Tag Archives: climate change

Are markets underestimating climate risk?

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This sprawling Naked Capitalism article says yes, basically because investors don’t consider the long term. But if it were really true that most investors are not aware or not correctly valuing the risk, a small minority of investors should in theory be able to make money on that and bring markets back into equilibrium. Maybe the “long term” is just too long for mortal human investors to consider? But corporations and other institutions like pension funds are not mortal humans. Fossil fuel companies could try to exploit these opportunities to hedge their bets while they continue to cast doubt on the science and technology needed to get out of the mess.

How would an investor exploit other investors’ underestimation of climate risk, if this actually exists? Short-sell companies insuring homes, businesses, and lives in coastal and fire-prone areas? Buy construction and engineering companies that will get our tax money to clean up after disasters? Military and security contractors who build walls and detention camps (a morbid thought, but mass migration driven by climate panic seems likely to hit us at some point). Clean energy? Nuclear energy? It’s hard to guess and time these things – basically comes down to luck, and there are always going to be people with deeper pockets and political influence to keep us small-time investors from getting ahead. Diversifying across asset classes and internationally, and not having all our savings tied up in our houses, still seem like the best options for us little people.

Venice flood protection

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The Italian government has completed an $8 billion coastal flood protection system. It is interesting because it is submerged under normal sea conditions and can be raised when a storm is coming in.

Youtube

$8 billion sounds like a lot of money, but perhaps it is not to protect a major coastal city and international cultural treasure. The U.S. Army Corps of Engineers has spent $14 billion to protect New Orleans and is undertaking a projected $31 billion project to protect Houston (and projections have a way of running over). These are guaranteed to be far uglier projects than the Venice one. These U.S. cities may have “benefitted” from being the first to be devastated by coastal storms in the climate collapse era. Do we really think the U.S. Congress will not pony up even more enormous sums to protect New York, Washington D.C., and San Francisco when the time comes? They will. Cities with major military bases like Norfolk, Virginia and San Diego might make the cut. Smaller but still major cities with less political clout may have more trouble getting their fair share. Boston and Miami might make the cut. Major cities with less political clout, like Philadelphia and Baltimore, might not make the cut. And all this money Congress will find to protect major urban areas, while it will have some economic multiplier effect, will be money not spent on other priorities.

peak natural gas demand by 2030?

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The International Energy Agency is forecasting that global demand for natural gas will peak and fall by 2030. In the short term, the Russia-Ukraine war has led to a drop in supply, a spike in prices, and a shift to liquid natural gas from the Middle East. In the longer term though, the shift is toward nuclear (at least, restarting underutilized plants or delaying retirement of already existing plants) and renewables according to this article. It sounds somewhat hopeful and welcome, although of course still too little too late to stop the unfolding climate catastrophe.

the world is drying out

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Increased carbon dioxide concentrations have spurred plant growth up to a point, but at the same time increased temperatures have led to increased evaporation and transpiration (evaporation of water from plants to the atmosphere). The net result, if I understand this article in Science correctly, is that the drying effect now more than offsets the increased carbon uptake effect, so the growth rate of plants is no longer increasing as carbon dioxide concentrations increase.

Maui

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The Maui fires are awful. First of all, my sympathy for all the loss of life, property, and all the displacement and disruption people are experiencing. The Los Angeles Times has some coverage of factors that may have contributed to the disaster.

  • Rain shadow and seasonal dry conditions, which are normal
  • Severe drought on top of these conditions
  • Low humidity
  • High winds (gusts up to 80 mph) caused by a hurricane nearby, but not close enough to cause rainfall on the island
  • High ocean temperatures made even worse by El Nino this year

The severity and frequency of both drought and hurricanes have increased due to climate change, making this catastrophic combination of factors more likely to occur than it would have been in the past. The article also says cooler ocean temperatures in the past have tended to steer hurricanes away from Hawaii, and this is also less like to occur now than in the past. So all this is bad luck, but we humans have made our own bad luck to a certain extent.

WEF Global Risks Report 2023

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And now, without further ado, the top ten global risks for the next ten years according to the World Economic Forum:

World Economic Forum

Well, what is very clear here is that environmental issues are at the forefront here. We can’t just pretend our human activities are a small part of the larger biophysical system any more, and that the biophysical system therefore has an inexhaustible ability to support our human activities.

Here’s another way they look at it. This is pretty but maybe it tries to do too much in one picture.

World Economic Forum

So climate change mitigation, adaptation (adaption?), natural disasters and natural resources, which were at the top of the “top 10 list”, are relatively small bubbles in terms of “risk influence” here. But then they drive “large-scale involuntary migration”, “cost-of-living crisis” (food is too damn expensive?), “collapse of a systematically important supply chain” (not enough food at any price?), “geoeconomic confrontation” (war?), “state collapse” and “erosion of social cohesion” (riots over prices, food, immigration, military conscription?). It’s pretty easy to see how these things can interact, with our ongoing squandering of the planet’s biophysical stability as a root cause.

Exxon Lied

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I’ve talked about Exxon’s accurate climate science going back to the 1970s before. But it’s just worth repeating in the hopes more people will examine the evidence and reach the right conclusion. They knew. They intentionally lied and misled the public and the government. The entire planet is paying the price today and will pay an even larger price tomorrow. Just a reminder that the obvious climate impacts we are just beginning to endure today are the result of emissions decades ago, when Exxon was doing this science and lying to us all. We have not even begun to pay the price for today’s continuing and accelerating emissions.

climate change, migration, and right-wing politics

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Climate change is already causing displacement in poorer countries in Central and South America, Africa, and the Middle East, and this is clearly already fueling the rise of anti-immigration politics in developed countries including the United States and western Europe. The rational response, beyond dealing with climate change, is two-fold and fairly obvious. (1) Rational immigration policies based on the economic needs of the more developed countries, and (2) the more developed countries ponying up to help people in the less developed ones where they live.

The labor-market shortages in advanced economies are not some temporary or short-run phenomenon. In the US, a recent Brookings Institution study documents a shortfall of 2.4 million workers as of December 2022, relative to the 12-month average ending in February 2020. Most of this decline would have happened without the pandemic, owing to changes in the age and education of the population. But there was also a decline in the average weekly hours worked, producing an additional labor-supply shortfall equivalent to another 2.4 million people…

A well-designed immigration policy that allows for the controlled entry of willing workers, and that helps integrate them into host countries, would go a long way toward easing labor-market tightness and preventing humanitarian tragedies caused by smugglers’ shameless exploitation of migrants and refugees. But policymakers will need to look beyond the next election cycle and rise above partisan political interests.

At the same time, it is neither possible nor desirable to move the entire populations of low-income countries to America and Europe, so it is imperative to reject short-sighted economic nationalism. Advanced economies must do more to address the huge imbalances that still exist across the world economy. Reducing global inequality is essential to a sustainable future.

Project Syndicate

This is rational and fairly obvious, and yet politically very, very difficult. Anti-immigrant sentiment and fears over job displacement are common. And anti-immigrant sentiment is not just among people who consider themselves “native born” for several generations. Recent immigrants do not always support the idea of more people following them, especially if they perceive that the more recent immigrants might have an easier path or that they may have to compete with them. Combine that with legitimate fears of job loss and low wage growth among the general population, and sprinkle in some right-wing assholes, and the general apathy toward foreign aid when we have plenty of problems at home, and you have a pretty potent coalition. On the other side, big business generally favors immigration because they like low wages. So maybe there is something there you can work with, but unfortunately on this one issue it seems like politicians pay serious attention to the perceptions of voters and not just deep-pocketed big business. Maybe big business could divert some of their propaganda efforts from voters to support war and pollution and instead work on this issue. Or what about declaring war on climate change. That worked for drugs and poverty, right…ruh-roh!

North Atlantic sea surface temperature anomaly

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This year’s ocean temperatures are being described as “unprecedented”, “off the charts”, and “beyond extreme”. I have to stare at this plot for awhile to get it, but basically the 0 line is the long-term average, presumably over 50 years or so. Then each individual line shows the difference between actual temperature and that average, for one year, over the course of the year. So not only is the departure of more than 1.5 C in June 2023 way above the average, it is way above any other extremes seen over the last 50 years.

Daily sea surface temperature anomaly (°C) averaged over the northeastern Atlantic region during 2023 (black line) and for previous years from 1979 to 2022 (red and blue lines). Data source: ERA5. Credit: Copernicus Climate Change Service/ECMWF.  

The article gives physical explanations, including El Nino, changes in ocean currents, and changes in wind currents. It says climate change is a factor but doesn’t really reach conclusions on how much of a factor. I think it almost certainly has to be a factor. But the important question to me is whether this is an extreme fluctuation the likes of which we are going to start seeing occasionally, or the start of some runaway trend we are going to start seeing frequently and may even get worse? The article does not suggest anything like the latter. Tipping points concern me – could this be an early warning that we have hit some tipping point in terms of runaway methane release for example? The article doesn’t suggest that. Let’s hope not. If it is, it would be an “unprecedented” planetary emergency and we would need to pull out the stops and try any and all of those risky geoengineering ideas we have been hearing about, because “risky” is by definition less risky than “certain doom”. Let’s hope not. The fluctuation does appear to be subsiding, so we can see where we are next year around this time.

The New New South

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This article in Bloomberg gives some hard numbers on migration of U.S. population and business from the Northeast to the Southeast and Gulf states. It’s a long term trend, but it seems to have blown wide open during the pandemic. Although I actually have a soft spot for the south and the more positive aspects of its culture, I am disheartened by this trend in some other ways. People are moving into areas that sea level rise, coastal storms, inland storms, and extreme heat are expected to devastate in the coming decades. And say goodbye to the idea of walkable cities – these cities and states are the poster children for sprawl and automobile-dependence. We see in the headlines that insurance companies are starting to pull out of some of these areas, and the government may need to step in with more subsidy programs like the National Flood Insurance Program – in other words, the government may need to decide if it wants to support unsustainable development in these areas, and if so, we may need a national sea level rise and hurricane insurance program, and national thunderstorm insurance program, and a national fire insurance program. We will have to pay for this, or else go further into debt, and it will become one more reason why we can’t have nice things like health care, childcare, and equal access to high-quality education.

On the other hand, I am sitting here in Philadelphia, one of the most walkable northeastern cities and it is expensive, dangerous and just DIRTY AND BROKEN. And our voters just seemingly chose to keep it this way for at least four more years by re-electing the same if-it’s-not-invented-here-we can’t-do-it leadership that got us to this point. Boston, New York, Philadelphia, and DC are all coastal cities so I can’t argue that we have a leg up over the south in this area. And the U.S. Army Corps just came through with upgraded coastal flood protection for Houston.