Professor Ross Garnaut, author of the Australian government’s climate change review, has warned that the world will face severe consequences, if policy makers ignore the economic impact of global warming.

In an article published in the Australian National University's biannual, Asian-Pacific Economic Literature, Professor Ross Garnaut likened the shocking economic impacts of unexpected climate change events could rival the Great Depression of the 1930s.

Economic policy should seek long-term solutions that mitigate the economic risk of climate disasters before they happen.

"Progress that is judged later to be inadequate is likely to be associated with policy panic, instability and belated concentration of adjustment into disruptively short periods," he said.

However, costs to governments could be minimised by implementing steady policies that provide incentives placing external costs and benefits of energy policy on citizens and businesses. This is an idea that renewable energy companies have long agreed with.

Markus Lambert, Communication Manager of the Australian solar and wind company, Energy Matters , said that the ideal way to mitigate global warming and its effects on markets worldwide is to reward people for using renewable energy.

“If governments are serious about offsetting future market turmoil in the energy sector, they need to think further than the next electoral cycle. Investment in sustainable, clean energy can help stave off climate change,” he said.

“We need to be proactive in this battle. European nations have used feed-in tariffs that pay people for the energy they produce to great effect. Households with solar power systems can feed electricity back into the grid and they get paid to do it.”

“Professor Ross Garnaut is just confirming, what most people already know. The fact is ignoring the impacts of global warming will end up costing the world much more than it will to fix the problem. We need to get on with the job.”