[Vision2020] Mutually Insured Destruction

[Art Deco]

  [image: The New York Times] <http://www.nytimes.com/>

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August 27, 2013
Mutually Insured Destruction By MAGGIE KOERTH-BAKER

In March 1947, a winter of heavy snowfall followed by a quick thaw and
torrents of rain swelled rivers throughout England and Wales. Over the
course of just 13 days, at least 27,000 homes and businesses were flooded.
It was one of the worst natural disasters in British history. But thanks to
climate change, which can prevent the thick snowpack from which spring
floods draw their strength, that sort of flood may be less likely to happen
today.

The seemingly inexorable (and increasingly irreversible) march of planetary
warming is something we tend to associate with increased devastation —
floods and famine, droughts and storms. In many cases, that’s true. But
there’s a reason scientists prefer the term “climate change” to “global
warming” — not everything is getting warmer. As the global average
temperature rises, it alters weather systems, changing patterns of heat and
cold and shifting wind currents. Risk is redistributed along with them.

No one understands risk better than the insurance industry — except,
perhaps, the reinsurance industry, the companies that sell insurance to
insurers, which also need protection from risk exposure. As the risk
managers for the risk managers, reinsurers follow climate change
obsessively. A great deal of money is at stake. If the 1947 spring floods
happened today, they could cost the insurance industry as much as $24
billion.

*In June of this year, the Geneva Association, an insurance research group,
released a report called “Warming of the Oceans and Implications for the
(Re)insurance Industry.” It laid out evidence explaining how rising ocean
temperatures are changing climate patterns and called for a “paradigm
shift” in the way the insurance industry calculates risk. Traditionally,
insurers have predicted the future by studying the past. If your house is
on a 100-year flood plain, for example, that’s because an actuary looked at
historical data and calculated that there’s a 1 percent chance of your
neighborhood’s experiencing a flood of a certain magnitude every year. Over
the course of 100 years, that massive flood is likely to happen about once.
*
* *

* But the past can no longer reliably predict the future. A 2011 paper in
The Journal of Hydrology suggests that the risk of spring floods associated
with snowmelt in Britain will decline. That same year, a paper published in
the journal Nature indicated there may be a link between climate change and
an increased risk of fall flooding in Britain.*

To fully grasp how our changing climate affects their downside, the
insurance and reinsurance industries need new ways of modeling risk —
systems that look at what’s happening now rather than what happened decades
ago. That drive is leading insurance wonks to join forces with climate
scientists, who might have found a solution.

*While the ever-practical* insurance industry has long focused on the past,
climate science has, for the most part, been fixated on the far future.
Scientists built computer models of virtual worlds and used them to test
hypotheses about what would happen to our children and grandchildren as the
planet becomes hotter.

“But for most practical decisions,” says Myles Allen, a climatologist at
Oxford University, “what the world will be like in 50 years’ time is less
important than understanding what the world is like today.”

A new method of statistical analysis called “event attribution,” developed
by Allen, allows climate scientists to better understand how weather
patterns work today. It examines recent severe weather events, assessing
how much of their probability can be attributed to climate change. These
impacts are so complex that isolating them would be like taking the sugar
out of a chocolate-chip cookie — nearly impossible, everything is so
intertwined. Event attribution tries to break through this ambiguity using
brute force.

Harnessing a tremendous amount of computing power, scientists create two
virtual worlds: one where the atmosphere and climate look and operate like
ours does today, and one that looks more like the preindustrial world,
before we started releasing greenhouse gases from factories, cars and
buildings. They alter the weather in both simulated environments and see
whether natural disasters play out given differing sea-ice levels,
greenhouse-gas concentrations and sea-surface temperatures. They do this
over and over and over, tens of thousands of times, producing an estimate
of how much our altered climate affected the outcome.

It’s a slow process that requires sophisticated software, which is why it’s
a relatively recent development. It took Allen and his team six years and
50,000 simulations to analyze the causes behind an episode of fall flooding
in Britain in 2000. Eventually, they were able to say this: 9 times out of
10, the world with climate change had a 20 percent greater chance of
experiencing those floods than the world without.

That sort of less-than-satisfying answer is common with event attribution.
In 2012, Allen and his team published a paper on the heat wave that baked
huge swaths of Russia in the summer of 2010. Their conclusion: that climate
change made only a modest contribution, but a warmer climate had made that
sort of heat wave more likely to occur in general.

It doesn’t fit well on a protest placard, but this information may one day
help build better actuarial tables, translating complicated data into
real-world impacts. If reinsurers expect to spend more money on losses in
your region, your insurance company’s insurance gets more expensive, and
your policy should, too. But it doesn’t always work that way.

Florida is a case in point. There, where some 2.4 million people live less
than four feet above the high-tide line and where many U.S.-bound
hurricanes are likely to pass, insurers can only use historical models to
calculate risk. Climate scientists estimate that sea levels will rise
anywhere between 8 inches and 6.6 feet by 2100 — enough to inundate whole
neighborhoods in Miami, even on the lower end. The past offers a
comfortable fiction that could limit rate hikes by writing the risk off the
books.

As more groups like the Geneva Association call for risk models that
account for climate change, politicians are going to get a different
message. Denying climate change isn’t just foolish — it’s bad for business.

Maggie Koerth-Baker is science editor at
BoingBoing.net<http://boingboing.net/>and author of “Before the Lights
Go Out,” on the future of energy
production and consumption.


-- 
Art Deco (Wayne A. Fox)
art.deco.studios at gmail.com
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