Brains & Climate

The insurance industry is one of the few major economic sectors that has fully realized the perils of inaction in combating climate change. Reinsurers, especially Swiss Re and Munich Re, employ staffs of scientists full time to analyze the problems and find solutions. However, the industry can’t do it alone. If Stern’s report is dismissed as a Cassandra like prophecy of doom, and no action is taken, not only will the industry be hard pressed to survive, but also the entire planet. Cite.

Now if only the WSJ had the brains of UK’s Financial Times.

Climate change is one of the most serious issues facing the planet. Scientific evidence shows that temperature changes are likely to have profoundly negative consequences for human society, the global economy and the world’s natural systems. This poses risks and opportunities to which investors and companies must respond.

 

Stern by the numbers

The level in the atmosphere of carbon dioxide, the principal greenhouse gas, stood at 280 parts per million by volume (ppm) before the Industrial Revolution, in about 1780. The level of CO2 in the atmosphere today stands at 382ppm 

£200bn, or 1 per cent of global GDP, must be spent every year to get carbon dioxide levels to “stabilise” at 550ppm.

This figure will rise as world GDP increases, and could be three to four times as large by 2050

40 per cent of the world’s species would face extinction if temperatures rose by 2C

200 million people are at risk of being driven from their homes by flood or drought by 2050

6C is a “plausible” estimate of how much world temperatures could rise by the end of the century if greenhouse gas emissions are unchecked

60 million more Africans could be exposed to malaria if world temperatures rise by 2C

35 per cent drop in crop yields across Africa and the Middle East is expected if temperatures rise by 3C

200 million more people could be exposed to hunger if world temperatures rise by 2C

550 million more people could be at risk of hunger if world temperatures rise by 3C

4 million square kilometres of land, home to one-twentieth of the world’s population, is threatened by floods from melting glaciers

35,000 Europeans died in the 2003 heatwave, an event likely to become “commonplace”

4 billion people could suffer from water shortage if temperatures rise by 2C

This from Sir Nick Stern, formerly chief economist at the World Bank and current advisor to Tony Blair:

The science tells us that GHG emissions are an externality; in other words, our emissions affect the lives of others. When people do not pay for the consequences of their actions we have market failure. This is the greatest market failure the world has seen.

followed by

[Business as usual] involves very high risks; it is likely to imply a rise of 4-5°C or more above pre-industrial levels within the next 100 or 150 years. This is way outside human experience. At high levels of warming, less is known about how the climate will respond – very large events might happen….
                What are the costs and benefits of taking action? The costs of removing most of that risk, getting to 550 or below, are around 1% of [global] GDP per year. The cost could be above or below 1% depending on policies, technological progress and ambitions but would be in this region. This is equivalent to paying on average 1% more for what we buy - the price rise for carbon intensive goods would be higher and for low carbon intensive goods would be lower – it is like a one-off increase by 1% in the price level. That is manageable; we can grow and be green.

 and UK politicians listen. This from Tony Blair

The consequences for our planet are literally disastrous. This disaster is not set to happen in some science-fiction future, many years ahead, but in our lifetime. What is more, unless we act now, not some time distant but now, these consequences, disastrous as they are, will be irreversible.

 

The question is not whether we can afford to act, but whether we can afford not to act [on climate change]. To be sure, there are uncertainties, but [it is clear] that the downside uncertainties—aggravated by the complex dynamics of long delays, complex interactions, and strong non-linearities—make a compelling case for action.

To be credible, the handful of “skeptics” about human causation of current global climate change would need both to explain what alternative mechanism could account for the pattern of changes that is being observed and to explain how it could be that the known human-caused buildup in GHG is not having the effects predicted for it by the sum of current climate-science knowledge (since, by assumption, something else is having these effects). No skeptic has met either test.