October 6, 2015

Climate Change Porn: Floods and Finance

Or maybe that should be Twinning Tweets.  First item:

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Flood

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This is an incident we’ve never dealt with before,” Gov. Nikki Haley said Sunday. “We are at a 1,000-year level of rain. That’s how big this is.”
Sunday was the wettest day in the history of Columbia, according to the National Weather Service. The rainfall total at the Columbia Metropolitan Airport was 17.44 cm, the most rain that’s ever fallen there in one day. The rainstorm dumped so much water on South Carolina and parts of several surrounding states that even the weather experts said they were astonished.
“The flooding is unprecedented and historical,” said Dr. Marshall Shepherd, a meteorologist and director of the atmospheric sciences program at the University of Georgia, in an email to The Associated Press.

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Second item: The speech of Mark Carney, Governor of the Bank of England, to Lloyd’s of London a week before:

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Carney

The tragedy of the horizon
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There is a growing international consensus that climate change is unequivocal. 2  Many of the changes in our world since the 1950s are without precedent: not merely over decades but over millennia. …
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Evidence is mounting of man’s role in climate change. Human drivers are judged extremely likely to have been the dominant cause of global warming since the mid-20th century. 5  While natural fluctuations may mask it temporarily, the underlying human-induced warming trend of two-tenths of a degree per decade has continued unabated since the 1970s. 6 …
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 While others have been debating the theory, you have been dealing with the reality: Since the 1980s the number of registered weather-related loss events has tripled; and inflation-adjusted insurance losses from these events have increased from an annual average of around $10bn in the 1980s to around $50bn over the past decade. 7   …
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So why isn’t more being done to address it?
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A classic problem in environmental economics is the tragedy of the commons.  The solution to it lies in property rights and supply management.
Climate change is the Tragedy of the Horizon.
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We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix.
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That means beyond:
  • the business cycle; 9
  • the political cycle; and
  • the horizon of technocratic authorities, like central banks, who are bound by their mandates.
The horizon for monetary policy extends out to 2-3 years. For financial stability it is a bit longer, but typically only to the outer boundaries of the credit cycle – about a decade. 10
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In other words, once climate change becomes a defining issue for financial stability, it may already be too late.
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Third item- from the Daily Durning:
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Wall

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