LONDON -- Efforts to combat climate change will remain hobbled because of the failure of the economic system to give the planet's environment a value and actions that harm it a cost. Such a cost may violate the belief in unremitting consumption that many economists and businesspeople (and more than a few consumers) hold, but the absence of a price on carbon emissions is a situation that needs needs to be fixed urgently.

That, broadly, is the analysis of two provocative new books on the climate change crisis, its causes and some potential cures. Both of them want to tailor some of the basic notions of Economics 101 to make a better fit with moves to curb greenhouse gas emissions.

Tim Jackson's book "Prosperity Without Growth: Economics for a Finite Planet" is the bolder of the two. Jackson, economics commissioner on the U.K. government's Sustainable Development Commission advisory body, argues that the whole economic model is broken and in need of replacement. "The existing economic model is unsustainable. We cannot afford the economic output that we currently have," he asserted earlier this month at the launch of his book.

At the more pragmatic end of the scale is Dieter Helm, professor of energy policy at Oxford University and head of the academic panel of advisers to the United Kingdom's environment department. He calls for a thorough overhaul of the economic model that puts all its faith in gross domestic product and ignores asset values -- particularly ecological assets.

Is there something gross about gross domestic product?

"We need to look at net national product, not gross national product," he told E&E in an interview to launch his book, "The Economics and Politics of Climate Change." "We must take an asset-based view so that you include depreciation of those assets."

"It is better to be roughly right than precisely wrong," he said. "GDP is precisely wrong."

Jackson argues that one of the main problems with the current setup is that ever-increasing personal consumption gives the individual a social status that is utterly unrelated to its environmental cost.

Breaking that link and substituting it with a system that gives value to family, health and happiness, among other things, he argues, is at the core of the revolutionary economic rethink he proposes.

"Prosperity consists of our ability to flourish as human beings -- within the ecological limits of our finite planet," he writes. "The challenge for our society is to create the conditions under which this is possible. It is the most urgent task of our times."

Jackson believes that just as the financial crisis exposed the fundamental unsustainability of the financial system, so the climate crisis has revealed the basic contradictions of an economic system that relentlessly pursues growth regardless of cost. He thinks the two are inextricably linked.

"Prosperity today means nothing if it undermines the conditions on which prosperity tomorrow depends. And the single biggest message from the financial meltdown of 2008 is that tomorrow is already here," Jackson writes, deploring what he calls the "iron cage" of consumerism."

Concealing the true cost of climate efforts may weaken them

His theory is that new economic variables must be brought into the equation -- notably to reflect energy and resource dependency and carbon limits and to give value to ecosystem services and stocks of natural capital. He wants to incentivize more ecological investments -- an area currently not fully supported by the financial markets, as they tend to give too low a rate of return than that offered by more classical investments.

"A better and fairer social logic lies within our grasp. Neither ecological limits nor human nature constrain the possibilities here: only our capacity to believe in and work for change," he concludes.

Helm, on the other hand, says the major factor holding back progress on tackling the climate crisis is that politicians have tried to sell the idea that action will be relatively cheap.

If governments told the truth about the level of cost and scale of effort needed, then people would start to take it seriously, he said. "If you tell people the truth rather than lying to them they will eventually come round. Lying about the cost of decarbonising our economy has got us into the mess we are in today where we are going nowhere fast," Helm said.

Nicholas Stern, the former U.K. government chief economist whose seminal 2006 work on the economic costs of climate change was the first detailed work on the subject, calculated then that taking action now would cost about 1 percent of GDP -- a figure he later doubled -- as against up to 25 percent if there were a significant delay.

Helm has always rejected the lower figures -- something he repeats in his new book, which he both contributed to and edited with Oxford University colleague Cameron Hepburn -- although he does back Stern's conclusions on the need for action now rather than later.

Is the West responsible for part of China's emissions?

Helm called for actions to start immediately, with something like a carbon tax to start the process rolling, followed by a series of incremental steps. "That is a good starting point. It is very pragmatic. It is a very good idea to do this piecemeal. No asset pricing, no environmental pricing. But start now," he said. "We are a long way from where we need to be, so we need to start very soon."

Helm was also among the first economists to raise the thorny issue of so-called embedded carbon, whereby importing nations fail to account for the carbon content of the goods they buy from abroad, despite the fact that in the past they would have made those products themselves and therefore have included their emissions in the national total.

China is a particular case in point. Some estimates suggest that up to one-quarter of China's carbon emissions come from goods exported to places like the United States and Europe.

"I am keen that we treat China's emissions as our own. I am quite optimistic that we eventually will," he said.

In the book, Helm insists that there must be a new international institution created to oversee any new climate change deal, much like the World Trade Organization regulates global commerce.

"The United Nations is too cumbersome, and national politics and distrust make any other body suspect," he said in the interview.

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