Climate / Environment

Seen in the Orlando Sentinel:

Gov. Charlie Crist and the Florida Cabinet had told the state’s risk managers to find potential buyers for as much as $11 billion in bonds that would be needed to pay claims if the state is racked by a Katrina-sized hurricane.  But with financial markets in tatters, state money managers say they’ve struck out.

"The terms that we are getting are just outrageously expensive," said Jack Nicholson, director of the state’s hurricane catastrophe fund.

Translation: The state now will hope for the best.

[If a massive storm were to strike Tampa or Miami] Florida would have to sell bonds to help insurers pay claims. But with about $8 billion in cash and the expectation the state could sell a maximum of $10 billion in bonds, officials fear a possible $11 billion shortfall.

Mother Nature has responded via the National Hurricane Center thusly:

A STRONG TROPICAL WAVE IS LOCATED OVER THE EXTREME EASTERN ATLANTIC
OCEAN NEAR THE WEST COAST OF AFRICA...AND IS ACCOMPANIED BY A BROAD
AREA OF SHOWERS AND THUNDERSTORMS AND PERHAPS A WEAK SURFACE LOW.
ENVIRONMENTAL CONDITIONS COULD ALLOW FOR SOME SLOW DEVELOPMENT OF
THIS SYSTEM DURING THE NEXT COUPLE OF DAYS AS IT MOVES WESTWARD AT
ABOUT 15 TO 20 MPH.

I know.  It’s not that impressive a tropical outlook…but it’s somewhat ironic that the first hiccup in the Atlantic in about a month would come just as Florida decides to cross its fingers again this year.

Seen at Inhabitat:

On June 20th, the town made 21st century history by becoming the first city in Germany to require solar power for newly built or renovated buildings. […] This law will require newly constructed buildings or existing buildings that are expanded or altered by more than 20% to include solar panels as part of the heating system. The main goal of this law is to encourage the use of solar thermal systems to displace the use of non-renewable energy sources for heating. Photovoltaic systems also meet the requirement. Each building is required to install at least 1 square meter per 20 square meters of roof surface (that’s 5% of the roof surface).

It’s not the first time that it’s been considered.  For example, a couple of years ago Delhi debated such a requirement.

What’s more surprising to me is why hasn’t this been done in more communities?  Solar panel costs have dropped (and energy costs have increased) to the point where such installations make economic sense.  Throw in the ecological benefits and (if you buy into the hype) the anti-global warming value, and such requirements seem like no-brainers to me.

…almost.

Seen in the Guardian:

James Hansen, one of the world’s leading climate scientists, will today call for the chief executives of large fossil fuel companies to be put on trial for high crimes against humanity and nature, accusing them of actively spreading doubt about global warming in the same way that tobacco companies blurred the links between smoking and cancer.

You know, if you were going to seek to have a sensational trial to end a perceived travesty, perhaps effort would better spent elsewhere.  Maybe we ought to have a “high crimes” trial for educational leaders for failing to teach their students logic and critical thinking, for example.

First some background for readers who haven’t heard me ramble on about global warming and climate change before – I believe that climate change is a threat to society.  I can accept that climate change may be influenced by human activity.  However, I do not subscribe to the global warming hype of the past decade, and instead think it’s far more likely that any climate weirdness we have perceived is the result of longer-term weather cycles, increased awareness of global weather, etc. than “real” global warming.

Despite my skepticism in global warming hype, I like and support many of the measures being advocated by climate change activists.  While they may not impact the long-term climate cycles we barely understand, conservation and sustainability are good ideas, I think, on their own merits.

Global warming activists like James Hansen remind me a bit of George W. Bush and the run-up to the Iraq war.

Back in 2001 and 2002, there were some decent reasons to seek the overthrow of Saddam Hussein.  The crimes committed against his people, the rampant corruption around sanctions loopholes meant to ensure access to food and necessary supplies in spite of international embargo, the ecological damage being done in a sensitive part of the world, the failure to live up to the agreements which lead to the cease-fire after the Gulf War of ‘91.

However, Bush, seeking to drum up support for the war, used the hot-button of terrorism and weapons of mass destruction, to play upon Americans’ post-9/11 fears to generate support for war.

We went to Iraq, overthrew Saddam….and realized that Bush administration had mislead us to reach that point.   American credibility was ruined, and achieving some of the still-worthwhile goals of regime change have been severely aggravated with the fallout from that deception and betrayal.

I don’t think that Hansen and others are intentionally trying to mislead the people of the world.  However, they are evangelists, who seem to believe in the cause of Global Warming without critically challenging and re-testing their beliefs.

The world would be a far better place, I think, if folks like that would occasionally take a pause and ask, “what if I’m wrong?”.

Assume for a moment that Hansen’s call to put oil company execs on trial for crimes against humanity actually had legs, and was successful.  

What if he’s wrong?

Could the sensationalism of such a trial, perhaps accompanied by a brief stint of global cooling (Solar Cycle 24 is still missing, after all), cause everything associated with Global Warming to fall into public disrepute?

That would be a shame since, as I’ve said before, conservation and sustainability are good for reasons beyond attempting to combat climate change.

Perhaps rather than seeking oil executive blood, climate change activists would be more effective by expending energy on expanding their message through the use of logic and reason, rather than attempting to sell it with high-profile temper-tantrums.

Hot off the Colorado State presses:

And, for whatever it’s worth, over at the Actuarial Outpost, a hurricane season prediction contest is underway.

It’s a good time of the year to be in the random number generation business.   From Business Insurance:

Atlantic hurricane activity will be 20% above average this year, Tropical Storm Risk predicted Monday.

The London-based forecasting consortium in April had predicted a season 35% above the 1950-2007 norm. But in a statement announcing Monday’s prediction, TSR said: "The lowering of the forecast is due to the unexpected rapid waning of La Niña conditions now occurring in the tropical Pacific. However, uncertainties remain, and La Niña and other key climate factors will be closely monitored."

ABC News recently carried a story on its website about how Celine Dion’s estate-under-construction in Florida consumed 6.5 million gallons of water last year, despite a drought in the southeast, despite the strain South Florida’s freshwater supply, and despite the fact that Celine doesn’t even live there.

Included in the article was this bit of trivia:

Experts estimate that at least 50 percent of Florida’s water is used for landscaping.

Fifty percent?!

I’m not a fan of seeking regulatory or legislative involvement to govern personal behavior or the enjoyment of one’s private property…but I’m finding hard not to think that some folks up in Tallahassee might want to start looking into what could be done in that regard.

On the calendar, Atlantic storm season doesn’t start until tomorrow.   However, it looks like Arthur just couldn’t wait.

It is, however, a little unusual for a storm to get it’s first name while inland, I think.

Seen in the Daily Mail:

Every adult should be forced to use a ‘carbon ration card’ when they pay for petrol, airline tickets or household energy, MPs say.

The influential Environmental Audit Committee says a personal carbon trading scheme is the best and fairest way of cutting Britain’s CO2 emissions without penalising the poor.

Under the scheme, everyone would be given an annual carbon allowance to use when buying oil, gas, electricity and flights.

Anyone who exceeds their entitlement would have to buy top-up credits from individuals who haven’t used up their allowance. The amount paid would be driven by market forces and the deal done through a specialist company.

Well, that would be one way to incent consumers to behave in a more sustainable .  Rather than loading up prices with “hidden” costs, either in the form of a carbon tax, or a windfall profits drag, you’re putting an actual cost of CO₂ blatantly in front of the consumer.

I’m not sure I agree with the notion of of such a mechanism being a fairer way to allocate costs away from the poor to those who can better afford it.  After all, the less affluent families in society are probably less able to adopt more efficient technology due to the expense of that technology.   It’s all too easy to imagine a world where the rich drive around in their nice shiny new hybrids or electric cars, while impoverished folks try bumming a few carbon credits to enable them to drive their old beaters home.

If you’re going to try to promote “economic/social fairness” in the transition to a world dominated by greener gadgets, I think effort would be better spent in accelerating the availability of affordable green tech.

It’s for that reason that I’m still intrigued with the idea of adopting a carbon or windfall profits tax, but requiring that the additional revenue be considered a mandatory investment, funding research and early production of new, practical, conservation-minded technology.

I remember that when I was in high school, science fair projects tended to be pretty cheesy.  It sounds like things have changed very significantly.   Seen in The Record:

[W]e produce 500 billion a year worldwide and they take up to 1,000 years to decompose. They take up space in landfills, litter our streets and parks, pollute the oceans and kill the animals that eat them.

Now a Waterloo teenager has found a way to make plastic bags degrade faster — in three months, he figures.

Daniel Burd’s project won the top prize at the Canada-Wide Science Fair in Ottawa. He came back with a long list of awards, including a $10,000 prize, a $20,000 scholarship, and recognition that he has found a practical way to help the environment.

He was able to identify a couple of bacteria, one that loves to eat plastic, and the other that loves to support the plastic-eating bacteria.  Create a bacteria soup, drop in plastic bags, wait three months, êt voilá!

So, when can we start getting the necessary vats o’ bacteria set up at the local recycling plant?

It’s a little crazy at the day job, so I’d expect my posting to continue to be somewhat erratic until a couple of projects quiet down a little.

However, I did want to pop up to mention that Sam Friedman has an interesting article up, written by Charles Chamness, discussing the campaign to get insurers to disclose climate change risk as part of public disclosure.  One section of the article strikes a chord with me:

Earlier this year, the task force released a draft Climate Risk Disclosure Proposal that would require all U.S.-domiciled insurers to answer a lengthy set of “climate risk disclosure” interrogatories–drafted largely by Ceres–to be included in the Annual Financial Statement. The following questions are typical:

• “What actions have you taken to assess the impact of climate risk and global warming on your operations?
    
• What are the results of your assessments of the impact of climate risk and global warming?”

Robert Detlefsen, Ph.D, vice president of public policy for the National Association of Mutual Insurance Companies, said “these highly tendentious questions assume insurers have knowledge of things that are, in fact, unknowable.”

“While many property-casualty insurers face challenges and uncertainties due to the risk posed by large-scale natural disasters, no company is in a position to assess the risk posed by climate change per se,” he added. “Given the current state of climate science, insurers can do no more than speculate about the nature and extent of risks attributable to climate change.”

Amen!

Insurance is risky business, and there are a few of us who spend a lot of time on the job of trying to answer questions like, “what’s the worst that can happen?”   It’s a rather stimulating if macabre sport…and you quickly begin to realize that there’s a heckuvalot we don’t know.  

Sure we can model scenarios and assign probabilities, but such exercise introduces the risk that the models could be wrong or the probabilities could be off.  Also, questions like “what’s the worst that can happen” generally are answered by “the worst thing that can happen is all of these horrible individual events occur at the same time”, which opens up a door to a discussion about correlation and the multiplication of really tiny odds on multiple events….and you quickly begin to appreciate that a nontrivial part of pricing or modeling work really is art.

Yes, it’s important to consider what could happen if the climate changed, or if a Katrina-like storm hit metro New York, or both.  We can lobby for preventive action to be taken now, and we can monitor our exposure in to such risks to keep the risk of ruin minimized.  Those are good things, if done early enough.

But one thing that critics of the insurance industry don’t often appreciate is the bureaucracy we live with when dealing with state regulators.  Considering the amount of research and silly-form-filling-out carriers already have to do at the behest of 50 state insurance regulatory bodies…I’m not sure that singling out climate change risk for special treatment is the right approach to take.

Of course, I suppose I could naively hope that if the industry is more communicative about the risks it faces, states which limit insurer profit loads might finally allow the returns that investors demand.