Mexico’s Calderon Leads Probe of Climate Change Economics

Former Mexican President Felipe Calderon is spearheading a study sponsored by seven countries into the economics of climate change, seeking to elucidate the financial benefits of reducing carbon emissions.

Calderon’s panel will draw from the experiences of companies and governments around the world in fighting off the ravages of storms and droughts, and in cutting greenhouse gases. It also will use academic research to show the costs and risks associated with climate change and efforts to stem it, publishing a report next September to guide policy makers.

“We’ve talked about emissions -- this time, we will try to talk about profits, and that will change the equation,” Calderon said today at an event announcing the Global Commission on the Economy and Climate in New York. “The idea is that we can present an economic case. What we’re expecting is that our report cannot be ignored in 2014.”

The effort by a group that includes Unilever NV Chief Executive Officer Paul Polman and the former leaders of Chile, New Zealand and Mozambique is designed to guide global envoys as they devise a new treaty to fight climate change in 2015. Britain, Colombia, Ethiopia, Indonesia, South Korea, Norway and Sweden are sponsoring the panel.

“The alternative of not doing anything is not actually an alternative,” Norway’s Prime Minister Jens Stoltenberg said at the event. “The costs of not doing anything are much higher.”

The panel also includes business leaders such as Vattenfall AB Chief Financial Officer Ingrid Bonde, China International Capital Corp. CEO Zhu Levin and officials from the World Bank and International Monetary Fund.

Calderon’s Credentials

Calderon, a former chairman of state oil producer Petroleos Mexicanos, was Mexico’s president for six years through December 2012. He oversaw a United Nations climate-change conference in Cancun in 2010 and pushed through Mexico’s first climate-change law last year.

United Nations scientists this week are putting the finishing touches on their most comprehensive report into the science of climate change, and are due to publish a summary of their findings Sept. 27. A draft of the document seen by Bloomberg News shows sea-level forecasts for the end of the century higher and temperature-rise predictions lower than those made in the UN’s last major assessment in 2007.

Calderon’s report will build on an effort in 2006 by the U.K. government led by former World Bank chief economist Nicholas Stern that said the impacts of global warming could cost the world as much as 20 percent of economic output, compared with the 1 percent cost of containing the problem.

The study also will show that the purported choice between economic growth and battling climate change “is a false dilemma,” Calderon said.

Stern Report

Stern, a member of Calderon’s panel, said there’s been “a tremendous amount of experience both in what’s happened in the world and in terms of the analysis” since then.

“The whole problem looks even riskier than we described it in the Stern review,” Stern said. “Emissions are rising faster than had been anticipated and many of the things are coming through more quickly than we anticipated, an example being the Arctic ice,” which is melting faster than predicted.

The world has also seen “remarkable technological change” since 2006, with solar power prices coming down by a factor of six or seven, advances in hydraulic fracturing that use large amounts of water to tap new reserves of oil reserves and the recession all being events that need to be included in the new analysis, Stern said.

Seven Institutions

The research will be led by seven institutions around the world: the Climate Policy Initiative in San Francisco, the Ethiopian Development Research Institute, South Korea’s Global Green Growth Institute, the Indian Council for Research on International Economic Relations, the Stockholm Environment Institute, Tsinghua University in Beijing and the Washington-based World Resources Institute.

“We are already paying very high costs as consequences of climate change,” said Calderon, including hurricanes Manuel and Ingrid, which battered Mexico this month and killed at least 123 people. “We are paying for the consequences of our lack of action in the past.”

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Justin Doom in New York at jdoom1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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