UK-US Workshop Part II: Perspectives from the private sector on climate adaptation

by Judith Curry

Perspectives on climate change adaptation from Coca Cola, SwissRe, and Acclimatise.

In Part I UK-US Workshop on Climate Science Needed to Support Robust Adaptation Decisions,  we considered presentations  from the ‘demand’ side, presenting perspectives from the UNFCCC, development, public health, and security.   Part II focuses on perspectives from the private sector.

Peter Adams – Acclimatise: Perspectives on private sector needs

Adams shared private sector examples of climate adaptation from agriculture, retail, transportation, and energy, Peter will provide early insights into how climate data and information are used by business decision-makers to build resilience to climate variability and change in their supply chains and infrastructure.  Business sectors that are vulnerable to climate change include those with long-lived fixed infrastructure, financial services, and sectors with extensive or climate-vulnerable supply chains.

What triggers climate adaptation?  Within the business fence line:  previous direct experience of impacts, awareness of climatic sensitivity of business objectives and financial performance, changing views of sustainability.  Outside the business fenceline:  reputation;  regulation, legislation and standards; enhanced reporting requirements from stakeholders; litigation.

Business can manage uncertainty, but do not always have the power to manage risk (i.e. some things are beyond their fence line).  Within business fencelines:  assets and infrastructure, production.  Beyond business fence lines:  community and ecosystem resilience, raw materials sourcing, market conditions, geopolitical conditions.

Businesses want tools and guidance: e.g. risk screening tools, managing risks in supply chains.  Businesses want to understand tradeoffs – making adaptation decisions requires business-specific analysis of costs and benefits of action vs inaction; how much adaptation to do and when?  Where are the win-win solutions?  Most businesses are focused on the short term, need weather/climate information this year out to +10 years.  Need to tailor climate science to the needs of business:  encourage development of data/information in formats & resolution useful for business; professional bodes and business organizations can help translate available data/information into business-relevant resources.  Businesses need guidance, tools and entry points into their existing practice.

Accept uncertainty and plan for resilience, focusing on robustness to today’s and tomorrow’s potential climate – not necessarily the optimal solution. Some businesses are seeking opportunity, e.g. improved process efficiency, rainwater harvesting, renewable energy, green roofs, surface water drainage systems, etc.

Megan Linkin – SwissRe:  The Economics of Climate Adaptation (ECA) Methodology: Application and a Case Study of New York City

Natural catastrophe risk is the core driver of the property reinsurance business, so it is important to understand the risk as completely as possible.  The historical record does not provide a large enough sample of events to determine true or future hazard. Hence they rely on simulations of physically possible events not in the historical record to understand risk landscape.  SwissRe sees growth in emerging markets, areas that have historically been under-observed. Climate change alters to the risk landscape through a variety in potential shifts in the frequency and severity of events dependent upon hazard and region. Linkin argued that it is imperative that cities, states and nations globally understand the risk posed by natural catastrophes, how the risk landscape will change under climate change and take the necessary steps to protect infrastructure, physical structures and citizens.
.
SwissRe has developed a comprehensive risk assessment methodology, that assesses hazard exposure and cost.  They assess total climate risk – both today’s climate risk and future climate change scenarios.  Using SwissRe’s proprietary catastrophe models, current and further hazards are translated to economic loss potential.  Various resiliency strategies can be implemented to demonstrate savins of each measure considered.  This assessment methodology is a powerful tool to allow decision makers to understand current and future risk and the benefits of long term action.  For reference, see SwissRe’s report Mind the Risk.
A case study was presented of New York City, whereby a collaboration between the City and SwissRe has developed  actionable recommendations both for rebuilding the communities impacted by Sandy and increasing the resilience of infrastructure and buildings citywide.  The cost-benefit analysis of various mitigation efforts is guiding decision makers in the selection of which efforts to focus on.

Greg Koch – Coca Cola:  The Coca-Cola Company’s Observations, Responses and Outlook in a Changing Climate

Greg Koch provided a fascinating perspective on recent observations across Coca Cola’s  global operations, the company’s water strategy and specific climate adaptation responses, and modeling study results that help drive their decision making.   This statement from Coca Cola’s CEO puts water into perspective re Coca Cola’s business:  “Our business can only be as healthy as the local communities where we operate; access to clean water is one of the most important barometers of a community’s health.”

To serve Coca Cola’s world wide market, local water supplies are used in 1000 plants worldwide.  Water is the biggest part of Coca Cola’s supply chain, and it is under growing stress.  Stresses include physical availability and sustainability of water resources, available water resource infrastructure, water pricing, droughts, competing uses and increasing water demand, climate change, regulatory limits and social acceptance.  Water supply risks are greatest in these manufacturing locations:  western US, north Africa and the middle East,  Australia, and South Asia.  Flooding can also impact water treatment plants, impacting their water supply.  Water problems in recent years have resulted in plant closures, the need to deal with water resource reduction and find new water sources, and improve waste water treatment.

In context of their Global Water Stewardship Strategic Framework, Coca Cola undertakes extensive global risk assessment and analytics, that includes water resource availability and sustainability, wastewater compliance, supply economics and efficiency, and social acceptance and engagement.  They operate in a risk management framework, whereby the assess the water and related social risks, ecological risks and risks to human health and well-being, and make decisions on investments to support watershed protection, water access & sanitation, water for productive use, and education & awareness.  To date, they have made investments in 468 community water projects in over 100 countries. A key framework for their analysis is the food-energy-water nexus, in context of climate change, population growth, and global development.  IPCC scenarios  out to 2025 are used in this analysis.  His talked focused on the water stress in South Asia associated with growing population, irrigation, and increased number of power plants.

Koch remarked that uncertainty about the magnitude of climate change ended up being a relatively minor factor in decisions related to investing in individual water projects, as other factors dominated the decision making rationale.

JC reflections

The time horizons for business interest in climate adaptation is mostly out to 10 years, although big infrastructure investments are generally made for a longer time horizon.

In comparing these three presentations, one thing that struck me was that Swiss Re and Coca Cola have moved beyond the traditional fencelines for a company in dealing with climate risk.  Both SwissRe and Coca Cola are addressing climate risks to their companies through public/private partnerships – SwissRe through supporting government decisions for  improving the resilience of infrastructure that it insures and Coca Cola through working to improve local water infrastructure.

Adams’ presentation and his company Acclimatise provide an example of climate services provided by the private sector, for the private sector.  Big companies like Coca Cola with high vulnerability is managing this with in house expertise.  Both Coca Cola and Swiss Re have developed very sophisticated risk assessment/management models.

All three companies seem to accept prima facie the magnitude of the near term climate risks as laid out by the IPCC.  How vulnerable are these businesses to making a bad decision if the IPCC turns out to be wrong on the time scales of interest?  Well, it seems like they are not so vulnerable.  In the case of Acclimatise, they adopt the approach of looking for win-win or robust decisions, which are arguably decisions that make sense in any event, even if motivated by concerns about climate change.  In the case of Coca Cola, other drivers seem to dominate the actual decisions.  In the case of SwissRe, there is a clear advantage to them if property owners and local governments make decisions to increase the resilience of infrastructure.

In comparing the private sector perspectives with public sector perspectives presented in Part I (e.g. UNFCCC, DFID), it seems that the private sector focus is more consonant with the DFID framing of climate adaptation than with the UNFCCC framing.

Coming up in Part III:  robust decision making strategies.

Atlanta weather update:  Well, Georgia Tech is closed again today (tomorrow also), leaves me extra time for blogging (and to catch up on all the things I put off last week).  We are hunkered down, about 100,000 people in Georgia are without power (Midtown Atlanta is ok).  The biggest threat is that the ice storm will down trees, which is a bad thing for the environment and a really bad thing for power lines.  The current precip is graupel (little ice pellets); the good news these bounce right off the trees.  So as long as I have power, I will be able to keep blogging.

130 responses to “UK-US Workshop Part II: Perspectives from the private sector on climate adaptation

  1. If global warming, drink more Coca Cola!
    If climate change and extreme weather, call SwissRe!
    If nothing happens, read the IPCC reports!
    Long live the UNFCCC!

    • David Springer

      Acclimatise response is bs. They’re an opportunist company giving advice on climate change risk management. They’ve a vested interest in alarmism.

      SwissRe said there wasn’t enough historical data to reach any conclusions about “climate change” risk and does what they’ve always done build their own risk models to characterize potential economic loss and offer advice to customers on how to minimize it by being prepared and also how to best recover from it after the fact.

      Coca Cola just blew it off altogether saying water supply was their biggest problem and they haven’t changed their practices due to climate change.

      So basically businesses that aren’t in the business of milking a climate alarmism cash cow don’t want anything from government with regard to climate change except to be left alone to go about their business.

  2. “So as long as I have power, I will be able to keep blogging.”

    As a coastal New England native, I’m all too well acquainted with storms and consequent losses of power. During the last couple of tropical storms many towns around us lost power for over a week. It’s a reminder how dependent we really are on electric power, and what a blessing it is. Policies that play fast and loose with the life sustaining power grid should always be greeted with default suspicion.

    • Probably should have said default “skepticism.”

    • What concerns me is if they get a lot of freezing rain at Augusta. I hate to think what it might do to The Masters golf course.

    • @ pokerguy

      “…….always be greeted with default suspicion.”

      “Probably should have said default “skepticism.””

      Looking at the historical actions of the ‘warmists’ and associated ‘green’ groups and the ‘results’ achieved, I think you should stick with ‘suspicion’. A much better fit to the evidence at hand.

    • Thanks, Bob. Perhaps you’re right after all.

    • “Pokerguy.. ill stack up my business acumen against yours any day. Ill go first. 5 million invested with nvidia pre ipo.
      Next”

      Mosher, Well I’ll have to come up with some other explanation for what seems a certain lack of real world sophistication. Too bad, because lack of experience was the kindest for you….

      More seriously, I’m no J. Paul Getty I’d be the first to admit. But I’ve not done too badly as a partner in a small but profitable enough business for me to retire early.

      But maybe I was a cynic before I even started. Too long ago now to remember.

  3. thisisnotgoodtogo

    I, for one, believe that Swiss Re is being totally honest!
    What could they hope to gain? :)

    • if they overcharge for insurance relative to the risk, there are wiser competitors who will eat their business, if you believe in the free market.

      or maybe you have some leftist notion that all these re insurers are colluding.

    • thisisnotgoodtogo

      Mosher, insurers told the province of Ontario that since drivers who hadn’t any accidents in 7 years were overdue, they should pay higher rates.

    • thisisnotgoodtogo

      Mosher must have the notion in his noodle that it’s free market everywhah!

    • thisisnotgoodtogo

      Relative to PERCEIVED risk, eh, Mosher? You’re doing your bit.

    • Steven Mosher,

      Adam Smith disagrees with you. From “Wealth of Nation” (1776), chapter X, part II:

      People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

      History proves him right. Many large businesses are dominated by a small number of large firms, with large barriers to entry. Pice-fixing is commonplace, as seen by reading the newspapers (although only a small fraction appear there). So marketing efforts by one firm to raise prices benefit all, and are often unchallenged by competitors.

      Your advice to form a firm and compete with the giant insurers is quite daft.

    • “Your advice to form a firm and compete with the giant insurers is quite daft.”

      I’ve seen evidence of business related naivete in Mosher several times despite the fact that he’s obviously quite a bright fellow. I have no idea as to his background but I assume he’s an academic who’s not been in business for himself for any extended period, which inevitably supplies valuable insights into the ways of the world.

      The climate debate interests me, as do politics, from the point of view of personality and temperament. It seems to me after hanging around these blogs for 5 or 6 years now, that warmists tend to be quite naive in certain areas, which permits a kind of idealism not shared by skeptics.

    • Businesses love to glom onto the hot buzzword that both spurs govt investment in infrastructure they want and allows them to take credit for “being green.”
      Water access in North Africa, just as hardening against storms in coastal NY, is in issue if AGW is real or not. But if you include the magical phrase “because of global warming” in the request, it opens doors. What do you think they were going to do w the global warming slush fund (at least the part they don’t loot) except fund stuff they always needed anyway?

    • U guys surely do sound like a bunch of leftists. Next youll suggest extra regulation for these colluding giants.
      Pokerguy.. ill stack up my business acumen against yours any day. Ill go first. 5 million invested with nvidia pre ipo.
      Next

    • David Springer

      How does a stock purchase qualify as being in business for oneself for an extended period of time?

      pokerguy (aka al neipris) | February 12, 2014 at 5:07 pm |

      not been in business for himself for any extended period, which inevitably supplies valuable insights into the ways of the world.

      If that’s the case I’m a frickin’ business genius because I bought Dell at $0.50/sh and held it through seven splits.

    • Ha ha … Mosher really thinks it all operates as a free market?
      Talk about naive and idealistic.

    • “How does a stock purchase qualify as being in business for oneself for an extended period of time?”

      That was my reaction, but I honestly felt bad he seemed to feel the need to brag.

    • Mosher: “U guys surely do sound like a bunch of leftists.”

      That’s an interesting reply to a quote from Adam Smith. It also shows ignorance of the long history of corporate price-fixing — and a rigid ideological orientation.

      Such thinking dominates discussions of climate change, and plays a large role in reducing them to a catacophny.

    • Mosher –

      It seems to me that the price signaling needed to bring about the price correction is on a much longer time scale than usual. So, the difference between perceived risk and actual risk will not be detected by the consumers for many years, even decades. The competition is probably better off colluding than trying to convince the consumers of the lessened risk. Especially in the face of massive alarmist propaganda.

    • Mosher could use a little study of price theory. Starting with indifference curves. I am sure he will get it.

  4. thisisnotgoodtogo

    I love the last polar bears ever seen, that grace Coca Cola cans.
    It’s a tribute to their honesty and goodwill to all.

    • Here ya go Mosh; how it really works:

      A Lassez Faire capitalist fable:
      In a small, isolated town there exist some businesses; three supermarkets, two butchers, two bakers. Competition keeps prices down.

      But, the owner of Growing Supermarket is a popular man, he belongs to all the clubs, has a good sense of business and a flair for marketing and design. He has connections, and is able to present convincing business plans. His business booms.

      Almost Supermarket and MomPops Supermarket reduce prices, and claw back some customers.

      But, Mr Growing is man of ambition. He incorporates a butcher shop in his supermarket. He uses surplus cash to advertise. One stop shopping. Now MomPops, and both butchers are losing business.

      MomPops follows by starting a bakery in the operation, but are not cash rich and are unable to borrow on as favourable terms as Mr Growing. Growings also adds a bakery. He buys out a butcher and baker and shuts them down. He buys Almost, and replicates his supermarket there.
      Eventually, MomPops, and the remaining butcher and baker shut down.
      Growings is hiring, so they all get jobs. The mayor tries to enact laws to stimulate competition, but Growing tells him that is against economic theory, and helps fund the mayor’s next election campaign.

      Occasionally, somebody sees the opportunity and competition starts up. Growing has all the advantages, including having all suppliers on contracts (with extortionate terms of payment) so cuts prices, ups advertising, and watches for innovations to copy. The competitors don’t last. Some force Growing to trade at a loss for months, but with his accumulated reserves Growing prevails.

      Everyone is happy to shop on one stop, and barely notice the gradual rise in prices. Many suppliers go broke and more and more imported product comes into the market.
      Questions:
      1. Does Growing deserve his success? (That I can answer: Yes, undoubtedly)
      2. Is this result good for the general community?
      3. Is it good that everyone ends up working for one employer?
      4. Will such a system ever regulate itself and provide competition?

    • This is also a lesson in how wealth and profits are concentrated to fewer people. Mega-industries are a natural end-state of the free market. A free market ends up being a less-choice market.

    • Note to the fable … it does not mention the almost unlimited access to very cheap finance that big business enjoys. Access that startups rarely have.

      (…and I’m not sure how this ended up under thisisnotgoodtogo’s comment on bears!)

    • @markx | February 12, 2014 at 9:43 pm |
      That story could be about Walmart. I think Walmart brings low priced goods to the market which helps the poor stretch their dollars. They still have competition though. You don’t see their prices get higher and higher, do you? As always, data from the real world sheds light where fables and models can’t.

    • Walmart is a perfect example of the profits going to fewer people, some of the richest in the world in fact.

    • @ jim2 .. ” it could be about Walmart”.

      Precisely … and there are those who think Walmart is a good thing … but if they bothered to look a little more deeply they may question that which we are preached.

      Certainly as JimD says, a very few people get very, very rich from it.

    • David Springer

      re; very few people get rich from it

      What a load of BS. Walmart stock is in a great many mutual funds, pension funds, and etc. These in turn are owned far and wide by individuals with 401K, IRA, and/or pension plans both public and private. $73 billion worth of Walmart stock is institutional ownership.

      If you don’t know what the frick you’re talking about you should STFU.

    • Thanks David.

      re Wallmart.
      % of Shares Held by All Insider and 5% Owners: 51%
      % of Shares Held by Institutional & Mutual Fund Owners: 30%

      … and some of these fee charging executive bonus paying Institutuitonal investors and funds are big corporations too.

    • How can we punish Walmart for attracting hordes of unsuspecting customers and making obscene money? It just ain’t fair. I hear they don’t even pay no taxes. Unions busted them for not paying a living wage. Employees dying like flies. Seriously, Walmart employees are dying. You have to have a slave mentality and a death wish to work at Walmart. They wouldn’t let this exploitation of the people happen in Venezuela. They know how to deal with profiteers and kulaks.

    • markx –

      You seem to forget. Part of the ideology of free-market fetishists is the belief that in a fully free-market, businesses will only develop business plans that are good for their customers. That is why in a full-free market environment, businesses will not seek to underpay workers so as to maximize earnings for a few executives or prioritize short-term gain over long-term sustainability so as to maximize short-term investment returns. That is why businesses, in a truly free-market environment would not sell toxic products, or make profits from exploiting the public welfare such as by polluting the air.

      If there were ever a truly free-market environment, we would all see that corporations only do what is best for everyone, and that of course, the streets would be paved with gold.

      The fact that there has never been such a free-market environment in the history of the planet is purely happenstance. It’s a coincidence. It in no way informs us about whether or not free-market fetishism is reality-based.

      I’m sure that Shangri-La is right around the corner.

      I hope that clears things up.

    • The thing with Walmart is, if you don’t like working for them, find a different job. When Walmart can’t hire the people they need to run their business they will increase their pay.
      Another thing, the owner of Growing Supermarkets probably worked very long hours for years getting his business to be Growing, he also probably put all of the money he had, risked it. The people working there (or Walmart) didn’t, that’s why the owner makes a lot more money than the employees.
      The more valuable your work is, the harder you are to replace, the more money you make. Packing grocery bags is not a hard role to replace, it also doesn’t add a lot of value, don’t expect it to pay the same as say a Brain Surgeon, living wage or not. If you don’t like your wage, make what you do at work more valuable.
      Next, you are for the most part not going to get rich working for a static business. You want to get rich, start your own business (and probably a grocery store isn’t a good choice). Want to work for someone and still get a good chunk of money, risk your job, take a cut in pay and get a job at a startup with plans for going public and accept some equity instead of cushy hours and a big pay check. Work hard (though manual labor generally does not pay well period), long hour, provide high value for your work, and you’ll get paid well. Otherwise don’t expect to make anymore than the value you provide.

    • That’s right Micro, they can work elsewhere, or just drop out of the workforce. The people who whine about the success of Walmart should be more concerned about the abysmal workforce participation rate and the government debt that is piling up largely as a consequence of having to provide a safety net for those who choose not to be productive.

    • Deleting that comment was really some chicken doo-doo, Judith.

    • Sam Walton and his associates and the executives following have done a stunning job putting together a store offering goods at a low price. Their supply chain management is immaculate. Genius! They bring low-priced goods to millions of people who all have benefited and continue to benefit from their hard work. We shop there and at Costco and I appreciate what they have done. They have earned their millions and I don’t begrudge them that. After all, they have to run a global business; keep up with economic, political, and regulatory issues in multiple countries, and coordinate with thousands of other companies. They earn their millions.

      As far as many of the Walmart workers go, this is obvious and someone has to say it. Stocking shelves, cleaning up aisle 5, and directing people to the location of the paper towels isn’t worth $20/hour with benefits. The value just isn’t there. It’s worth maybe 10 bucks with no benefits. If companies are forced to pay unreasonable rates, robots will stock an clean up aisle 5 and smart phones will locate the paper towels. Be careful how you demand how other people spend their money, it won’t work out anyway.

      In the meantime millions of poor and middle class people like me are saved from local small business gougers. We get a break on our bills. That is what Walmart excels at, and they are the best.

    • ‘Free market’ capitalism is a wonderful thing and has brought about the incredible progress and development we now enjoy.

      But, this ‘free market capitalism’ ONLY functions due to a myriad of laws and regulations, covering everything from currency, to property rights, to company structures to financial systems. It really ain’t that ‘free’.

      Few envisaged corporations which would have world wide spread, and around which ‘Free’ trade agreements would be written, and for which laws would be restructured. (Well, a few did, and they are now running the world, to a certain extent.)

      Joshua sees the situation as it is (his comment couched in satire).

      Micro is a devotee to that great religious American system of belief that anyone can make it if they only work hard. (And don’t get me wrong, this truly made the USA great, and also gave it one of the greatest wealth disparities in the world, and the highest by far per capita or jailed population in the world.)

      Don Monfort is similarly immersed in this belief and also subscribes to the mantra that welfare payment systems are the problem. (I even saw an illustration the other day saying Welfare = Detroit, complete with pictures of a derelict city). Talk about confusing cause and effect. No, it was a fanatical and blind belief in ‘free trade’, ‘the market will regulate itself’ and ‘everyone can get a better job elsewhere’ that did that. Just horrific political and economic management. And Australia, with the lowest vehicle import tariffs in the world, is going down the same path as quickly as it can.

      The USA is an incredibly success story. Primarily because most of the working class are so infused with the religion of the American dream that they regulate themselves. This dream was once an attainable one, but today these poor saps in this pursuit get tied into pillaging credit systems where they can never win, while the whole finance system is geared up to make gigantic, minimal interest loans to huge corporations even if they are in the red, because that is where the obscene fees and bonuses are. (Tried to set up a business a few years ago in conjunction with a very successful entrepreneur. On first review of my $10 million business plan he said; “Great, but too small. These merchant bankers won’t even talk to you for less than $30 million, their fees and charges get too small”. (We are talking millions in bonuses, fees and charges here – mainly to a few individuals).

      The whole system is horribly slanted to favour the ultra rich and the time is coming where laws will have to be re-written lest a few corporations end up owning everything in the world, including us slaves.

      Super rich becoming the dictators of 21st century
      http://www.theage.com.au/comment/super-rich-becoming-the-dictators-of-21st-century-20140103-309jg.html

      There are now some 150 multi-national companies, which account for nearly half the total capitalisation of all firms {in the world}. Three quarters of these belong to the financial sector. This group of transnational corporations, which are strongly interlinked, poses a “too big (or too connected) to fail” problem (i.e. a situation in which the failure of any of these companies might have a systemic impact on the world economy).
      http://www.paecon.net/PAEReview/issue64/HelbingKirman64.pdf

      Wealth inequality in America http://www.youtube.com/watch?v=QPKKQnijnsM

  5. Insurance companies make money by the arbitrage between real risks (what they pay out in damages), and perceived risks (what clients are WILLING to pay in premiums).

    They can increase profit by decreasing actual risk, or increasing perceived risk. Its usually easier, and more proifitable, to increase perceived risks.

    Sodium chloride should be taken with each insurance company proclamation on AGW.

    • If you think they are overcharging, compete with them and prove your point

    • I don’t think they are overcharging, Mosh. They are charging what the market will bear. The market will bear more, if the perceived risk is higher. Increasing the perceived risk is no different than another industry using advertisements to sell their particular product.

      Just as I won’t trust a car salesman about claims of performance on his auto, I won’t trust insurance companies about claims on AGW. Both have vested interests in their product, that may or not intersect with mine.

      Perhaps you should stick to the science, and avoid the business aspects.

    • Steven Mosher Feb 12 3:34pm “If you think they are overcharging, compete with them and prove your point”. A new company will need to begin at mega-mega-buck size to have any chance of succeeding, and even then it will have years of underperformance as it establishes its brand and market while trying to match the suddenly reduced premiums of the existing players. Bear in mind that the elevation of perceived risk has given them a buffer with which to compete against would-be newcomers.

      A free market is like democracy, it’s the worst way of doing business except for all the others.

    • Actually, more insurance companies are expanding to take advantage of the lucrative insurance contracts around AGW risk. The political shift means big dollars entering the field quickly – large profit margins, which attract capital.

      And, the regulatory burdens involved make it challenging for competitors to enter the field – which extends the profitability curve. The pause may or may not reflect the energy accumulation, but it leads to inconsistency in political will (read: budgets), which makes the cost/time of adjusting to regulatory burdens a wildcard in the insurance companies equations – slowing entry to market.

      And – I have clients associated with insurance who have invested significant time/$ testing those waters (including funding politician’s and educational/pr campaigns to “feed at the government trough” if and when they are more certain the money will flow. Public choice around the Trillions which AGW promises to channel into mitigation/insurance is alive and well…

    • If they create a perceived risk that is too high they of course are open to price competition.

    • Mosher: Yes, thats how the free market system works.

    • Les Johnson sums it up.

      But the whole thing is compounded by the fact that if you are locked into loans from finance companies, a lot of the insurance is compulsory.
      So while you may be able to shop around, you cannot choose to go without.

    • You hit the nail on the head Les. The insurance companies will wisely nod their collective head in agreement that rates will have to go up due to climate change. Then, in order to pay out less (an old game with them), they will lobby government to force citizens to spend money on hardening of facilities. In my book, that’s the same as a tax.

    • They actually make most of their money on the earnings on retained capital…….the premiums they are holding and have not paid out in claims. In simple terms.

    • markx.

      SwissRE is in the re insurance business. think about it.

    • Mosh: Thought about it. – You don’t have re-insurance without insurance.

  6. SwissRe stands to gain a lot more from CAGW frenzy than Coca Cola stands to lose, but both corporate viewpoints were interesting.

    Another interesting recent article is this one by Pat Michaels, commenting on a recent editorial by climate scientist, Garth Paltridge:

    Will The Overselling Of Global Warming Lead To A New Scientific Dark Age?

    http://www.forbes.com/sites/patrickmichaels/2014/02/03/will-the-overselling-of-global-warming-lead-to-a-new-scientific-dark-age/

    Max

    • Another disbeliever in the free market.

    • Steven Mosher

      Another disbeliever in the free market

      Not at all, Mosh – just someone who knows how it works.

      (Irrational fear of imminent disaster goes up, so does disaster coverage plus insurance premiums – and insurance company revenues plus profits. Pretty simply, actually.)

      Ve Sviss know how to make a buck (or Franc).

      Max

    • thisisnotgoodtogo

      Mosher does think it’s free market everywhah!

    • @Steven Mosher | February 12, 2014 at 3:34 pm |

      Another disbeliever in the free market.

      Don’t forget we’re talking about a “free” market among very large accumulations of capital managed as (usually) public stock corporations whose managers need only 2-3 years of “successful” performance to move on to something better. Decisions that look good in the short term can be disastrous in the long, while those actually responsible are long gone.

    • thisisnotgoodtogo

      Mosher must have some notion that insurers would NEVER collude.
      Me too, they’re honest as the day is long.

    • @ Steven Mosher

      I THINK that I would like the free market. Know of any place I could go to observe one in action, just to be sure?

    • Another disbeliever in the free market.

      I don’t believe it’s that simple Steve. They only have to match the risk / perceived risk of their competitors. Even if they believe in the risk, it doesn’t make them right, and they’ll still make a lot of money.

    • The free market is a useful theoretical construct. There are barriers to entry in nearly every market and people do not always act logically. If they did Coach would be out of business and diamonds would be worthless. In a free market there can be no economic profits.

      There are significant barriers to entry into the insurance business and that business is regulated. There has been a lot of work done to understand economics since Adam Smith wrote A Wealth of Nations.

    • Another disbeliever in the free market

      U guys are laugh. Especially Mosher.

      If there were actually a “free market”, the United States of America would make zero cars, it would grow no cotton, and many large US banks would no longer exist. And Walmart can turn a profit only because it sources from the cheap materials and labor in communist China. Funny.

      If you have ever worked in the defense industry, you automatically forfeit your “free market” cred. Corporate welfare at its finest.

      U want free market? Move to Somalia.

    • Mosher:
      >Another disbeliever in the free market.

      Heh.
      There was an insurance company owned by a mutual society (was – they have since sold it off). They were always just a little cheaper than all the others. By their own admission, they could have been much cheaper, but they didn’t because they would have put the rest out of business. When the rest increased premiums (justified or not), they followed, despite having no reason and no motive to do so.

      Free markets do not always work as theory suggests, especially where regulation is imposed requiring consumers to purchase.

  7. Judith Curry

    Just Skyped with my daughter who is snowed in in Greenville, SC (at least she has a teenage son to take on some shovel-ready projects).

    Hang in there!

    Max

  8. I don’t think they are overcharging, Mosh. They are charging what the market will bear. The market will bear more, if the perceived risk is higher. Increasing the perceived risk is no different than another industry using advertisements to sell their particular product.

    Just as I won’t trust a car salesman about claims of performance on his auto, I won’t trust insurance companies about claims on AGW. Both have vested interests in their product, that may or not intersect with mine.

    Perhaps you should stick to the science, and avoid the business aspects.

  9. Steven Mosher: An example of insurance companies increasing perceived risk, while actual risks fall, and profiting from it. Please note that I have no problem with either the methodology or the profits. Its only business.

    A risk model, based on 4 scientists spending 4 hours together, cost consumers 82 billion dollars. Note that a reduced prediction in 2008 did NOT see a corresponding drop in rates.

    And I love the use of tiddly winks to select the models….

    From the article:

    For his part, Pielke returned to Colorado and set up a random number generator to rank RMS’ 39 climate models from 2008 — akin to blindly throwing darts to choose the best model.

    The outcome nearly matched the scientists’ consensus.

    “”So with apologies to my colleagues,”” he wrote in his science policy blog, “”we seem to be of no greater intellectual value to RMS than a bunch of monkeys.””

    Also note that an employee of the modelling company that the insurance industry uses (RMS), was a lead author of the AR4. No conflict of interest there, right?

    Even RMS admits that the lead author’s use of a graph showing more damages, was “”misleading””.

    Insurance rates, based on RMS models, went up over 40%, while actual damages were about 30% of predicted, and only 50% of historical. In other words, huge profits for the insurance and re-insurance industry.

    To see a chart of predicted damaged vs actual and average, see:

    http://rogerpielkejr.blogspot.com/2010/11/82-billion-prediction.html

    http://www.heraldtribune.com/article/20101114/ARTICLE/11141026/2055/NEWS?p=all&tc=pgall&tc=ar

  10. Pielke Jr looks at hurricane damage, and the Re-Insurance industry recation to it.

    Using the methodology from his 2008 paper, upated with damage to 2012, he shows no trend.

    Also interesting is the Insurance industry interpretation of Hurricane Sandy:

    “”most reinsurers are still within their annual catastrophe budgets for 2012 and not facing any capital impact… In the absence of Superstorm Sandy, reinsurers would have found it difficult to resist buyer pressure for further concessions. As such, Sandy’s impact has helped to stabilize market pricing on an overall basis and reinsurers have largely delivered to their clients in terms of capacity and continuity.””

    As Pielke says:

    In other words, thank goodness for Sandy.

    http://rogerpielkejr.blogspot.co.uk/2012/12/updated-normalized-hurricane-losses.html

  11. The insurance industry had a surplus of just about 600 billion dollars in 2012, in spite of the “increase” in climate disasters. Note this is a record surplus.

    http://www.iii.org/assets/docs/pdf/MunichRe-010313.pdf

  12. A Pulitzer Prize winning series of articles on insurance in Florida, and how the insurance companies used very shaky models to increase premiuims and profits.

    http://cf.htcreative.com/insurance2/insuranceriskhome.html#

  13. Kerry Emmanuel is on the board of two re-insurance companies. Note that re-insurers make money (or lose it), on the basis of the spread between actual risk and perceived risk. I would suspect that his vested interest is to increase perceived risk.

    http://starpas.azcc.gov/scripts/cgiip.exe/WService=wsbroker1/officer-detail.p?corp-id=F16896990

    http://sec.edgar-online.com/validus-holdings-ltd/def-14a-proxy-statement-definitive/2011/03/23/section12.aspx

    http://www.corporationwiki.com/Massachusetts/Boston/kerry-a-emanuel/60736184.aspx

  14. Did you hear the one about the environmentalist who spent over a million dollars to put in a green roof? He watered and tended it and overnight out of the blue it got tramped over with alien crop circles.

  15. john vonderlin

    This overview of historical hail damage trends in the U.S. gives insight into how insurance companies can manipulate the system. http://sciencepolicy.colorado.edu/socasp/weather1/changnon.html

    • thisisnotgoodtogo

      Mosher only gave slight and effete service for those he would sidle up to on this issue.
      ?
      It must be that bad.

  16. J. C. comment.
    “Koch remarked that uncertainty about the magnitude of climate change ended up being a relatively minor factor in decisions related to investing in individual water projects, as other factors dominated the decision making rationale.”

    This is a more telling comment than most people realize. Coke and many other corporations are excellent at paying homage to popular political agendas, but when it comes to making decisions, they rely on hard data. For project siting and design, building codes and historical information hold sway. In design meetings, I have never had big clients or insurance companies mention anything about climate change.

    One might think the agencies that create storm intensity curves consider future impacts of climate change. I have tried to determine if they do, but all I can find is that they pay lip service to climate change, and then continue to rely solely on historical data.

    If anyone knows differently, I would like to hear about it.

    • Bill +1
      In conversation with fellow consultants, the climate change agenda comes in during the sales process as a PR value-add, then as an after the fact PR value-add about “how the project addresses environmental/climate concerns.” In the actual project planning? Not so much.

    • Yes, the realistic and relatively short term focus of the business contributors is a welcome change from long-term doomsayers – as you say, very telling. It suggests, as I believe, that those furthest removed from real-life, day-to-day decision-making, are more prone to focus on particular long-range scare scenarios and promote a response which is out of proportion and not consonant with dealing with current, here-and-now, issues. The approach of Coca Cola is more likely to promote future well-being than any costly emissions-reduction programs.

  17. Bill: Business as a whole has AGW low on its list of concerns.

    Lloyds survey of business leaders showed that climate change ranked 32 out of 50, as a business concern.

    http://www.lloyds.com/~/media/Files/News%20and%20Insight/Risk%20Insight/Risk%20Index%202013/Report/Lloyds%20Risk%20Index%202013report100713.pdf

  18. Bill: In 2010, I had a business meeting, with a years forecast as the topic. As part of the presentation, I said that activity would increase about 75% in the next year. (we are in a boom/bust industry)

    I then asked everyone to guess at how much CO2 emissions would be reduced in the coming year. The company had specifically asked for our emissions plan as part of the forecast.

    Everyone guessed that we would reduce emissions 10%-25%.

    They were shocked when I said I would increase emissions 50%-75%

    I had to point out that we could not increase activity without increasing emissions. At the best, we could only reduce emissions intensity.

  19. I guess it is just a reflection on the economic, business and science urban based elite that agriculture and horticulture, the producers of food, the second most important requirement of our species next to water and an industry that has had to adapt to the ever changing weather and climate for some 8000 to 10,000 years has apparently been totally ignored and excluded from the discussion on adaption.

    As a now retired Australian grain grower we had to adapt every year to often a completely different seasonal weather patterns to that from the previous years.
    The only real adaption that would have been of direct and immense benefit to agriculture down here in SE Australia would have been the knowledge of the PDO phases and when they occurred and what they changed in our local climate and weather.
    In my case something that has taken a life time of some 75 years to understand that the phases of the PDO have a very significant effect on our local climate and the consequent seasonal weather ‘
    I can now tie in quite closely on a local basis the decadal long periods of cool wet seasons and the decadal long periods of dry hot seasons and drought with the cool negative phase of the PDO and the warm and for us dry phases of the PDO that I have seen over my lifetime.

    The rest is weather which agriculture has had to contend with for all those thousands of years past.

    The drive by the urban based business and scientific experts to force adaption strategies onto the populace is another still borne rather stupid strategy and can very easily back fire and turn out to be very costly and of the totally wrong sign leading to making a situation much worse as the adaption strategies as proclaimed to be required by the experts turn out to be the direct opposite to that required by the future unknown and almost totally unpredictable circumstances .

    A few years ago the wheat and barley breeders in our local large agricultural research institute told me they were now breeding and selecting varieties of crops that would only hit the fields a decade into the future, that would be able to tolerate the greatly increased temperatures predicted by the IPCC and alarmist scientists.
    Nobody told them that adaption strategy would be probably be for nought as the likelihood of cooler global temperatures instead of warmer temperatures becomes more likely.
    Effectively this adaption strategy promulgated by the climate scientists and experts for a sector of agriculture is now likely to turn out to be a massive waste of time and valuable resources if a global cooling occurs instead of the predicted warming.

    I look at that list of presenters in the above workshop and not one of them represents the sectors of our economy that will need to adapt in the most direct sense.
    All of those businesses suposedly pontificating on adaption that are only secondary effect businesses to the true adapters.
    Just leave the adaption business alone until a great more is actually known without doubt about the global climate and weather.
    If the push for adaption strategies to be forced onto the populace then like all those past catastrophic non eventuating climate predictions, the so called predicted to be required adaption strategies are far more likely than not to be of the completely opposite sign to that actually required or will be of no use whatsoever or worse have diverted immense resources away from the real and actual events that need to be adapted to at the time.when events do finally occur.

  20. as climate changes, people are adopting; can’t ”adopt” before it changes = you can’t cross a bridge, before you get to the river

    on the other hand: adopting to the phony GLOBAL warming is a sick joke it’s only fodder for the zombies… benefit for the insurance companies

  21. Some points which struck me as reflecting a realistic approach to an ever-changing world:

    Peter Adams: Accept uncertainty and plan for resilience, focusing on robustness to today’s and tomorrow’s potential climate – not necessarily the optimal solution. Some businesses are seeking opportunity, e.g. improved process efficiency, rainwater harvesting, renewable energy, green roofs, surface water drainage systems, etc.

    Megan Linkin: A collaboration between New York City and SwissRe has developed actionable recommendations both for rebuilding the communities impacted by Sandy and increasing the resilience of infrastructure and buildings citywide. The cost-benefit analysis of various mitigation efforts is guiding decision makers in the selection of which efforts to focus on.

    Greg Koch: In the context of their Global Water Stewardship Strategic Framework, Coca Cola undertakes extensive global risk assessment and analytics, that includes water resource availability and sustainability, wastewater compliance, supply economics and efficiency, and social acceptance and engagement. They operate in a risk management framework, whereby the assess the water and related social risks, ecological risks and risks to human health and well-being, and make decisions on investments to support watershed protection, water access & sanitation, water for productive use, and education & awareness. …
    IPCC scenarios out to 2025 are used in this analysis. His talked focused on the water stress in South Asia associated with growing population, irrigation, and increased number of power plants. Koch remarked that uncertainty about the magnitude of climate change ended up being a relatively minor factor in decisions related to investing in individual water projects, as other factors dominated the decision making rationale.

    JC: . How vulnerable are these businesses to making a bad decision if the IPCC turns out to be wrong on the time scales of interest? Well, it seems like they are not so vulnerable. In the case of Acclimatise, they adopt the approach of looking for win-win or robust decisions, which are arguably decisions that make sense in any event, even if motivated by concerns about climate change. In the case of Coca Cola, other drivers seem to dominate the actual decisions. In the case of SwissRe, there is a clear advantage to them if property owners and local governments make decisions to increase the resilience of infrastructure.

    If these extracts are representative of business responses, then they should have far more influence on policy than climate scientists, bureaucrats and international (busy-)bodies.

    • Faustino – Nice!

      Some businesses will adapt according to their time horizons (10 years is way too long for most businesses, not near long enough for others).

      Others will adapt to take advantage of public monies/rent-seeking – using the technologies that give them the best ROI (leech-factor) per public dollar spent.

      Part of the unspoken issue is that 10 years from now, the technology will be more efficient, so to invest in adaptation now is a relative waste of capital both in terms of cash-flow and long term results.

      It is like Denmark and windmills – tilting towards the unseen prophetic vision, even when good intentioned, leaves you less able to deal (capital, infrastructure, technology, public will, etc.) with the real issues when they come.

    • Mark, your last point is something which I’ve argued for many years.

    • A fan of *MORE* discourse

      Plain Fact I  The wind-energy industry is driving radical advances in manufacturing technology that are transformationally advantageous across broad industrial sectors.

      Plain Fact II  The strip-mining industry, not so much.

      Common-Sense Conclusion  The 21st century economic principle “Green proves good” is proving mightily true across a broad spectrum of far-sighted enterprises and multigenerational human concerns.

      \scriptstyle\rule[2.25ex]{0.01pt}{0.01pt}\,\boldsymbol{\overset{\scriptstyle\circ\wedge\circ}{\smile}\,\heartsuit\,{\displaystyle\text{\bfseries!!!}}\,\heartsuit\,\overset{\scriptstyle\circ\wedge\circ}{\smile}}\ \rule[-0.25ex]{0.01pt}{0.01pt}

  22. This seems to me akin to a doctor tending a patient and asking for some independent opinions.

    And asking Coca Cola and SwissRe to assess this particular patient is a bit like asking a couple of vultures which portion they would prefer.

  23. It would be interesting to know the extent to which the insurance industry is mislead by the poor accuracy of the IPCC’s models. Do they endevour to find a more accurate source? Do they use their own history of temperature? How cost effective are the IPCC;s models?

  24. John Robertson

    Would you not need conditions to change, before you waste capitol on adapting?
    So far what has changed in human history?
    Do we have any data that stands out from the noise?
    Given we are most all descendants of people smart enough to escape a glacier,what adaptation is required?

  25. thisisnotgoodtogo

    Mosher is putting in digs about leftist thinking.

    Which brings me to wonder where have all the crazed leftist alarmist denizens gotten to ? All silent.

    Maybe because there is a hint of possible agreement with non-alarmists on an issue.

    • well you have to admit that when the military and some businesses start to take climate risk as a reality rather than a leftist ploy, that ideologies about the military and business get a bit scrambled.

      • “well you have to admit that when the military and some businesses start to take climate risk as a reality rather than a leftist ploy, ”
        The Military is treating it as a possible risk, and creating a contingency plan, either from internal or Administration request. In no way does it actually mean they have to believe it.

  26. Maurice Strong: businessman as environmentalist

    The Merchants of UNCED
    “The environment is not going to be saved by environmentalists. Environmentalists do not hold the levers of economic power.”

    -Maurice Strong, UNCED Secretary-General
    snip

    RIO DE JANEIRO – Confronted with the avalanche of green rhetoric that fell upon the Earth Summit, it was easy to lose sight of the fact that United Nations Conference on Environment and Development (UNCED) Secretary-General Maurice Strong and his leading collaborator, Stephan Schmidheiny, chair of the Business Council for Sustainable Development, are businessmen first, environmentalists second.
    http://judithcurry.com/2013/09/07/big-green-in-denial/#comment-378193

    Maurice Strong: Our Man in Rio (and San Francisco, too)
    April 30, 2005

    Do you think we’re reaching the peak of oil production? Do you foresee an abandonment of our oil-based energy economy, and if so, will we take that step because we’re “running out” of oil or because of global warming?

    It’s quite clear that the world’s oil reserves are not going to last forever. It’s also clear that the fossil-fuel era is far from over. So there’s no question that we’re going to continue to rely on fossil fuels for some time. But it’s also true that we may see a new era in which fossil fuels play a diminishing role. It’s not going to happen suddenly. But there’s still a lot of oil around, especially in the Athabasca tar sands of Canada, which has almost as much oil as the whole of Saudi Arabia, and the oil sands of Venezuela. So it’s too early to write off the petroleum economy. It is not too early to start to make the transition to an energy economy that relies less and less on oil and gas. And indeed coal is the main source of energy in China. It’s a big source in the U.S. and India and other big energy-consuming countries. But we can’t wait until fossil fuels run out. Coal is going to last for centuries. Because of the environmental constraints we have to move quite quickly and rapidly now to try to develop alternatives, and also to reduce the environmental impacts of using fossil fuels.
    http://www.emagazine.com/magazine-archive/maurice-strong-our-man-in-rio-and-san-francisco-too

    Maurice Strong: A principle Godfather of CAGW
    http://judithcurry.com/2014/01/25/death-of-expertise/#comment-442818

    Hansen and the “Destruction of Creation”
    Re-Energize Iowa: An Opportunity to Lead the Nation in Stewardship of the Earth and Creation
    Jim Hansen, 5 August 2007
    A price on carbon emissions is needed to stretch oil and gas supplies as we develop technologies needed for the world ‘beyond petroleum’. The carbon price will drive efficiency and low-carbon or no-carbon energy sources. If instead we continue business-as-usual, addicted to more and more fossil fuel use, as oil begins to run out we will be unprepared
    http://judithcurry.com/2013/09/09/laframboises-new-book-on-the-ipcc/#comment-378223

    Question:
    Would it not be better to address the real and non-trivial issue of HC depletion directly, rather than try to implement energy policy through the back door via the Proxy of Carbophobia Dogma?
    When have we ever had a good approach or solution when we hide real issues behind the curtain of Oz??

    all the best
    brent

    • I should have added this:

      The key to a political elite class controlling the sheeple IMO is as noted by Pynchon below.

      “If they can get you asking the wrong questions, they don’t have to worry about answers.”
      ― Thomas Pynchon, Gravity’s Rainbow
      http://www.goodreads.com/author/quotes/235.Thomas_Pynchon

    • brent

      You are right.

      Hansen is no businessman or economist.

      He is also not a visionary.

      He is an CAGW-activist with a scientific background.

      He is even a pretty lousy forecaster of global warming caused by human GHG emissions (i.e. his failed 1988 prediction)

      His feigned concern for dwindling fossil fuel resources is simply a ruse.

      He wants to kill the “coal death trains”.

      And he thinks that a carbon tax will do the trick, without even contemplating what the unintended negative consequences could be, especially for the least affluent and most vulnerable.

      There are better sources of information than Hansen.

      Max

    • MAnacker,
      Geophysicists such as Hansen and Raymond Pierrehumbert know all too well the limits in our fossil fuel supply.

      Denialists such as yourself are more upset about the move to alternative energy approaches than climate science. You just use the climate scientists as a scapegoat for your own frustrations on not seeing us turn into a petrochemical Nirvana.

    • @manacker
      Let me offer a slightly different perspective Max
      The small snippet from Hansen is probably as close to truth as Hansen has ever uttered. I disagree with his terminology of “running out”. I also disagree that a carbon tax is the only method of making adjustments. However I don’t disagree that HC depletion is a real and nontrivial issue. I also don’t disagree that we have dramatically underpriced energy compared to a sustainable basis.

      All the Best
      brent

      Special Edition of Royal Society Journal on the Future of Oil
      http://www.ukerc.ac.uk/support/article3539-Special-Edition-of-Royal-Society-Journal-on-the-Future-of-Oil

      The future of oil supply
      An interview with guest editors Steve Sorrell and Richard Miller
      http://rsta.royalsocietypublishing.org/site/2014/2006.xhtml

      The future of oil supply
      Oil is a finite and rapidly depleting fossil resource, and the capacity to maintain and grow supply has been a recurrent concern for over 50 years. During the first decade of this century, an increasing number of commentators began forecasting a near-term peak and subsequent terminal decline in the global production of conventional oil—so-called ‘peak oil’. This process was forecast to lead to substantial and sustained disruption of the global economy, with alternative sources of energy being unable to ‘fill the gap’ at acceptable cost on the time scale required. Countering this, other commentators argued that rising oil prices would stimulate the discovery and enhanced recovery of conventional oil, the development of ‘non-conventional’ resources such as oil sands, and the diffusion of substitutes such as biofuels and electric vehicles, without economic disruption. In support of their arguments, the first group cite the plateau in crude oil production since 2005 and the associated rise in oil prices (figure 1), while the latter group cite the recent rapid growth in US tight oil production. But despite these differences, there is a growing consensus that the era of cheap oil has passed and that we are entering a new and very different phase.
      http://rsta.royalsocietypublishing.org/content/372/2006/20130179.full

      Former BP geologist: peak oil is here and it will ‘break economies’
      http://www.theguardian.com/environment/earth-insight/2013/dec/23/british-petroleum-geologist-peak-oil-break-economy-recession

    • I commend Rud Istvan and Brandon Shollenberger for doing a good job in counterspinning the IEA. Unfortunately the IPCC isn’t the only government or quasi-government organization whose propaganda needs to be “deconstructed”

      They observe:

      IEA Facts and Fictions
      by Rud Istvan and Brandon Shollenberger
      THE IEA PUTS A DATE ON PEAK OIL PRODUCTION
      For which the IEA caught hell in 2009. And then got ‘religion’ in 2010. The 2008 scientifically based indirect peak oil projection was disappeared, replaced by comforting fictions in a prettily colored figure.
      Whoever wrote the WEO 2010 peak oil box (pp.125-6) courageously summarized the fundamental conundrum despite figure 3.19’s fictions:
      http://judithcurry.com/2013/02/11/iea-facts-and-fictions/

      When we consider who rapped the IEA’s knuckles and gave them religion, we should remember that the IEA was set up by the OECD, so I would suggest that it would be the OECD head who would be most directly involved in administering the religion.

      Although it would be his successor as OECD head directly involved in this case, it’s not out of order to consider some comments from Don Johnston who was OECD head from 1996 to 2006

      Donald J. Johnston, OECD Secretary-General from June 1996 to June 2006
      http://tinyurl.com/69zq6u

      Sustainable Energy For Future Generations
      Don Johnston 2001

      In the mid-1950s, at the time of President Eisenhower’s “Atoms for Peace” initiative, nuclear energy was seen as a godsend for both the developed and the developing world. Fossil fuels were understood to have a finite life, which of course they still do, although it has been modestly extended beyond estimates of that day.
      http://www.nea.fr/html/pub/newsletter/2001/sustainable-energy19-1.pdf

      The above minor snippet is nevertheless interesting. Here is Don Johnston, then head of the OECD (which set up the IEA and through which the IEA reports) admitting that in the big picture it’s long been well known that fossil fuels have a finite life (EG.. a foremost issue being oil peaking), but that the timing of the peak has been modestly extended beyond estimates made in Ike’s time.

      In the link below, Don Johnston touts nuclear as the workhorse replacement energy source. IMO this has been the primary political plan all along

      Energy crisis looms, experts warn
      Worldwide oil, gas production expected to peak in 2020
      Only solution to impending shortage will be higher price
      Nov. 26, 2003. 06:33 AM

      Rees and other experts took issue with the more benign energy outlook presented by Don Johnston, secretary-general of the Organization for Economic Co-operation and Development.
      Johnston, a cabinet minister in the Pierre Trudeau era, argued that a huge expansion of nuclear power would reduce emissions of greenhouse gases and slow the rate of climate change. Most questions about nuclear power could be solved by technology once countries were past the political and economic hurdles, he said.
      But many people simply don’t trust assurances from the nuclear industry, Johnston acknowledged, including his own wife.
      “Whenever I tell her all the good things about nuclear, she says: `They lied.'”
      Snip
      The Royal Society session also heard warnings that the looming challenge from declining oil and gas production is being obscured because governments in Canada are preoccupied with the Kyoto response to climate change.
      “Kyoto is a distraction,” Gilbert said of the multinational agreement for reducing greenhouse-gas emissions.
      http://mailman.mcmaster.ca/mailman/private/cdn-nucl-l/0311.gz/msg00116.html

  27. Remember that corporations (whom I have nothing against) have the funds, staff and experience to appear “good corporate citizens” and “responsible risk managers”. Or anything you please! (Who can blame them for not wanting to be sitting ducks for media attacks, litigation etc?)

    However, your local dress shop of or panel beater or takeout has to make a sale or two today, and can’t do flattering consultations with climate scientists and the like.

    A corporation can even sell itself carbon credits or environmental consultancy, while moving money about and getting tax breaks. It can pass on costs and turn regulatory burdens into publicity or even new branches of business. It can also point to its virtuous record of “consulting” when going after government contracts (and don’t some of these consultants of virtue know it – and don’t they charge accordingly!)

    When academics and public bureaucrats (whom I also have nothing against) claim to be talking to “business”, they are actually talking to people much like themselves – only better paid and a bit easier to sack.

    Corporations are all very well, and they can turn on a better lunch, that’s for sure. But can you really say you have talked to business? To business? Really?

  28. Doesn’t real competition, resulting in public goods, low prices
    etc imply government and bureauscrats don’t intervene to play
    favorites, interfering with Adam Smith’s ‘invisible hand?’

    Puzzled – serf – livin’ – on – the – littoral..

  29. thisisnotgoodtogo

    Dr. Curry will be a professional consultant when she realizes that she can send the bill for dinner while she watches comments here on her consultancy.

  30. thisisnotgoodtogo

    Not to mention the bill for constructing the thread and watching commentary on her consultancy.

    It’s what consultants charged the government of Ontario for, while consulting on eHealth when the government had already spent $6 billion consulting and were still at Square One on doing what any bank could have done in a trice.

  31. thisisnotgoodtogo

    Sorry, the auditor at that point had said $1 billion wasted.

    “At one point, the auditor writes, the eHealth program branch had “fewer than 30 full-time employees but was engaging more than 300 consultants.”

  32. Although the climate always changes, there’s been no trend in global mean temperature over this *Current* past decade, but there have been large decadal shifts in the past 90’s, 80’s, 60’s, 30’s etc…
    .
    It seems like there were no climate risk experts in the past yet we were able to meet those challenges and thrive. But now we have all these experts, but no change in climate. That’s a big risk, if you’re a climate risk expert.

  33. David Springer

    The negative reactions from the peanut gallery with regard to large multinational businesses makes me wonder about the truthiness of Tea Party Republicans being a core consituency of climate change skepticism. These were not typical Republican opinions of private enterprise.

    • The reason that many people think that large multi national corporations are wonderful for us all is because large multi national corporations spend a lot of time and money telling that they are.

    • I think that your opinions are actually the ones that are atypical. Government regulation is bad. In a few cases it may be necessary, but I don’t see a lot of people advocating more regulation of businesses. I am certainly not. You don’t seem to be able to separate advocating regulation and being critical of businesses. Being critical of businesses is a good thing in my mind, where the shoe fits. Certainly businesses are capable of making mistakes, being self-interested, etc. I assume that everyone has had an experience with an employer that they would rather not repeat. I certainly have. Assuming that corporations are up to good things seems a little naïve to me. Further assuming that government is up to good things is equally naïve. Both have a long history of self-interested expansionism. The more power they can obtain the better. To industry’s credit, their activity is generally good in an economic sense. The same can not be said of government, but I for one have not quite crossed that libertarian line where government is an unnecessary evil. Unfortunately, history has proven that chaos is worse than limited government. Also unfortunately, the current governments have conveniently forgotten that they have limited powers. In conclusion, I think that being critical of both government and business is not at all out of line with the Tea Party ideals. They could both use a lot of cold water on their plans.

    • @ David

      We have (at least) two wings of the Democratic party in the US. The overt wing and the covert wing.

      The covert wing identifies itself as ‘Republican’.

  34. thisisnotgoodtogo

    David Springer,
    I think more accurately it’s a response to the question of the credibility of the corporations’ intent in seeking consultation. It has benefits all of it’s own, worth big bucks.

  35. A fan of *MORE* discourse

    The healthy human heart manages multi-decade timescales with grace.

    Whereas self-centered never-grew-up libertarian thinking has become so short-sighted as to be completely nutty.

    The accelerating nuttiness of far-right neo-conservative private-sector Randianism is entirely obvious to everyone, eh Climate Etc readers?

    \scriptstyle\rule[2.25ex]{0.01pt}{0.01pt}\,\boldsymbol{\overset{\scriptstyle\circ\wedge\circ}{\smile}\,\heartsuit\,{\displaystyle\text{\bfseries!!!}}\,\heartsuit\,\overset{\scriptstyle\circ\wedge\circ}{\smile}}\ \rule[-0.25ex]{0.01pt}{0.01pt}

  36. Yes, well, the trouble is that “completely nutty” is in the eye of the beholder. Personally, I think the whole dog and pony show known as the Catholic Church is as nutty as it gets. Grown men wearing funny hats laboring under the impression they’re infallible is pretty classically nutty it seems to me…

    But it’s a big deal for you and I respect that FAn. If you want to believe in things other’s might justifiably call insane, it’s ok with me. And yet that’s a courtesy you’re not willing to extend to others.

  37. Mitigating risk in the world we know …

    In the next two months, how many of those 100,000 powerless customers will buy a generator to keep the freezer, the hot water heater and a few lights on during the inevitable next event? I don’t have a generator but the local grocery store does. Which one of us is right?

    Coca Cola, with 1,000 plants worldwide can take a portfolio approach to measuring and mitigating risk. This is different from Bob’s Cabinet Shop with a production facility and sales room on the Outer Banks where his mitigation strategy will be a policy from Swiss Re or equivalent.

  38. Antonio (AKA "Un físico")

    I have read the presentation by Koch about global water sustainability and it is very interesting to check that Coca Cola has 468 community water projects around the world.
    There is a small issue though. Koch and Coca Cola, seem to accept that by the year 2020, global temperature would increase in 0.8 K (not said if with respect to the year 1800, 1900, 1950, …).
    I am a physicist and I like to debate about climate change’s basis. May be, in a near future, in this blog, we could talk about the reliability of climatic models in order to provide an improved assessment to the private sector.

  39. William Lenihan

    To Mosher and all like minded: As for SwissRe’s risk assessments go to Roger a Pielke Jr’s blog. Roger shot SwissRe out of the saddle quite a whole ago. Refute him if you can.

  40. Generalissimo Skippy

    Predictably – the mere mention of the private sector descends into morality tales of the evils of capitalism from the usual suspects. These are always leftist neo-socialist with the same political agenda – and a need for climate catastrophe to engineer some unspecified – and always in history catastrophic – transition in economies and cultures.

    The theory of free markets is of course far removed from the morality tales of the left. Corporations are never ethical – individuals within organisations are hopefully ethical but there is no magical device by which this can be guaranteed. Hence the rule of law which evolves in the democratic process – which for business includes anti-monopoly, consumer and worker protections, environmental laws, child labour laws and much else. Real freedom – including free markets – cannot exist without laws.

    There is no push from the right to do away with law, democracy, freedom, free markets or government. It is all rhetoric from the left to justify an unlimited role for government – inevitable bureaucracy, technocracy, autocracy and despotocracy. Utter disaster for people and society – if ever they got near again to any semblance of power.

    The solutions for carbon emissions are utterly simple in principle. A comprehensive multi-gas strategy that builds resilience and maximizes economic development at the same time – and accelerated technological innovation. But this is not what the radical left wants to hear.

  41. Having been chief actuary for a reinsurance company, I actually know how reinsurers decide what to charge for reinsurance against natural catastrophes. The two key factors are expected loss and Cost of Capital. The former is straightforward. The reinsurer wants to charge enough to cover its average loss + expenses & profit. Since the average cost is uncertain, the company wants a risk factor in the rates.

    The subtler piece is cost of capital. Companies are limited in how much risk they can take on. E.g., suppose Reinsurance Company A can afford to lose no more than $100 million from a single event. Their capacity is $100 million. That figure limits how much reinsurance they can sell. A reinsurer wants to charge enough to make a decent profit per unit of capacity.

    • thisisnotgoodtogo

      David in Cal,

      ” The reinsurer wants to charge enough to cover its average loss + expenses & profit. Since the average cost is uncertain, the company wants a risk factor in the rates.”

      So the higher they can call the expected average cost, the better?
      If people are all jacked up with fear, unrealistically led to expect 100 yr. events to occur every 2 yrs. now their profits go way way up?

  42. Pingback: UK-US Workshop Part III: Strategies for robust decision making for climate adaptation | Climate Etc.

  43. Pingback: UK-US Workshop Part IV: Limits of climate models for adaptation decision making | Climate Etc.

  44. GIGO. When the wrong risks, attributed to the wrong causes, are assessed, nothing of use will be concluded, and any actions taken on the basis of the assessment will be seriously counter-productive, to the point of exacerbating damage (like Australia’s damming of rivers to save water when floods were actually about to be the problem!)

  45. Pingback: UK-US Workshop Part V: Broadening the portfolio of climate information | Climate Etc.