Lord Stern: I should have been fiercer in climate change review

There are certain iron laws of recessions. One of them is that the urge to take care of the environment rapidly falls down the political agenda.

The downturn of 2008-09 was a spectacularly big one so it is no surprise that those seeking an international agreement on climate change have found the going tough. Governments want growth and don't mind much how they get it. Businesses looking for an easing of anti-pollution regulations find it easier to get a hearing.

This is all a big mistake, according to Lord Stern, who completed a review of the economics of climate change for Tony Blair in what now seems the different world of 2006.

Stern is in Davos beating the drum for an organisation called the New Climate Economy, headed by the former president of Mexico, Felipe Calderón. Its aim is persuade finance ministers rather than simply environment ministers that tackling climate change should be a top priority.

This makes sense. Finance ministers hold the purse strings and dictate economic policy. They are much higher up the political food chain than environment ministers.

So what sort of pitch is Stern making?

Firstly, governments do not have to make a trade-off between growth and preventing climate change. On the contrary, action to slow global warming could result in a period of "discovery, innovation and investment".

The idea that green technologies could provide the next "great leap forward" for the global economy is a compelling one. Over the past 250 years, there have been long upswings driven by new technology: from textiles in the mid-18th century to consumer durables after the second world war.

Stern says that new innovations to tackle climate change might well dovetail with breakthroughs in other sectors – IT and biotechnology – to create the next wave.

Secondly, he says that someone is going to win the green race and at the moment the likeliest candidate is China. There is an awful lot of complacency about, but not in Beijing. Climate change is essentially about water, Stern says, and China has been worried about water for millennia. Its rivers rise in the Himalayas and it has millions of people living in coastal cities.

What's more, China is not content to be the country that does low-cost mass manufacturing. It wants to move up the global value chain. Western countries beware.

Finally, Stern says things have moved on in the eight years since his review. "I would have been much fiercer", he says. "Emissions have gone up faster than I thought and some of the effects of global warming are coming through more quickly, such as melting of the glaciers and the polar ice caps. But technical change has been faster too."

Stern says that on present trends global temperatures will be 4-5C higher in the next century and governments are fooling themselves if they think this will only have a modest impact on their economies.

"The last time we had a change in global temperatures of this order of magnitude it was in the other direction. It was called the Ice Age."