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Insuring for Global Warming's Surprises


Insuring for Global Warming's Surprises

Illustration by Bloomberg View; Photographs by Getty Images (2)

Postponing action on climate change will make the problem more expensive to manage later—if it can still be managed at all. So says a July 29 White House report on fighting global warming. While the message is true enough, changing attitudes about the problem is an exercise in persuasion, and the supposedly hard numbers highlighted in the report aren’t the best way to make the case. The document’s most powerful argument doesn’t lend itself to number crunching.

Dealing with climate change is a matter of managing risk. As the report says, it’s a question of insurance, which every voter understands. You insure your house against fire not because you are certain it will burn down but to guard against the risk that it might. Climate change creates big risks. It’s only rational to insure against them.

The frightening thing isn’t that gradually rising temperatures will cause gradually rising costs, but that climate change may take us by surprise. The report lists many possible “abrupt impacts.” For instance, the sea level may rise faster than expected if temperatures destabilize the West Antarctic Ice Sheets; melting permafrost may cause a sudden release of greenhouse gases, accelerating warming; fragile ecosystems may be irreversibly disrupted by subtle climate triggers, threatening food and water supplies.

None of these things are bound to happen, and these known unknowns, let’s call them, can’t easily be quantified. But only a fool would ignore them for that reason. If, at modest cost, these risks can be reduced, it would be stupid to do anything else.

Effective measures to reduce the risks by slowing and then reversing the growth of global greenhouse-gas emissions needn’t be costly. Some, like the proposed rules on emissions from U.S. power plants, produce substantial net benefits regardless of climate change. Done right, carbon abatement is cheap insurance against catastrophic risk—too good a bargain to pass up.

The report explains this logic well enough. The trouble is, this way of thinking isn’t amenable to simple numerical proofs. To meet this perceived need, the report piles on the figures and percentages. It’s honest, on the whole, about the many debatable assumptions that lie behind such estimates. Measuring the costs of climate change necessarily involves heroic guesswork. Measuring the costs of a delayed response is just as hard. (Who knows how quickly new technologies will reduce the cost of carbon abatement? Conceivably, if those costs were to fall rapidly, delay might make economic sense.) The result, unfortunately, is that people inclined to dismiss the case for action will have no trouble ignoring the numbers.

The most effective argument for action on climate change isn’t that we know for sure what will happen; it’s that we don’t. The only smart strategy is to insure against it.

To read Pankaj Mishra on the Mideast’s proxy wars and William Pesek on corruption in China, go to: Bloomberg.com/view.


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