Tag Archives: Lonnie Thompson

Climate Change: A Question of Caves and Mansions 2?

In my last post, I looked at the neoclassical economist’s view of a world undergoing climate change. The consensus within the profession is that global mean temperature rise will become a growing cost to humanity. Further, such a cost is not being borne by those causing it (a so called externality in the economics literature) and therefore justifies a carbon tax. Finally, and most controversially for some, the standard recommendation is for a slow and steady ramp in taxation from a very low starting point. This rests on the recognition that any investment to mitigate carbon emissions now will translate into lost economic output in the future. So the logic goes: it is often better to get rich and dirty first (before cleaning up), rather than staying clean and poor.

In sum, the economics profession calls for a calm, considered but, above all, slow response to climate change.  This is in stark contrast to the position of many climate scientists; for example, the sentiment expressed in the following statement by the climate scientist Lonnie Thompson:

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.

Since the scientific and the economics communities inhabit completely different academic silos, it is rare to find any intelligent discussion that analyses this dichotomy of opinion. Economists cite scholarly articles published in the leading economics journals, and scientists cite scholarly articles in the leading scientific journals. The one exception is perhaps the Intergovernmental Panel on Climate Change’s periodic assessment reviews, which has provided a communal market place of ideas for a variety of disciplines to meet. However, the last report was published in 2007 and was based on an information set available a few years even earlier. Therefore, many economists are not very well placed to tap into the rising alarm of climate scientists as new data comes in and reports get published.

If I were a climate scientist trying to install a sense of urgency among economists, how would plan my avenue of attack? Continue reading

Climate Change: A Question of Caves and Mansions 1?

A can’t count the number of moribund discussions I have had over the veracity of climate change. Having spent the best part of my career in the financial industry, it is impossible not to come across certain colleagues, clients and brokers who see global warming as an affront to free market economics and therefore something that could not possibly exist.

Such questioning of the science, however, doesn’t particularly bother me: a contrarian mindset is a prerequisite for a successful career managing money so the multitude of climate skeptics within the industry should not be a surprise. What does frustrate me, though, is that many of those who argue so vehemently that climate change is a product of statist scientists trying to secure government funding don’t feel the need to acquaint themselves with the basic tenets of what they are arguing against (and yes I have had the painful experience of reading through the standard skeptic offerings from Ian Plimer‘s ‘Heaven and Earth’, to Nigel Lawson’s ‘An Appeal to Reason‘, to Bjorn Lomborg’s ‘Cool It‘ and many more).

When engaging with many skeptics, it is like arguing with someone over the merits of a novel when my opponent has only read the reviews in a newspaper and not the original text. Continue reading

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 tin 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.