Cross-posted from the Wonk Room. This is the third in a three-part interview with economist Lord Nicholas Stern on climate policy. Watch the first part, in which he argued that failure to address global warming could eventually lead to World War III; and the second part, in which he discusses how action will lead to a new industrial revolution.

In 2009, Congressional Budget Office Director Doug Elmendorf testified that “a relatively pessimistic estimate” [PDF] for the economic impact of warming of 4 degrees C (7.2 degrees F) by 2100 would be 3 percent of U.S. GDP. With even more radical warming of 6 degrees C (11 degrees F), the impact would be 5 percent, he said. In an exclusive interview with ThinkProgress, leading climate economist Lord Nicholas Stern found Elmendorf’s testimony to be “ludicrous”:

I think that’s ludicrous. And it’s not clear what the real foundations of those kinds of estimates are. That would be saying that living in conditions which we haven’t seen for 30 million years on this planet would involve just minor adjustments.

Watch it:

Elmendorf based his testimony on a sectoral analysis of the impacts of climate change. Climate costs would primarily be felt, he argued, in fields like agriculture, power production, and infrastructure, which are a very small percent of U.S. GDP. With future economic growth expected to be concentrated in areas like information technology and health care that are “relatively insulated from climate effects,” Elmendorf claimed that effects of climate change on the U.S. economy would be “small,” citing economists Dale W. Jorgenson, William D. Nordhaus, and Joseph Boyer. Stern described these arguments as “very narrow and misplaced view of the economics of climate change”:

I can understand the arguments. I’ve read them. But I don’t think they really stack up in relation to the huge changes that we’d be trying to deal with. You would likely have massive movements of population. You’d have potential sea level rises, although they come quite slowly of course, but they come inexorably, which would start to make many parts of the coast of the U.S. untenable, just like other countries. You’d have potentially massive movements of population, in the case of the northern hemisphere, away from the equator and northwards, and potentially enormous world conflict.

And I simply don’t think that a sectoral analysis which extrapolates a little bit from the kind of temperature changes that we’ve seen gets to grips with the transformation of the world economy likely to come from 4, 5, 6 degrees C and the massive movements of people that are likely to be involved.

So running through the various sectors of the economy and knocking off a few percent here and there hardly gets to grips with the kind of transformation of the geography of the world. We have to see this as a whole-scale transformation of the relationship between human beings and the planet and the consequence of massive movements and potential conflict. We haven’t seen movements of the population of the kind we’re talking about here.

So, you know, a little bit of mucking about with a percentage here and there with this sector and that sector doesn’t really begin to come to grips with the magnitude of the kind of changes we’d be talking about. That seems to me to be a very narrow and misplaced view of the economics of climate change. It doesn’t get to grips with the magnitude of the risk. It doesn’t get to grips with the dynamic and unstable changes that would come as a result of all this. It’s a very narrow view of economics on the most optimistic of possible outcomes. [Emphases added.]

The failure of the economics profession to come to grip with the clear science of climate change is a scandal that far outstrips its cheerleading of the housing bubble and other financial disasters. As previously discussed in the Wonk Room, conventional economics not only fails to accurately assess the threat of global warming, but also totally misrepresents the economic impact of taking action. Economic textbooks promote utterly false myths about climate change.

Even climate economists like Stern and Martin Weitzman, who together earned the Leontief economic prize last week from the Tufts University Global Development and Environment Institute for moving the profession away from utter denial, consistently underestimate the consequences of climate change that are already occurring.