Global warming could devastate the world economy on a scale we haven't seen since the world wars and the Great Depression, a major report by a British economist says.

Sir Nicholas Stern, the report's author and a senior government economist, said unchecked global warming could shrink the global economy by 20 per cent -- and cost a whopping $7 trillion in lost output.

However, taking action now would cost just one per cent of global gross domestic product, Sterns says in his 700-page study.

British Prime Minister Tony Blair, who introduced the report today, called for "bold and decisive action" to cut carbon emissions and stem the worst of temperature rise.

He said the Stern Review showed scientific evidence that global warming was "overwhelming" and its consequences "disastrous."

British Treasury chief Gordon Brown, who commissioned the report, said the U.K. would lead international efforts to tackle climate change and establish "an economy that is both pro-growth and pro-green."

Stern's report is seen as the first major effort to quantify the economic cost of climate change -- and the first major contribution to the global warming debate by an economist, rather than a scientist.

"Our actions over the coming decades could create risks of major disruption to economic and social activity, later in this century and in the next, on a scale similar to those associated with the great wars and the economic depression of the first half of the 20th century," he writes.

Consequences

If no action is taken, says Stern, up to 200 million people could become refugees as their homes are hit by drought or flood from rising sea levels.

Further, up to 40 per cent of wildlife species could become extinct, and melting glaciers could cause water shortages for one sixth of the world's population, the report says.

"It is not in doubt that, if the science is right, the consequences for our planet are literally disastrous,'' said Blair.

"This disaster is not set to happen in some science fiction future many years ahead, but in our lifetime.

"Unless we act now ... these consequences, disastrous as they are, will be irreversible.''

Stern's solution

Despite the gloomy forecast, Stern said he is "optimistic" that if the world powers act "strongly and urgently," the effects can be minimized.

"Whilst there is much more we need to understand -- both in science and economics -- we know enough now to be clear about the magnitude of the risks, the timescale for action and how to act effectively," he said.

Stern said the world must shift to a "low-carbon global economy'' through measures including taxation, regulation of greenhouse gas emissions and carbon trading.

Brown said former U.S. Vice President Al Gore, who has emerged as a powerful environmental activist and spokesperson, would advise the government on climate change.

Brown called for Europe to cut its carbon emissions by 30 per cent by 2020; and 60 per cent by 2050.

He also said the British government is considering new "green taxes" on cheap airline flights, fuel and high-emission vehicles.

The "green" initiatives, he said, provide an opportunity "for new markets, for new jobs, new technologies, new exports where companies, universities and social enterprises in Britain can lead the world".

Stern's report is expected to increase pressure on the administration of U.S. President George W. Bush to step up its efforts to fight global warming. The Bush administration never approved the Kyoto climate-change accord.

Stern is a former chief economist of the World Bank.

With files from The Associated Press