Climate Risk & Insurance

I had a great time interviewing my friend Nick Gardner at Premiums for the Planet on The Climate Dad Podcast the other day. He had incredibly insightful things to say about reducing risk and saving money while tackling climate and insurance. I'd encourage you to subscribe wherever you get your podcasts, or go to TheClimateDad.com for a quick link!

For those of you who like to read what we're talking about, I started the podcast talking about probabilities and risk, and how the way you intuitively think about risk and how we engineer for it is probably wrong. Transcript sample below:

...One of the things that I think that was so important about the Paris Climate Accords in 2015 was that it took what the scientists were talking about and converting them into policy goals. Specifically, it said that we should all endeavor to remain below 1 .5 degrees Celsius of warming and we must absolutely stay below two degrees. Well, where'd they come up with those numbers? It has to do with something known as tipping points.

These are events that will happen in the natural world, and once we pass them, we cannot go back. Our world will have been permanently changed. They include things like melting ice sheets, methane release from loss of permafrost, dying coral reefs around the globe, and the changing of ocean currents. The thing is this, scientists don't really know what level of heat will cause these events to happen, because the Earth is a complex multivariable system.

The that scientists can come up with are probabilities of when these events will happen. So when the goals of one and a half and two degrees C were created, they were effectively formed by scientific best guesses. And the scary thing is we're now well past the point of zero probability for most of these events. Like we cannot guarantee that they will not happen. We just, we're gonna find out. So for example, even if we stopped emitting right now, there's a chance that we've already bought some of these outcomes.

And that really comes down to a discussion of probabilities and chance. To truly eliminate chance tends to be very expensive. I was trained as an engineer, and so sometimes I think about this like the way an engineer would. For example, the levees around New Orleans are built post-Katrina to a 100-year storm probability, which is to say that every year there's a 1% chance that a storm will be stronger than what the levees were designed for.

But there's a couple of things kind of embedded in that statement and that we assume when we say it. The first is that we as a country have accepted that New Orleans will probably have catastrophic deadly flooding like it experienced with Katrina far sooner than you might guess. How many years would it take for a 50% probability of occurrence to stack up? It's not 100 years. It's not even 50 years. It's actually 41 years. If you have a 1% chance of it happening every year, then after 41 years you'll have accumulated a 50% total likelihood.

Think about it this way, are you okay with losing New Orleans again in our lifetimes?

Continued at TheClimateDad.com...