Last year, an army of yellow-dressed civilians rebuffed the French plan to raise the price of petrol, a policy that was intended to discourage fossil fuel consumption in accordance with the Paris agreement on climate change. At around the same time, 13 US federal agencies unveiled a report that predicts a very grim future for the late-century American economy, due to a predicted growth in the number of hurricanes, floods, droughts and wildfires. How can we give up on oil and coal without disrupting the economy (and social order)? Shouldn’t we invest millions today to save billions tomorrow?
Voters and politicians alike seem to favour a short-term approach that, at least where the climate is concerned, is definitely a mistaken one. The few who look into the future by trade, such as scientists and reinsurers, argue that we should act more now and regret less later. Reinsurance companies, those who insure insurers, are scared. Swiss Re, the world’s second biggest reinsurer, estimated $337billion losses from natural and man-made disasters in 2017, a third of which were insured. Not only are these disasters projected to increase with rising temperatures, but AXA, the French insurer, has added that above a certain threshold (4°C of warming) just about everything will be ‘uninsurable’.
A 4°C increase may seem far-fetched. The planet’s mean temperature has risen by 1°C since the Industrial Revolution. The Paris Agreement vowed not to exceed the ‘dangerous level’ of 2°C. However, the Intergovernmental Panel on Climate Change recently warned that a 4°C spike could be reached by the end of the century with some ease – simply not swaying from the current track will be enough.
No wonder then that Mark Carney, governor of the Bank of England, has suggested adding climatic risks to annual stress tests for banks, at least to make them aware of the troubles they may incur from climate issues, such as financing a coal plant that is doomed to be shut down before its typical lifetime.
States, financial and industrial companies have to readjust their business plans, at least those based on long-term thinking. But families and individuals will also have to do the same. Before buying a new house by the beach, as with almost any other investment, civilians now need to grapple with climanomics.
This was published in the February 2019 edition of Geographical magazine
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