Mitigate, Adapt or Suffer

Thomas Carlyle termed economics “the dismal science” but if you understand the conclusions of a paper entitled “Climate Change; The Evidence and Our Options”  by the eminent glaciologist Lonnie Thomson then you would surely agree that the study of anthropogenic (human-induced) global warming (AGW)  deserves the title better.

Thomson’s paper is important because it gives you a window into the mind of what most scientists truly believe about the climate change outlook if you chat to them over a beer or a coffee at the end of a long day, something you would rarely gauge if you focus on their academic writings. And what do they really think?

Climatologists, like other scientists, tend to be a stolid group. We are not given to theatrical rantings about falling skies. Most of us are far more comfortable in our laboratories or gathering data in the field than we are giving interviews to journalists or speaking before Congressional committees. Why then are climatologists speaking out about the dangers of global warming? The answer is that virtually all of us are now convinced that global warming poses a clear and present danger to civilization.

The message could not be more clearer in terms of the overall outlook, but what does this mean in terms of the life paths of individuals? In the concluding paragraph of the paper, Thomson spells it out:

Sooner or later, we will all deal with global warming. The only question is how much we will mitigate, adapt and suffer.

The premise of this blog is that ‘mitigation, adaption and suffering’ can be summed up in one word: risk. And risk is something that every financial professional (and indeed all individuals) deals with every day. Risk is the reality that the outcomes associated with our actions are subject to uncertainty, and attached to each potential outcome are gains and losses. The non-fringe scientific community has clearly stated that climate change is a reality (for example here). As such, it now poses major risks to our actions—whether buying a house, saving and investing, or educating our children. So, while climate change science contains uncertainties, it also makes the life outcomes of both ourselves and our families far more uncertain as well. In short, it poses a monumental risk.

Faced, with such a risk we have two choices: manage it or ignore it. The temptation to pretend the risk isn’t there is large because it is easy to feel impotent in the face of a planetary phenomenon. But as Peter Bernstein, the American financial historian and scholar of risk, puts it:

….outcomes are uncertain, but we have some control over what is going to happen or at least some control over the consequences of what does happen. That is what risk management is all about.

His highlighting of the difference between outcomes and consequences translates into the difference between mitigation (reduction of greenhouse gas emissions) and adaption in a climate change context. The goal of this blog is to encourage everyone to see climate change as a major risk to their well-being, and a risk that should be managed through mitigation and adaption. To do neither is to invite the third response in Thomson’s troika: to suffer.

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