Paying for climate resilience
The transition to an environmentally sustainable economy has begun, but it will be a generation (about twenty years) before we see a moderation in global warming. The cost of reducing climate pollution faster would be an economic and political disaster. Slowing or stopping economic growth would destabilize politics, and given the rapid advances in weapons technology and destruction, instability would be more devastating than the impact of climate change. The pace of transition to an economy based on renewable resources depends on the development and adoption of new technologies for energy and waste treatment. It is difficult to predict how fast this process will go, but the sunk costs of existing technologies will only be ignored when new technologies are better, cheaper, and more reliable than what they replace. The notion that climate pollution can be eliminated through political edict overestimates political power and underestimates economic power. It is not only powerful economic interests that influence public policy, but the sense of economic well-being perceived and experienced by the general public. Maintaining this sense of well-being is a critical foundation for political stability. The transition to an economy based on renewable resources must be careful to enhance, not undermine, this sense of well-being. The fact that this transition will take time does not diminish our sense of urgency about its necessity, but it is more important that we engage with the world we live in rather than the world we might desire.
This summer of fire, floods and sweltering heat demonstrates that decarbonization must accelerate. But our work to protect our communities from the impact of extreme weather events is even more urgent. While there is still discussion of a “managed retreat” from low-lying areas prone to flooding, the pervasive geography of severe weather suggests that you can run but not hide from the effects of climate. Maybe we should get from the Jersey Shore to Vermont’s Green Mountains: Oops, that won’t work, Vermont just had two months of rain in a few days. Maybe we can move on to the small towns of the Midwest: Nope, they’ve got those tornadoes along with overflowing rivers, too. Maybe we should move west near the woods: Oh yeah, drought and electric sparks cause wildfires. Forget retreating, orbiting or under panic conditions, we need to build a stronger and more resilient built environment. The need is urgent. Drainage systems, dams, buildings, transportation, and energy systems must be built to withstand the rain, wind, heat, and cold of accelerating extreme weather events. The impact of extreme weather is massive and growing. According to Christopher Flavell of The New York Times:
Census data shows that “weather-related disasters will drive more than 3.3 million American adults from their homes in 2022. Of those, at least 1.2 million stayed out for a month or more; more than half a million never returned, fueling a A growing diaspora of local climate refugees. “
We are not powerless to prevent the damage caused by severe weather, Flavell reports:
“Technologies exist to protect homes from harsh weather—but these innovations have been slow to creep into mainstream home construction, leaving most Americans increasingly vulnerable to climate shocks, experts say…Steel and concrete homes can be more resistant to heat, wildfires, and storms. Even traditional wood-frame homes can be built in different ways.” greatly reduce the odds from severe damage from hurricanes or floods. But the costs of the added flexibility can be about 10 percent higher than with traditional construction.”
A weather-resistant built environment will cost money. a lot of money. This means that we will need to pay for those upgrades with money that we would prefer to use elsewhere but we must be urged to spend on these safeguards. Upgrades of public infrastructure such as roads, bridges, ports, dams, train tracks and airports should be led by the government. Income, sales, transportation and toll taxes would have to be increased to pay for these improvements. The anti-government forces controlling the US House of Representatives are unlikely to be useful here, and so we will need mayors and governors across the country to take the lead.
Here in New York, both the state and city government are taking action. Hilary Howard of The New York Times She reported that the state has budgeted over $1.1 billion for flood control but wonders if that is enough. According to the Howard Report:
“Disastrous rainfall It caused massive flooding in parts of the Hudson Valley and elsewhere in the country this week, prompting New York officials like Gov. Kathy Hochul to warn of severe weather that will be “our new normal.” New York City’s chief climate officer, Rohit T Agarwala, gave an even more dire warning, saying that “weather is changing faster than our infrastructure can keep up.” Thousands of projects are in the works across the state to combat the effects of climate change, including rethinking flood-resistant housing, updating weather models and racing to manage excess rain. But much will take decades to complete, and there are concerns about whether it will be enough.”
But it’s clear that the state and city of New York are working hard to reduce climate risks. In coordination with the government, the private sector also plays an important role in reducing the costs of climate risks. Insurance companies can play a central role by requiring building owners to meet higher standards for resistance to flood, fire, and wind to purchase insurance. Owners who meet these higher criteria should be given a discount on the insurance they purchase. Insurers have a clear self-interest in reducing the cost of climate risks. They should work to play a role in convincing landlords to invest in flexibility measures. There is much precedent for this. When buildings first started being electrified at the end of the 19th centuryy In the past century, fire insurance companies have supported William Henry Merrill’s Underwriters Laboratory, which tested and certified the safety of equipment used in buildings ranging from refrigerators to boilers. Insurance companies have required the use of these certified devices before they will agree to sell you building insurance.
Today, some insurance companies are giving up on high-risk states like Florida and California. These insurance companies are not willing to take the risks involved in insuring homes in climate threatened locations. Just as the government had to take on the risk of flood insurance, we may eventually see that in home insurance, too. Homeowners with mortgages are usually required to carry insurance, and the government and insurance companies will need to work together to require more storm-proof construction and retrofits. Otherwise, the insurance cost will become prohibitive.
The government may need to play the role of reinsurer in climate-threatening regions because private reinsurers may not want to bear the financial burden of insurers. You won’t find any climate deniers in the insurance and reinsurance industry. As Sean Baldwin and David Kuhn noted in Risk Management last summer:
“It is no secret that climate change is having a serious impact on the insurance market, affecting industry participants from the level of basic insurance through to ILS and retroactive reinsurance. With extreme disaster events increasing in frequency and intensity as global temperatures and sea level rise, industry participants have faced a rapid increase in exposure to severe disaster losses. For example, One Moody’s study It found that more than 70% of globally insured wildfire losses between 1980 and 2018 occurred between 2016 and 2018 alone. This exponential increase in catastrophe risk poses challenges for every level of the insurance industry. For the purchaser of primary insurance, the changing nature of catastrophe risk leads to increased premium rates from insurers who face not only increased losses insured, but also increased loss adjustment expenses associated with more frequent coverage disputes…. These changing risks, increased volatility and increased demand for reinsurance will increase costs for reinsurance buyers.”
As insurers and reinsurers find risks are increasing, they charge more for property insurance, or simply refuse to do business. Lenders will not lend capital to businesses in uninsurable locations or will charge so much interest that borrowing is not practical. All this can lead to damage to the business environment in climate-threatening regions.
An alternative to the death spiral of risk is to develop a built environment that is better able to resist catastrophic destruction. We’ve seen this in earthquake zones where stricter building codes enable structures to survive earthquakes with only minor damage. Buildings must be constructed to withstand wildfires, floods and high winds. Cities and towns need to make sure they can handle the drainage needs of five inches of rain within two hours. We can build more flexible structures if we are willing to pay the price.
We have entered an era of severe weather, and we need to invest the massive resources required to survive the effects of the weather. One danger of this heavy focus on climate adaptation is that it may underestimate the importance of reducing climate pollution. This would be wrong because the planet could still get warmer, causing more damage. I suspect that the political dynamic caused by these weather disasters will lead to a greater understanding of the need to decarbonize our economy. Most people recognize that the increasing intensity of floods, fires, droughts and heat are effects of climate change and are beginning to see that we need to attack the causes and the effects.
The technologies we rely on have made the world more convenient, exciting, and stimulating dangerous. We must take these risks seriously, and this requires strengthening our homes as well as investing in the collective body we call government. We need policies, rules, and resources to ensure that the costs of our technological world do not outweigh the benefits. Protection costs money. In America we have the wealth to protect ourselves, and what we lack is the political will to act. Conspiracy theories and fact-free obfuscation on social media continue to cloud our political discourse and make it difficult to address the real dangers. Unfortunately, it takes floods, heat, and fire to convince people of the reality of our polluted planet. This increased awareness now needs to spur action.