not think there will be a Stern second edition in that sense.

Q200 Richard Burden: I would like to ask you to say a little bit more about how you see growth. You have been very clear in saying you are low carbon growth, not anti-growth per se, and you have always made the point that you do not see there being a contradiction of development in the pro-poor growth and low carbon growth. I would like to press you a little bit on what you mean by that, because there are a number of commentators who say there is actually a conflict there. Either environmental objectives do not get pursued enough and, when it comes down to it, in the development context fairly traditional models of growth are pursued or, on the other side of the argument, that because there is not a framework being developed of what low carbon growth actually means in a development context, you could end up with a form of growth that will not actually be very poor. Do you still think that the two things can be mutually reinforcing: development, pro-poor growth and low carbon growth, and, if so, how? What are the things we need to do? What is the framework we need to develop them?

Professor Lord Stern of Brentford: I think we have to do both at the same time. The two big challenges of this century are the fight against world poverty and the management of climate change, and they are inextricably interlinked. If we fail to manage climate change, we will undermine development very drastically, and if we try to put forward a programme for the management of climate change which is seen to, or does, undermine the prospects of fighting poverty over the next 20 or 30 years, we will not succeed in gathering the coalition that we have to and neither would we deserve to succeed. So from those very basic perspectives, we have to find it. Can we find it? Yes. A lot of this is about doing things in different ways which have their own attractions from the point of view of development. A lot of the low carbon sources of energy, if used on a major scale, would give us a form of growth which was cleaner, quieter, more energy secure and more biodiverse. The kind of growth path we are talking about is very attractive, for reasons which come through actually rather sooner than those associated with the management of climate risk, although, of course, the management of climate risk is enormously important. The question is: how do we manage the transition from here to there? There will be some costs along the way. I do not want to pretend that we can switch over from a high carbon growth story to a low carbon growth story without incurring some investments involved in managing that transition. In the medium term, over 20 or 30 years, there will be some investment costs as we learn and as the costs of action come down. Because the technologies are changing very rapidly, the more we put into them the more rapidly those costs will come down. The policy here is about getting between where we are now and the low carbon growth path which is so attractive, managing the costs of that transition and seeing how to do it in a way that makes the most of the growth opportunities that are there.

Q201 Richard Burden: That is helpful. One of the things I am trying to get at, though, is how we can try to make sure that in making that transition in practical terms - not in theory, but in practical terms - that the burden of that does not fall on the poorest and most vulnerable, whether it be in the least developed countries or actually parts of the population that may be middle income countries. What are the things we need to be doing to make sure that they are not the ones that are suffering?

Professor Lord Stern of Brentford: We need substantial finance. There will be important mitigation investments that need to be made, and in some cases in the short run, and in some places, they may cost more than the others. There will be places where wind power, solar power, ground source heating and geothermal, at least in terms of investment costs early on, cost more than a coal-fired power station, and what we have to do is to come up with incentive and financing mechanisms so that people in the developing world are financially supported to make those changes. Adaptation, what I prefer to talk of as development in a more hostile climate, is expensive. When we worked on the Millennium Development Goals, and I was involved as Chief Economist to the World Bank in the Monterey Conference on Financing for Development in 2002, and I directed the writing of the report on the Commission for Africa which reported for Gleneagles, so I was there and I know, we did not take climate change into account as, in my view, we should have done, even with what we knew then - we know more now - and we have to recognise that, had we taken it properly into account at the time we did those 2002 numbers for Monterey and the 2005 numbers for Gleneagles, we would have come up with higher numbers. The Human Development Report estimates around $85 billion a year by 2015 is the extra cost of moving towards the Millennium Development Goals in the context of a more hostile climate brought about by climate change. So resources are very important here, and they are not small. I wanted to emphasise the advantages that come with them beyond simply managing the risk of climate change, and there are many others I could go on to in terms of the empowerment that comes with being not directly dependent on a grid, and I have worked a lot in rural India and urban India. You would not want to be dependent on the grid because somebody has got their hands on your switch, and not just India but many other countries around the world. There is some empowerment too which comes from being independent. So this has quite a lot of different aspects to it, but, basically, there will be some investment costs up front in mitigation where we have to find financial mechanisms, often market mechanisms, to help supply those finances, and we have to recognise that the numbers we were talking about on development support are too small when you look at the challenge of development in a more hostile climate, or adaptation, as it is sometimes called.

Q202 Mr Singh: To what extent should developing countries now be building resilience to climate change into their development plans, and, if that is what they should be doing, what are the steps that they should be taking?

Professor Lord Stern of Brentford: I think it is crucial that they do, because it makes no sense to make your plans in the context of an assumption that the climate will be like it was in the past when it is not going to be like it was in the past; so I think there is no alternative to bringing it in. The first thing you need is information. There are no certainties here, but you need information on the probabilities of different kinds of outcome. It looks as if south-west Africa is becoming much dryer and south-east Africa is becoming much wetter - looks as if - and what we want is those who are concerned, and obviously, in the first place, the people who live there, to try and understand as best they can what the different likelihoods are - we are not going to do better than probabilities, but what the different likelihoods are of those different kinds of changes. You cannot plan agricultural extension, you cannot plan an urban sewage system, you cannot plan an irrigation system without some knowledge of the different kinds of possibilities that there would be, so that information story is absolutely crucial, and we have very good climate science research in the UK - outstanding. I am not a scientist, I am just a consumer of the science, but I think investment in the climate science in the UK, because you need the global model, because it is a global system, of course, the climate and the weather, whilst at the same time supporting observation stations, supporting local modelling of particular aspects of the climate in a way that can integrate with these global models. The Hadley Centre is working in that direction. I would say more power to their elbow, because without that information it is very difficult to make the kinds of investments that are necessary. With that kind of information, and we are going to have to guess as best we can now, we cannot wait for it all to be refined because the investments in irrigation, agriculture extension, and so on, come now, the investments in urban infrastructure come now, so we have to try to think how best to use that information as well, and, thirdly, we have to recognise that development, as I said before, in a more hostile climate costs more and they will need extra support for that.

Q203 Mr Singh: Are we clear and are developing countries clear about the adaptation measures that are required and the costs of adaptation measures, and how are the donors working with the governments of developing countries to build that into development plans?

Professor Lord Stern of Brentford: Increasingly developing countries are doing their best to understand the implications for them, and that is why I emphasise so strongly the information side of this story, and there is great variation. The number of observations that you have for Ethiopia are tiny compared with the number of observations you have for, say, France. Take countries of comparable size and population: if you look at the most vulnerable point in the world in terms of its consequences for human kind, it is probably the few hundred square kilometres in the Himalayas that feeds the Yellow River, the Yangtze, the Brahmaputra, the Ganges, the Jomuna and the Indus - if you go round, that is where they all start - and the number of observation stations there about what is happening is very thin, and those countries have to struggle to understand what those consequences might be and they need to know what is happening in the Himalayas. These are the kinds of information that is crucial. Are they working on it? Yes, they are, but with great difficulty, because the information is weak, and that is something which we can all work to support, but, as I said, you have got to use the information and you have got to face up to the reality that development is going to cost more.

Q204 Mr Singh: Are there implications for DFID there then, in terms of how they refocus the emphasis of their work, and so on?

Professor Lord Stern of Brentford: Yes. I do not speak for DFID, I have lots of friends who are in DFID and I stay close, but I do not have a comprehensive view of what they do, but I do know, through direct interaction, that they are very much seized of these issues. I know that they are investing, for example, on the information front in Africa and they are working strongly on this. In their White Paper of two years ago there is a chapter on climate change, so I think that DFID probably ahead of most, but we are all, as it were, playing catch-up here because of trying to understand just what these consequence are and likely to be and acting on the risks.

Q205 Mr Singh: Do we have any idea of the current cost in terms of the impact of climate change.

Professor Lord Stern of Brentford: Yes.

Q206 Mr Singh: Have we any words to describe what the costs might be in the future and how do we plan for that? How do we get that into our planning?

Professor Lord Stern of Brentford: For example, the World Development Report this year is on climate change, and I was last week with a team in the World Bank that is working on it, and this will, indeed, be the kind of issues where they try to move forward. What you will get is---. I gave you the Human Development Report figure. That is a couple of years old now. About 85 billion extra cost by 2015 as you run it forward. That is only a bet on 0.8 degrees centigrade, which is really small. It is big in terms of the reality of what it does to the world, but it is small in relation to what might happen to us. So these costs will be in their trillions, for sure, as you let it run forward 20 or 30 years, even if we are sensible with what we do. Of course there will be many more trillions if we do not act responsibly. So I think you are going to see these kinds of calculations come out, but I would focus particularly on the importance of understanding, country by country or region by region, what these consequences are like rather than just going, as it were, for aggregate numbers.

Q207 Mr Singh: I think a DFID study of Kenya showed the costs at five per cent of GDP---

Professor Lord Stern of Brentford: Already.

Q208 Mr Singh: ---already. Is that just for droughts and the famines?

Professor Lord Stern of Brentford: I find the number in a plausible range, but, since I have not studied that DFID study, I should not comment on what it includes and what it does not include, but those kinds of number of damage now do not surprise me. Remember that we are talking about much bigger damages down the track.

Q209 Chairman: Just on that point, to some extent you have acknowledged the updated figures such as the UNDP figure in your answer just now, but the problem is that virtually no money is actually being provided. Various reports suggest that even the UK has only delivered $300 million out of a pledge of 1.5 billion. So, if we are talking about anything up to 86 billion a year being required for adaptation and a few hundred million is all that is actually being delivered by the developed countries, does not the gap suggest that we are not really beginning to engage?

Professor Lord Stern of Brentford: I do not think, as a community of people who are interested in development, we have factored this kind of challenge in to the extent that we should. I think increasingly people are becoming much more strongly aware of the issue and its implications for resources, and when you do that I think it becomes clear that we cannot within the United Nations Framework Convention on Climate Change generate the kind of resources that will be required for development in a more hostile climate. The conclusion I draw from that is that we have to think through its implications for development funding of the traditional ODA kind as well.

Q210 Chairman: We are going to come to that.

Professor Lord Stern of Brentford: We are going to have to face up to larger numbers.

Q211 Chairman: I was going to say, large numbers are what the governments are talking about for bailing out banks, and so on. Is the urgency of the situation not such that actually the economic stimulus and climate change should be one and the same thing in the present circumstances? That seemed to be the implication of your opening analysis.

Professor Lord Stern of Brentford: Yes, I have written a paper with colleagues at the Grantham Institute and the London School of Economics that the world needs a stimulus now of at least two trillion dollars to actually be spent in real terms in the next year or two, and within that at least 400 billion could go under a green hat as a green part of the stimulus. That is looking at it in aggregate terms and bottom up. So I do think that investment in new technologies, energy efficiency, bringing forward green infrastructure, and so on, should be a very big part of the stimulus. The adaptation story is a little different. What we are talking about here is short and medium term investment, particularly in the developing world, and I think we should not see that only as a matter of a stimulus package. I think it is still more important to see it in terms of our medium and long term commitments to development, because this problem stays with us. It is not a problem that is just here for the period of recession.

Q212 Chairman: Do you have a figure for the UK in that?

Professor Lord Stern of Brentford: For what?

Q213 Chairman: You said 400 billion was a global figure.

Professor Lord Stern of Brentford: I was talking about world stimulus, yes.

Q214 Chairman: You have not got in your own mind a figure?

Professor Lord Stern of Brentford: I am sure there will be more coming in the Budget, and let us look at it then. I am not sure, because I do not know what is in the Budget. I should say, but I would hope that there will be more coming on stimulus and the green stimulus, and I believe, from what the Government has said, that that is likely to be the case, but I left the Treasury two years ago, so I do not know what they would do, and when I was in the Treasury more than two years ago, if you had asked me just before the Budget, I would not have been able to tell you.

Q215 Chairman: You are free now.

Professor Lord Stern of Brentford: Yes. I have indicated where I think it should go.

Q216 John Battle: I was always intrigued, and you made me think of it last time I heard you speaking - I cannot think who it was - of an old philosophy about unknown unknowns. I kind of think the only thing we know about recessions globally is that the poor always suffer the most, and what I found most encouraging about the present agenda, if you like, is that the sustainable development, the whole question of climate change and living within our limits is coming together with the agenda to root out poverty internationally. I find it quite encouraging if those agendas converge, but my biggest struggle on this committee in Britain, and elsewhere (and Britain has got a good track record) is every time we have a G8, as one is coming up, and Gleneagles, commitments are made and people say, "Oh, yes, we will make a contribution", but then the disbursements never quite keep with the promises and the pledges, and I worry again we will go through that process. I wonder if I can make a particular comment and ask you about Copenhagen, because already some people are writing off Copenhagen and saying we are further away in terms of targets than we thought we were, and I just wonder whether you could encourage me to say that there are real prospects for a new framework at Copenhagen. What are the chances of a new adaptation from it actually being agreed and the level of funding being pledged? Do you think we are further away from it or are we creeping nearer to it? I suspect we may be encouraged by the rhetoric, and I use that word positively, that the climate change agenda is tackling poverty, sorting out the world recession and the banks may all be on the agenda as items at the G8, but what can we sharpen up at Copenhagen and really start to get to grips with making this happen?

Professor Lord Stern of Brentford: I agree with you. It is the poorest people in the world that are hit by weather and climate catastrophes, by inadequate development and by recessions, and we have to look at those three things together, and I have covered that, but it is terribly important. I share your encouragement. Actually, increasingly people are looking at those things together. I do want to say that I have sat in international institutions for ten years and looked at the UK from the outside, and DFID is, by some way, the best bilateral agency in the world and we all have ideas for helping it along, making it even better, but we should not lose track of that and we should not lose track of how far we have come on increasing development assistance in the UK. There is very strong cross-party support for the objectives of increasing to 0.7 per cent by 2013, which we were articulating in 2005. I think it is very important that we have got that cross-party support for that and I find it very encouraging, and I believe that the UK, under whatever government it is, will stick to that. So as we look for more, I think it is important to recognise that, whilst historically we have not been up there with countries like Denmark or the Netherlands, we are moving in a good direction. It is vital, for the reasons we were just discussing, that we keep going and raise our sights still further. I think that governments do have to be held to account for the commitments that they make, I think in this area governments also have to be held to account for commitments that their predecessors have made, because the relationship with a developing country and its national institutions are long term relationships and they cannot just be switched on and off, and I think it is important, as we think about what might come out of the G20, that we also think about institutional structures and political structures for monitoring commitments and delivery on commitments.

Q217 John Battle: In Copenhagen do you think there will be the adaptation money there?

Professor Lord Stern of Brentford: In answer to a previous question, I think I said that we do need adaptation funding to come out of Copenhagen, but that is environment ministers. They cannot make ODA promises, and I think that at the Prime Ministerial and Presidential level we have to make sure that this is part of the understanding around Copenhagen. If we go for it in Copenhagen, we have got a good chance. The most damaging part of Copenhagen would be people saying it is all too difficult; let us do it later. If we want to do it, we can do it as a world, and we are part of the UK and it is our job to support the UK, pushing for very strong agreement.

Q218 John Battle: You do not want Copenhagen to replicate the problems with the trade rounds in Doha. You have got a positive track, I think.

Professor Lord Stern of Brentford: It is very dangerous that that happens, because in a trade negotiation you can pick up five years later roughly where you were before; not with climate change.

John Battle: Exactly.

Q219 Richard Burden: It is on the point really. If tackling climate change and combating global poverty have really got to be two sides of the same coin and more investment needs to be put into all of that, should ODA in the future include adaptation - it is actually in front of ODA - so that you increase the whole thing and it is actually seen as one funding stream rather than separate, so it comes under one minister, and so on?

Professor Lord Stern of Brentford: At one level it is unavoidable, because you cannot separate out. You cannot say this amount of this irrigation system I have been building is for climate change and this amount is for our battle against world poverty, as it might have been had the climate not been changing. It is very difficult to separate out those two kinds of things, and you can be disruptive and diversionary if you try too hard. So I think it is extremely important that the use of funding, whatever hat it sits under, is one which---. You can have an adaptation hat and you can have a standard ODA hat, but it has got to be used in a way makes it easy to integrate those things. You could, for example, have another window alongside the ODA window in the World Bank so that the people who were looking after those two windows were, roughly speaking, the same people, so that we could be sure that these things were being well blended. They have got to be blended with private investment, they have got to be blended with any of the guarantee instruments that any of the international institutions can use. It is extremely important that we do not lose the ability to bring that funding together in as easy a way as possible; so I am quite worried about excessive separation of streams. National income accounts are done in various kinds of ways, and I could give you an essay on how to see adaptation funding as a separate category in the national income accounts and I could give you another essay on how to see national income accounts putting adaptation and development funding in the same classification, and I would be worried if we got stuck on what is simply an accounting convention which can be done this way or can be done that way. It would be a very strange world if we let that have some kind of real policy significance. I fear that it might, but we should not yet it.

Q220 Richard Burden: You do not think there is a danger perhaps that if the logic is to bring them together, and the logic has got to be "it needs more money put behind it", that we could end up with bringing together not enough more money to put behind it and the result could be that actually money could get diverted away from, say, health projects, and so on?

Professor Lord Stern of Brentford: I was with you right up to the last sentence. I think there is a danger, but the danger is about the overall resources being too small in relation to the extra challenges from climate change. It is not that very last issue, which is diverting money. Investment in human capital, in the jargon that we sometimes use in health and education particularly, can be very important for dealing with climate change. A lot of this is about human resilience, a lot of it is about finding different kinds and more diversified activities which education helps you find. So the danger is that the inadequate resources are there and that those will be inadequate resources. I do not think the diversion question is the right way to look at it.

Q221 Chairman: It is three o'clock. I know Lord Stern has to catch his plane to Copenhagen to join that discussion, so I think we should let you do that, because I think we need you to be there. My apologies for the interruption that obviously took some time away, and thank you for giving us this opportunity to have an exchange. I think we can all only hope that Copenhagen will be about securing a deal and that the Americans, even if they cannot deliver everything that we want, come with a positive attitude and also the EU, because with Italy cutting aid and with Xavier Solana saying they should only fund a third of the developing countries' requirements against the expectation of 100 per cent, there are big gaps, so I guess we need you and others to try and use all your eloquence to show them the gaps to bridge.

Professor Lord Stern of Brentford: It is very nice to talk, Chairman. There are so many things to talk about, obviously. You should certainly let Mr Solana know that this is a security issue. Big numbers of people are already moving and the numbers who would have to move in the context of unmanaged climate change would be in the hundreds of millions, and what we would then have is a very protracted world conflict, because large numbers of people moving lead to conflict - surely a lesson of the last two or 300 years. So I fear those are mistakes that you describe, but we should try to argue strongly against them because they are just analytical errors.

Q222 Chairman: Thank you very much and bon voyage.

Professor Lord Stern of Brentford: Thank you very much. It was nice to talk to you.