Anti-Semitism: Local, National & International

As I described last week, I participated in my college’s “We Stand Against Hate” series. While my talk commemorated International Holocaust Day, I didn’t speak directly about anti-Semitism. Instead, I focused on my experiences in the Holocaust and the connections that I have made between that horrible event and the eventualities of climate change under business as usual practices. I included my encounters with both Holocaust and climate change deniers.

I also showed some of the anti-Semitic caricatures that I received in my mailbox at the university (see my December 3, 2019 blog) and talked of British climate activist Roger Hallam’s alleged belittling of the Holocaust experience in comparison to the dangers we can expect from unmitigated climate change.

anti-Semitic, anti-Semitism, Jew, Jewish, discrimination, anti-Zionism, Palestine, Israel

One of the anti-Semitic cartoons I received in the mail

I talked to both my wife and the college president’s chief of staff when I was first considering using the caricatures in my talk. Both objected to the inclusion. My wife protested because she saw them as irrelevant to the talk; the chief of staff thought that the writing at the bottom would be unreadable. In the end, I kept them in regardless.

One of my colleagues in the Chemistry Department emailed me an Atlantic article by Walter Reich that came out the same day as my talk. I have emphasized the segment below that addresses the conflation of anti-Jewish sentiments with objections to Israel’s policies toward Palestinians.

On January 27, 1945, Soviet troops liberated Auschwitz. The date is now consecrated as International Holocaust Remembrance Day, as the world vowed never to allow murderous anti-Semitism to recur. Yet 75 years later, attacking Jews has once again become socially acceptable in many countries—across the left-right ideological spectrum, and among different groups that blame Jews for their grievances and oppression.

The recent eruptions of anti- Semitism in America have awakened us to a prejudice that has long resided, in quiet ways and in many forms, in this country. And the part of it that now disguises itself as anti-Zionism—hatred of the Jewish state that was established in the wake of the Holocaust as a refuge for Jews—has even seemed, to some, virtuous, a sentiment they believe puts them in humanity’s moral vanguard.

And anti-Semitism has returned, in part, because the general public’s knowledge about the Holocaust— of what exactly it was, who exactly was murdered in it, how many were killed, and how anti-Semitism spawned it—has diminished. For a time, that knowledge discredited anti-Semitism and those who indulged in it. But the passing of survivors who experienced the Holocaust and could testify to it, the denial and minimization of the Holocaust, and the hijacking of the word itself to advance numerous other causes, great and small, all combined to diminish its memory. The horrifying knowledge of where anti-Semitism can lead has been, in large measure, lost in a miasma of forgetting, ignorance, denial, confusion, appropriation, and obfuscation.

Indeed, the writing at the bottom of the cartoon above talks about the suffering of the Palestinians. For me, however, the images sting much worse than the writing. They are based on old, anti-Semitic tropes and their message is clear: if the Nazis had finished their job and murdered all Jews, the Palestinian problem wouldn’t exist. That is anti-Semitism reduced to its essence.

Figures 1 and 2, compiled from Anti-Defamation League data, show some recent trends. Anti-Semitic incidents in the US are clearly on the rise, as is the anti-Semitic sentimentally within the Middle East and the North African countries. These clearly reflect the consequences of successfully equating anti-Jewish and anti-Israeli sentiments.

anti-Semitic, anti-Semitism, Jew, Jewish, discrimination, ADL, Anti-Defamation League,

Figure 1Anti-Semitism within the US

anti-Semitic, anti-Semitism, Jew, Jewish, discrimination, anti-Zionism, Palestine, Israel

Figure 2Global anti-Semitism

One can argue with the Anti-Defamation League’s definition of anti-Semitism; it is, itself, a Jewish organization. However, it is much more difficult to argue with the statement that the cartoons make about people of my background.

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Noah’s Ark and Humanity’s Survival

January 27th was both International Holocaust Remembrance Day (IHRD) and the beginning of a new semester at my school (Brooklyn College of CUNY). To commemorate the day, my school invited me to speak about my Holocaust experiences and explain how they tie in with my teaching. My talk was the first in a BC series of “We Stand Against Hate” seminars, which will also address diversity and equity within Brooklyn College, Japanese American Internment Day of Remembrance, Jewish refugees in Shanghai, and Indigenous people, among other topics

President Michelle Anderson’s “We Stand Against Hate” series has been a campus fixture since spring 2017. Throughout the year, the initiative often features lectures, workshops, concerts, programs, and events that reflect our ongoing commitment to elevating dialogue, enhancing understanding and compassion, and celebrating the voices that make up our diverse campus community.

In my talk, “When the Past Writes the Present: From Holocaust Survival to Climate Change,” I tried to echo my goals here on this blog: connect my early life experiences of the Holocaust with a warning about the global consequences of unmitigated climate change.

During the question and answer period following my talk, one of my friends and colleagues—a professor in the Judaic Studies Department in my school—brought up the Biblical flood.

I had seen this analogy before, in Jonathan Safran Foer’s book, We Are the Weather. It includes a small chapter, “The Flood and the Ark,” in which the author describes a series of collective suicides in Jewish history in spite of the fact that Judaism forbids the act.

He mentions the Siege of Masada as one of the largest mass suicides in Jewish history (Masada is now the number one tourist attraction in Israel). Our knowledge of Masada comes to us mainly through the writings of Flavius Josephus, who described it as a full collective suicide: the Jews decided they would rather die than submit to the invading Romans. Foer follows the subject with a look at the Warsaw Ghetto uprising in 1943. I was there as a baby and most of my family was murdered during this event. We know about the Ghetto uprising in large part from the Oneg Shabbat milk cans, Emanuel Ringenblum’s ingenious information storage system. The people didn’t directly commit suicide in either case—i.e. they didn’t kill themselves.

In Masada they killed each other en masse. In the Warsaw Ghetto, to my knowledge, nobody killed himself or arranged for somebody else to do so but all those who rose up knew that they would ultimately be unsuccessful and be crushed brutally. The uprising started on April 19, 1943 and ended with the burning of the Ghetto on May 16th, 1943.

The Germans invaded Poland at the start of WWII on September 1, 1939 and the last resistance was recorded on October 6th of the same year. It lasted only a few days longer than the one in the Ghetto. That Ghetto uprising came in the wake of the Great Deportation, where—between July and September 1942—about 300,000 Jews were deported to and murdered at Treblinka with no resistance from any party. That uprising was not a suicide; it was a resistance meant to show that the murder of Jews could have a price.

From these two examples of uprising/suicide, the book moves to two current attempts to store collections of thousands of samples of DNA in case a global cataclysmic event destroys present life on this planet. One such storage space is the Svalbard Global Seed Vault in Norway, which got some press recently when it flooded with melting snow. There is another facility under construction: the “Noah’s Ark” at the Moscow State University. Given the name of the latter and the aims of both, it was not a stretch to consider the biblical flood and Noah’s Ark, which was, itself, constructed as a sort of living bank of DNA samples.

Genesis, flood, Noah, Ark

1859 German Drawing of Biblical Genesis Flood and Noah’s Ark

The story of the cataclysmic flood shows up in Judaism, Christianity, and Islam, and as early as the epic of Gilgamesh. Wikipedia gives good sources for related stories—including some geological indications that some accounts of these events have seeds in the physical history of Earth.

Jonathan Safran Foer brings it up mainly to make the point that it took Noah considerably longer to build the ark than we have in a projected business as usual scenario before the climate change-fueled floods advance in full.

I strongly suspect that my Judaic studies friend explored the concept at a considerably deeper level than the element of DNA preservation. According to the Bible, the flood came about as a sort of attempt to “reverse” creation because God wasn’t happy with the end result of his first draft. In other words, mankind’s sins brought down the wrath of God. But God didn’t like this solution either and after the flood He made a deal with Noah not to repeat the exercise

It is, however, interesting to guess how long it took Noah to build the ark. There are countless estimates available. For example:

Genesis, flood, Noah, ark

Accordingly, this would mean it took him 100 years to build the ark, a number that almost precisely matches the estimated time it will take us to build the mitigation and adaptation infrastructures necessary to counter our own extinction—but longer than we actually have to act.

To my shame, in spite of having the Jewish Bible as an important anchor in my education, I had never made the connection before.

I want to thank my Judaic studies friend for putting me on the right track.

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Climate Change Refugees: Where Will They Go?

I have seen some alarming new reports of late. Two of them describe the start of environmental, climate change-powered migrations within rich countries. In the US, the key motivator is sea level rise:

The Great Climate Retreat is beginning with tiny steps, like taxpayer buyouts for homeowners in flood-prone areas from Staten Island, New York, to Houston and New Orleans — and now Rittel’s Marathon Key. Florida, the state with the most people and real estate at risk, is just starting to buy homes, wrecked or not, and bulldoze them to clear a path for swelling seas before whole neighborhoods get wiped off the map.

By the end of the century, 13 million Americans will need to move just because of rising sea levels, at a cost of $1 million each, according to Florida State University demographer Mathew Haeur, who studies climate migration. Even in a “managed retreat,” coordinated and funded at the federal level, the economic disruption could resemble the housing crash of 2008.

Australia’s raging bushfires are also starting to trigger major displacements that it is ill equipped to handle.

As Al Jazeera reports, the Davos forum (see last week’s blog) addressed the problem on a global scale. “Davos: World needs to prepare for ‘millions’ of climate refugees – Richer countries may become a rising source of refugees as climate change forces people to flee their countries.”

The world needs to prepare for a surge in refugees with potentially millions of people being driven from their homes by the impact of climate change, the United Nations High Commissioner for Refugees said on Tuesday.

Speaking to Reuters at the World Economic Forum in Davos, Switzerland, UN Commissioner Filippo Grandi said a UN ruling this week meant those fleeing as a result of climate change had to be treated by recipient countries as refugees, with broad implications for governments.

President Trump’s Davos response was a complete dismissal of climate science and scientists:

“They are the heirs of yesterday’s foolish fortune tellers,” the president said. “They predicted an overpopulation crisis in the 1960s, a mass starvation in the 70s, and an end of oil in the 1990s.”

“This is not a time for pessimism,” Mr. Trump declared, adding, “Fear and doubt is not a good thought process.”

Over my nearly nine years writing this blog, I have frequently talked about climate change refugees (see June 29July 12, 2016; April 310, 2018 blogs). I have consistently focused on those coming from developing countries, who are knocking on the borders of rich countries in search of safety. Clearly, at Davos, the UN recognized the trend and tried to convince these rich countries to recognize climate refugees as having similar rights to political ones.

Now the situation is quickly developing wherein rich countries are creating their own climate refugees. Where are these refugees supposed to go?

Well, last week, the peer-reviewed scientific journal PLOS ONE (from the Public Library of Science) published a paper that attempts to address this question within the United States:

Robinson C, Dilkina B, Moreno-Cruz J (2020) Modeling migration patterns in the USA under sea level rise. PLOS ONE 15(1): e0227436.

Sea level rise in the United States will lead to large scale migration in the future. We propose a framework to examine future climate migration patterns using models of human migration. Our framework requires that we distinguish between historical versus climate driven migration and recognizes how the impacts of climate change can extend beyond the affected area. We apply our framework to simulate how migration, driven by sea level rise, differs from baseline migration patterns. Specifically, we couple a sea level rise model with a data-driven model of human migration and future population projections, creating a generalized joint model of climate driven migration that can be used to simulate population distributions under potential future sea level rise scenarios. The results of our case study suggest that the effects of sea level rise are pervasive, expanding beyond coastal areas via increased migration, and disproportionately affecting some areas of the United States.

In general, we find that previously “unpopular” migrant destinations (areas with relatively low numbers of incoming migrants) would be more popular solely due to their close proximity to counties that experience “direct effects”. The East Coast will experience larger effects than the West coast because of the large coastal population centers and shallower coastlines, indeed, all counties adjacent to coastal counties on the East coast are marked as indirectly affected. Existing urban areas will receive the largest magnitudes of migrants, as they represent the most attractive destinations, which will accelerate the existing trends of urbanization. We find that the southeast portion of the United States will experience disproportionately high effects from SLR-driven flooding due to the large vulnerable populations in New Orleans and Miami. These results show that by driving human migration, the impacts of SLR have the potential to be much farther reaching than the coastal areas which they will flood.

In other words, people will likely start moving to more rural, inland areas of the country in addition to flooding into already crowded cities. There is no question that the escalating environmental refugee issue poses—in addition to a massive humanitarian and economic challenge—a major security issue.

The Army

Indeed, a May 2019 publication by the US Army demonstrates the challenge:

According to a new U.S. Army report, Americans could face a horrifically grim future from climate change involving blackouts, disease, thirst, starvation and war. The study found that the US military itself might also collapse. This could all happen over the next two decades, the report notes.

The senior US government officials who wrote the report are from several key agencies including the Army, Defense Intelligence Agency, and NASA. The study called on the Pentagon to urgently prepare re for the possibility that domestic power, water, and food systems might collapse due to the impacts of climate change as we near mid-century.

I went to the original report. As far as reports go, it’s relatively short (50 pages). I strongly recommend reading it (I intend to use it in my classes).

While the Army is only one of four branches of the US armed forces—the rest include: the Air Force, Navy, and Marines—it is submitting its own climate change report. We have talked about this before. On September 9, 2014, I briefly mentioned a climate change report, “Global Trends 2030,” by the US National Intelligence Council (NIC) on the impacts of climate change on US national security. Congress has mandated that the NIC produce one every four years. That report also stresses the main details of climate change, including the important role that sea level rise and the surge of environmental refugees play in impacting US security.

However, the next report in this series, “Global Trends 2035,” which I covered on May 23, 2017, presented a very different vista. It came out about five months after the inauguration of President Trump. Initially, when it was posted, it looked like it would be a continuation of the previous “Global Trends 2030.” But shortly after, clicking on the posted report brought up something that was hardly recognizable. Indeed, it is nearly impossible to find the phrase “climate change” in it—an almost complete denial of the issue, expressed as deliberate blindness. Nor was the change of wording an anomaly. The federal government has made widespread attempts to eliminate climate change from its vocabulary.

There have been exceptions – a movie, “The Age of Consequences” (see April 9, 2019 blog), made with overwhelming participation from uniformed soldiers, described climate change as a major destabilizer and an important accelerator of global insecurity. Even in this context, however, the film framed the growing number of global environmental refugees as the main culprit.

The newest Army report that I mentioned above came out one year before the next election. It’s becoming more difficult to deny that climate change is occurring, given that we are seeing its effects everywhere. In a sense, the writers try to walk the line between two contradicting political landscapes. They emphasize certain aspects of the problem while pointedly ignoring others. For instance, they don’t distinguish between anthropogenic (man-made) and natural climate change, although they know full well that most data and most scientists attribute nearly 100% of climate change (distinguished from specific weather) to humans.

On the other hand, the report takes a novel step—its Executive Summary lists all the steps that must be taken to mitigate the impacts of climate change and approximates the resources needed to accomplish them. The steps themselves are neither groundbreaking nor army-specific; they are ones that every country, city, and industry needs to take. The report starts by identifying specific problems:

  • Lack of Organizational Accountability for and Coordination of Climate Change-Relat­ed Response and Mitigation Activities
  • The Lack of a Culture of Environmental Stewardship
  • Potential disruptions to readiness due to restrictions on fuel use.
  • Lack of coordination and consolidation in climate-change related intelligence.
  • Lack of Organizational Accountability for and Coordination of Climate Change-Related Response and Mitigation Activities
  • Lack of Climate Change-Oriented Campaign Planning and Preparation
  • Problem: Power Grid Vulnerabilities
  • Climate Change and Threats to Nuclear Weapons Infrastructure

The report is also unique in that it discusses the thawing of the Arctic and the advantages that Russia, one of our “traditional” enemies can derive from that. The map below, taken from the report, demonstrates this threat.

Russia, military, climate change, Arctic, security

Clearly, climate change represents a security threat not just in terms of the refugees it produces but also militarily. I wish us all good luck in dealing with this mounting crisis. We’ll need it.

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Climate Change Economics: Present Costs and Long-Term Threats

The Davos meeting in Switzerland is in full swing. President Trump is there, as is Greta Thunberg; climate change will be at the top of the agenda. The World Economic Forum (WEF) is organizing the meeting. In preparation, the WEF, in collaboration with PwC (PricewaterhouseCoopers), issued a report on the impact of the state of the physical environment on the world’s economic activities: “Nature Risk Rising: Why the Crisis Engulfing Nature Matters for Business and the Economy.”

I am citing two of the key paragraphs but I strongly recommend that you review the whole 37-page report:

Risks emerging from dependency of business on nature

All businesses depend on natural capital assets and ecosystem services either directly or through their supply chains. Our research shows that $44 trillion of economic value generation – more than half of the world’s total GDP – is moderately or highly dependent on nature and its services, and therefore exposed to risks from nature loss.41 To estimate the extent to which the global economy depends on nature, we have assessed the reliance on natural capital assets of 163 economic sectors and examined them at an industry and regional level, based on the economic value creation of each industry. Our methodology is detailed in Appendix A.

Industry dependency on nature

Industries that are highly dependent on nature generate 15% of global GDP ($13 trillion), while moderately dependent industries generate 37% ($31 trillion). Together, the three largest sectors that are highly dependent on nature generate close to $8 trillion of gross value added (GVA42). These are construction ($4 trillion), agriculture ($2.5 trillion) and food and beverages43 ($1.4 trillion). This is roughly twice the size of the German economy. Such sectors rely on either the direct extraction of resources from forests and oceans or the provision of ecosystem services such as healthy soils, clean water, pollination and a stable climate. As nature loses its capacity to provide such services, these sectors could suffer significant losses.

Scientists and politicians no longer have a monopoly on speaking about the dangers of the global impacts of accelerating climate change. Nor are we restricted to computer-simulated long-term predictions. We see the damage on a daily basis—both physically and monetarily—and (at least some of us) realize that the impacts will reach us all.

Around the world, some are moving climate change from polite (or not!) discussions about what might take place in the distant future to more concrete ones about immediate consequences. If we don’t take steps to minimize the impacts and insure ourselves against major effects, we will pay the price. It’s an inevitability—the only questions are how soon and how much.

Real estate is obviously one of the first casualties. The industry is impacted by almost everything that climate change can throw at us: sea level rise, extreme weather, fires, etc. Significant parts of the real estate industry are financed through debt; that debt accumulates as the disasters pile up. Last week I looked at the Federal Reserve’s efforts to include climate change risk in its analysis of real estate transactions.

An article from News Landed summarizes the climate change-fueled economic losses in some major US cities.

United States taxpayers are on the edge of bankruptcy with loss of safety due to an increase in change of climate. “There may be a threat to the availability of the 30-year mortgage in various vulnerable and highly exposed areas,” Berman wrote in the San Francisco Fed report…

Currently, the US owes $3.8 trillion due to the extreme weather events and loss of property of worth. The following picture shows the loss caused by climate change.

gdp, US, cities, extreme weather, property,  climate change, losses

Figure 1 Financial loss caused by climate change in various US cities

The data in Figure 1 came from BlackRock Investment Institute. Last week, BlackRock announced a major policy shift:

In an exclusive interview with Andrew, the money management giant’s chief, Larry Fink, discussed his decision to make climate change a focus of BlackRock’s investment strategy. The shift could reshape how Wall Street invests.

What BlackRock will do, according to Mr. Fink’s latest letter to C.E.O.s:

— Exit certain investments that have a “high sustainability-related risk” — but not all, since fossil fuels remain central to the global economy.

— Start to press corporate managers on their environmental goals, including leaning on companies to adhere to the Paris climate accord’s targets.

— Introduce more funds that avoid stocks related to fossil fuels.

BlackRock is the world’s largest asset manager; it controls around 7 trillion US$ in assets. When it speaks, the world listens.

Figure 2 shows a map of the continuous (monetary) environmental losses in the US from 2002-2017.

climate change, disaster, loss, environmental

 

Figure 2 Losses in the US from where climate change-caused disasters have struck repeatedly

The lightest yellow dots above represent losses of $150,000. The darkest red ones amount to over $5 million over the 15-year period:

In the last 16 years, parts of Louisiana have been struck by six hurricanes. Areas near San Diego were devastated by three particularly vicious wildfire seasons. And a town in eastern Kentucky has been pummeled by at least nine storms severe enough to warrant federal assistance.

Here is what the NYT writes about the longer-term viability of investing in properties that are subjected to such risks.

WASHINGTON — Banks are shielding themselves from climate change at taxpayers’ expense by shifting riskier mortgages — such as those in coastal areas — off their books and over to the federal government, new research suggests.

The findings echo the subprime lending crisis of 2008, when unexpected drops in home values cascaded through the economy and triggered recession. One difference this time is that those values would be less likely to rebound, because many of the homes literally would be underwater.

In other words, the financial powers are dumping responsibility for at-risk areas in the US on the federal government. The latter just keeps rebuilding on top of the wreckage, ensuring a cycle of climate-caused destruction.

Canada is dealing with these issues somewhat differently:

GATINEAU, Quebec — Along the coast of the United States, people who lost homes to Hurricane Dorian are preparing to rebuild. But Canada — which has faced devastating flooding of its own — is testing a very different idea of disaster recovery: Forcing people to move.

Unlike the United States, which will repeatedly help pay for people to rebuild in place, Canada has responded to the escalating costs of climate change by limiting aid after disasters, and even telling people to leave their homes. It is an experiment that has exposed a complex mix of relief, anger and loss as entire neighborhoods are removed, house by house.

Some parts of the US are trying to adopt similar policies. For example:

Nashville is trying to move people like the Laidlaws away from flood-prone areas. The voluntary program uses a combination of federal, state and local funds to offer market value for their homes. If the owners accept the offer, they move out, the city razes the house and prohibits future development. The acquired land becomes an absorbent creekside buffer, much of it serving as parks with playgrounds and walking paths.

Climate change is increasing the program’s urgency. While a number of cities around the country have similar relocation projects to address increased flooding, disaster mitigation experts consider Nashville’s a model that other communities would be wise to learn from: The United States spends far more on helping people rebuild after disasters than preventing problems.

What are the impacts on the mortgage markets?

Climate change could punch a hole through the financial system by making 30-year home mortgages — the lifeblood of the American housing market — effectively unobtainable in entire regions across parts of the U.S.

That’s what the future could look like without policy to address climate change, according to the latest research from the Federal Reserve Bank of San Francisco. The bank is considering these and other risks on Friday in an unprecedented conference on the economics of climate change.

For the financial sector, adapting to climate change isn’t just an issue of improving their market share. “It is a function of where there will be a market at all,” wrote Jesse Keenan, a scholar who studies climate adaptation, in the Fed’s introduction.

In the next blog I will focus on how climate change is already impacting our national security.

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The Federal Reserve and Climate Change

Four days ago, the NYT featured Paul Krugman’s op-ed, “Australia Shows Us the Road to Hell,” where he described the urgent situation of the fires now engulfing the entire continent and hypothesized about strategies for confronting the political issues blocking relevant policy changes:

What might an effective political strategy look like? I’ve been rereading a 2014 speech by the eminent political scientist Robert Keohane, who suggested that one way to get past the political impasse on climate might be via “an emphasis on huge infrastructural projects that created jobs” — in other words, a Green New Deal. Such a strategy could give birth to a “large climate-industrial complex,” which would actually be a good thing in terms of political sustainability.

Can such a strategy succeed? I don’t know. But it looks like our only chance given the political reality in Australia, America, and elsewhere — namely, that powerful forces on the right are determined to keep us barreling down the road to hell.

On the front page of the same issue of the NYT, Lisa Friedman wrote, Trump’s Move Against Landmark Environmental Law Caps a Relentless Agenda”:

WASHINGTON — President Trump on Thursday capped a three-year drive to roll back clean air and water protections by proposing stark changes to the nation’s oldest and most established environmental law that could exempt major infrastructure projects from environmental review.

Paul Krugman warned of political forces on the right and the damage they were doing/could do but even he probably didn’t see that coming.

Depending on the election outcome, it will be either next year or 2025 before we can expect the federal government to be of any help with the issue. In fact, at least for now, the federal government will likely do everything in its power to accelerate the damage that climate is inflicting on the US and the world.

Fortunately, the federal government is not the only one in charge of the money. The Federal Reserve System (also known as the Fed) is the US’ central banking system. It is under Congress—and the Board of Governors that runs it must report to that body—but it is, “an independent agency that makes decisions based on the best available evidence and analysis, without taking politics into consideration.”

In addition, though the Congress sets the goals for monetary policy, decisions of the Board—and the Fed’s monetary policy-setting body, the Federal Open Market Committee—about how to reach those goals do not require approval by the President or anyone else in the executive or legislative branches of government.

The Fed has a large impact on the economy—among other powers, it sets the interest rates and thus directly influences key activities. These include housing (through mortgage rates) and the value of the US currency relative to other major currencies, which impacts both trade and the money available for major infrastructure projects.

Federal Reserve, government, bank, congress, open market committee, I’m glad to see that it looks like several of the 12 districts of the Reserve Banks that make up the Federal Reserve are taking the impact of climate change much more seriously than the federal government as a whole.

I had never heard of the American real estate blog Curbed before now but I will be rectifying that oversight. One of its articles from October focused my attention on the San Francisco Federal Reserve and how its publication is giving special attention to the present impacts of climate change, “How climate change creates a ‘new abnormal’ for the real estate market”:

A report from the San Francisco Federal Reserve underscores how climate shifts create big investment and economic risks

The publication page for the San Francisco Federal Reserve, part of the nation’s central banking system, isn’t known for light reading. Recent research papers, such as “Yield Curve Responses to Introducing Negative Policy Rates” or “Precautionary Pricing: The Disinflationary Effects of ELB Risk,” aren’t exactly meant to go viral.

But a new set of papers around climate change should gain an audience beyond academic and economic circles. Titled “Strategies to Address Climate Change Risk in Low- and Moderate-income Communities,” this collection of 18 articles by academics and experts collectively offers “one of the most specific and dire accountings of the dangers posed to businesses and communities in the United States,” according to the New York Times.

Other central banks and bankers are taking notice of climate change as well; Since 2017, 46 central banks and regulators have joined the Network for Greening the Financial System, according to the Financial Times, including representatives from China, France, and the United Kingdom. The World Economic Forum’s 2019 Global Risk Report listed three risks of climate change—extreme weather events, failure of climate change mitigation and adaptation, and natural disasters—as both the most immediate and most damaging.

These risks will also affect real estate investments and the operations of the real estate industry, which, despite increasingly grave reports about the impact of climate change on land use and sea levels, has not taken the policy steps and process reviews necessary to deal with the coming challenges.

The special San Francisco Federal Reserve issue of the Community Development Innovation Review addresses how climate change is already impacting the real estate market and offers some detailed advice on how we can adapt:

Without smart, proactive investments in adaptive capacity and resilience, low- and moderate-income (LMI) communities will likely be disproportionately affected by climate change-related events.1 This issue of the Community Development Innovation Review explores these investment opportunities and calls on the community development sector to take a leadership role in preparing vulnerable regions most at risk for a “new abnormal.”2

This issue would not have been possible without the extraordinary work of its guest editor, Jesse M. Keenan. A leading thinker on climate change risk—even adding the helpful term “climate gentrification” to the lexicon—Jesse recruited a remarkable group of thirty-eight authors to write for this issue. Their contributions, and Jesse’s, advance the community development sector and help us better prepare for a changing world.

Despite the challenges that lie ahead, I’m encouraged by the work that’s already begun. As recently as this summer, in fact, the Low Income Investment Fund—a national Community Development Financial Institution—issued a $100 million “Sustainability Bond,” the first public offering directly aligned with the United Nations’ Sustainable Development Goals.3 If that’s any indication, the community development sector has already begun to mobilize capital to address the impacts of climate change in LMI communities.

Nor is the San Francisco Federal Reserve alone. The Dallas Federal Reserve echoed the sentiment:

CORPUS CHRISTI, Texas/ WASHINGTON (Reuters) – Dallas Federal Reserve President Robert Kaplan faced more questions on one particular topic than any other at a recent lunch with local business owners and community leaders on Texas’s Gulf Coast.

Texas has suffered catastrophic floods and billions in related losses in recent years. Now, “it’s hard to meet with a business person or a city or a community leader in this state” who doesn’t have questions on climate change, Kaplan, a former Goldman Sachs investment banker and one of 17 Fed policymakers, said in response to a question at the Sept. 20 lunch.

It’s not just Texas. After devastating fires in Northern California and corrosive storms on the Carolina and Florida coasts, the Fed’s regional banks are delving deeper into how the earth’s warming will impact U.S. businesses, consumers and the country’s $17 trillion asset banking system.

I will keep looking at the economic and social impacts that climate change is fueling on the real estate market, mortgage rate, insurance market, immigration, and the US army.

Stay tuned.

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Where Are We Living? Can We Stay There?

A New Year! A New Decade!

By now, we have all made our wishes and resolutions. I am sure that everyone is hoping for better times. However, the news around the world has been very bleak. Globally, since the New Year, the fires in Australia and the US’ killing of Gen. Qassem Soleimani and others have dominated the news. Iran is viewing the latter as an act of war and has promised to retaliate militarily. Meanwhile, NYC, where I live, has also faced anti-Semitic attacks.

I have written before on Australia’s wildfires (see my January 14, 2013 blog). However, the recent fires dwarf those that came before. An Australian’s op-ed in The New York Times sums it up: The bookstore in the fire-ravaged village of Cobargo, New South Wales, has a new sign outside: “Post-Apocalyptic Fiction has been moved to Current Affairs.”

Comparisons to atomic bombs and committing suicide have been cropping up everywhere. For instance:

 BBC: What is Australia doing to tackle climate change?

The New York Times:

Australia Fires Keep Spreading as Military Reservists Called Up

NBC: Australia’s fires could change the country forever

 

I have family in Australia; some live in Melbourne, in the southeast, others are in Brisbane and the Gold Coast on the east. The deadly fires didn’t reach them but some of the refugees from the disaster areas did, as did some of the smoke. My family there is much more nonchalant about the matter than I am. I am studying every moment of the fires, paying close attention to their locations and scopes. I know that now is only the beginning of the fire season and that in future years things will get worse.

I will give updates on devastating fires around the world periodically in future blogs. Now that we have entered into a new decade, I think it’s time to look at how climate change is impacting individual segments of the global economy that we can see and measure now. One of the key subjects is the real estate market. After discussing that, I plan to look into the insurance market, environmental immigration, security, and politics. All of these topics are obviously connected.

We desperately need to shift our perspectives on climate change. We have been exclusively using relatively short-term references, with a generational time limit. We regard long-term predictions with great suspicion and a strong conviction that somehow, in a more distant future, something will turn the tides in our favor. I’ve dealt with these decadal shifts in outlook on climate change and other matters before (April 18, 2017) but starting the 2020s it’s time to look more closely at what we can do to shift these trends in our favor.

I will start with an excerpt from the April 18, 2017 blog to get us on that earlier wavelength:

The Shifting Baselines Ocean Media Project grew from its three founding partners (Scripps Institution of Oceanography, The Ocean Conservancy, and Surfrider Foundation) to over twenty conservation groups and science organizations

For the fishing industry, this takes the following shape:

shifting baseline, fishing, past, future, watershed, generation, degradation, little ice age

Figure 1

The references change from generation to generation, ultimately resulting in a complete degradation of the natural stock that could have survived without human interference. Human interference is obviously not always destructive; it can often balance natural growth through human needs. For that to take place, however, we need people to be aware of how to determine such a balance and how to regulate human impact to maintain that balance. We need the scientists.

In another blog (February 23, 2016), where I described the flow of people between Cuba and Miami, I reminisced on an experience I had in Cape Town South Africa. I had discussed a recent trend of rich white South Africans buying real estate on the island of Mauritius as insurance against the uncertainties in South Africa:

In other words, the good times in Miami might not last much longer as the effects of climate change increase. I encountered a parallel situation during my last visit to Southern Africa. On my way to a conference in Mauritius (July-August 2013 blogs), we visited South Africa. A local family in Cape Town hosted us for dinner. As the conversation flowed and we told our hosts where we were going, they mentioned that among white South Africans, Mauritius is a popular place to buy property as an insurance against racial deteriorations in South Africa. I asked them if they took into consideration the impact of climate change on their choice of sanctuary, and got a confused stare in response. The topography of Mauritius (July 30, 2013) has some similarities to that of Cuba. The photograph below shows a beautiful landscape that is characteristic of the area we visited. It is certainly not as flat as southern Florida and one might easily consider it a perfect refuge in case of a water “siege” on Miami.

A few months ago, (September 2019) I talked about the Florida Keys, where climate change-triggered sea level rise was prompting the bulldozing of certain coastal neighborhoods:

The Great Climate Retreat is beginning with tiny steps, like taxpayer buyouts for homeowners in flood-prone areas from Staten Island, New York, to Houston and New Orleans — and now Rittel’s Marathon Key. Florida, the state with the most people and real estate at risk, is just starting to buy homes, wrecked or not, and bulldoze them to clear a path for swelling seas before whole neighborhoods get wiped off the map.

By the end of the century, 13 million Americans will need to move just because of rising sea levels, at a cost of $1 million each, according to Florida State University demographer Mathew Haeur, who studies climate migration. Even in a “managed retreat,” coordinated and funded at the federal level, the economic disruption could resemble the housing crash of 2008.

Yet the impacts of climate change have yet to reach the pathways of migration within the US. People are still moving from colder northern states to warmer southern ones:

Table 1 – The fastest growing US states in the last decade

US, growth, states, Texas, Florida, Arizona, Idaho, Utah, Colorado, South Carolina, North Carolina, Washington, population, immigration

The issues in this blog are necessarily anecdotal. Next week I’ll move on to present and near future impacts on the real estate issue with an attempt to address it from more generalized policy perspective.

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Happy Holidays!

holidays, presents, Christmas, Kwanzaa, Hanukkah

Happy New Year!

The end of the year brings Christmas (December 25th) and Hanukkah (December 22nd-30th), two traditional holidays, and Kwanzaa (December 26th – January 1st), which began in 1966. All three include giving presents. Children all over the world look forward to singing songs, praying, and unwrapping their presents.

It’s high time that we use these occasions to give our children and grandchildren the most important present of all: a planet that they can call their own, where they can be happy and secure throughout their lifetimes.

The Dutch Supreme Court was the first to unwrap the largest present:

The Supreme Court of the Netherlands on Friday ordered the government to cut the nation’s greenhouse gas emissions by 25 percent from 1990 levels by the end of 2020. It was the first time a nation has been required by its courts to take action against climate change.

Because of climate change, “the lives, well-being and living circumstances of many people around the world, including in the Netherlands, are being threatened,” Kees Streefkerk, the chief justice, said in the decision. “Those consequences are happening already.

Last week I examined the accelerated pace of the damage that climate change is inflicting on our children and grandchildren. Let’s try to quantify one aspect of that damage.

A direct indicator of the altered speed of climate change is the accelerated pace of sea level rise. Figure 1 illustrates this shift, as shown in the most recent WMO (World Meteorological Organization) report.

Global mean sea level rise

Figure 1Global sea level rise as measured by high-precision altimetry. The thin smooth line shows a quadratic function that best fits the data.

Figure 1 fits the global sea level rise to a smooth quadratic function over the time period of a full generation. The definition of a quadratic function is straightforward: Where f(x) is some function of x,

f(x) = x2

In our case, x is simply time.

In describing the physical world, the simplest function of this form is free fall from a height h, where the initial height and the initial velocity are both zero. The connection between time and height in this case are given as:

h = 0.5*g*t2

Here, h is the height from which the object starts falling and t is the time. g is the gravitational acceleration that is approximately constant over the entire planet. It depends on the size and mass of the planet but on Earth it has a value of 9.81m/sec2.

Quadratic dependence means motion with constant acceleration, i.e. motion caused by a constant force.

Let us now take a typical 10 year-old-kid (January 1st 2020) and try to calculate from Figure 1 the sea level rise that he/she will face. Figure 2 shows us that when the kid was born in 2010 the sea level was 40mm (4cm or 1.6 inches).

We use a pared down quadratic equation:

h = a*t2 + b

In this case, a and b are taken from Figure 1. Under the assumption that the acceleration remains constant, we can project the sea level rise in the future. We get b from the place where the smooth curve intersects the vertical axis: approximately 1.3mm; a is the intersection of the year 2020 (when the kid is 10 years old) and the vertical axis: 90mm. In another generation (by 2050), our kid will be 40 years old and will likely have his own family. At that time the sea level will be 400mm (40cm or 15.7 inches) high.

coast, flood, sea level rise, 2050

Figure 2Cities at risk from sea level rise of 0.5m expected by 2050 in business as usual scenario (RCP8.5)

Figure 2 shows a recent map of urban populations at risk from sea level rise by 2050 under a business as usual scenario. It includes 20 cities of over 10 million people. Likely billions of people all over the world will be at risk—either from direct flooding or less direct impacts of flooding like high tide. In addition, inland regions will face swarms of refugees fleeing from those flooded areas.

We can fix this now or at least start the process of doing so. Let’s make it our New Year’s resolution.

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Economic Impacts Report: Worse than Predicted?

Last week’s blog looked at Naomi Oreskes’ and Nicholas Stern’s October op-ed in The New York Times, “Climate Change Will Cost Us Even More Than We Think,” which dealt with a report about the unexamined economic risks of climate change. The authors posted a Q&A two weeks later, addressing questions from interested readers. This week I’m dealing directly with the report on which the op-ed was based.

report on economic risks of climate change

The report’s cover, above, bears the logos of three of the academic institutions that lead the world in climate change research. The report was published under the auspices of the London School of Economics which houses the Grantham Research Institute on Climate Change and the Environment, an institution where Nicholas Stern, one of the coauthors of both the report and the op-ed, serves as Director:

The Grantham Research Institute on Climate Change and the Environment was established by the London School of Economics and Political Science in 2008 to create a world-leading centre for policy-relevant research and training on climate change and the environment, bringing together international expertise on economics, finance, geography, the environment, international development and political economy.

The introduction of the report includes a short description of the three sponsoring institutions as well as mini biographies of all the coauthors. The 14 listed coauthors are divided almost equally between the physical sciences and economics. I say almost because most of them are highly interdisciplinary in their approaches; all are well known experts in their fields so we had better listen to what they have to say.

However, the report was not written for the same audience as the op-ed. It was aimed at policy makers rather than you and me. Climate reports show up often. I dedicate the second half of every semester that I teach climate change to the most up-to-date report—there’s a new one each time. Many of these reports appear in one way or another on this blog. Invariably, they contain an introduction summarizing the matter for policy makers, followed by a detailed analysis. You can find good examples of the IPCC reports and the National Climate Assessment reports on their respective websites. For those who have a question after reading the introduction and summary there are references on hand to the section with the original data and the rationale behind a finding.

The “Stern Review,” which I mentioned in last week’s blog and which was written by the same Nicholas Stern in 2005-2006, provides fantastic coverage of the economics of climate change as viewed at the time. The “Stern Review” has over 650 pages; the report that Oreskes and Stern reviewed has fewer than 15, not counting the references.

It is true that you can go to the original references provided in a report in search of support but almost no one ever does. When I read the report, my initial tendency was to look for cherry picking in arguments or rebuttals. With my background I quickly realized the validity of the reasoning. A less informed person (a policy maker, for instance?) likely wouldn’t spend the time or have the knowledge needed to do so.

The report has two main categories of arguments. The first category states that climate change is accelerating. Almost every climate change report worldwide agrees with that analysis; in certain impact areas such as sea level rise one can quantify the acceleration. The report provides some quantitative data about the accelerated impacts in the following areas:

    • Destabilization of ice sheets and glaciers and consequent sea level rise
    • Stronger tropical cyclones
    • Extreme heat impacts
    • More frequent and intense floods and droughts
    • Disruptions to oceanic and atmospheric circulation
    • Destruction of biodiversity and collapse of ecosystems

The report offers the conclusion that if the impact of climate change is accelerating the resulting economic impact will do so as well.

The second category is more complicated. Economists have a proven practice of not including impacts that they cannot quantify in their economic models. There is an abundance of issues in climate change that are not linear and not fully understood. The easiest way of saving face for economists so far has been to ignore them, thus eliminating the possibility that they could make big errors from wrong estimates. This issue is so important that I am citing the full section of the report:

5.  Why the risks have been missed, omitted or unquantified.

The biggest risks from climate change are associated with consequences that are unprecedented in human history and cannot simply be extrapolated from the recent past. As such they are uncertain and difficult for scientists to quantify in physical terms. Furthermore, the resulting consequences for lives and livelihoods can be difficult to determine because they involve assumptions about the resilience of populations, their capacity for adaptation and their ability to move in a crowded world. The cascading risks that can result from these impacts can be difficult to predict precisely and to capture in simulations using current models. These uncertainties mean that the impacts are difficult to represent in terms of costs and benefits and are therefore often ignored or omitted from economic models. In essence, they are assigned a probability of zero even though it is understood that to do so is incorrect.

Some of the physical processes that are not well understood, in terms of both occurrence and impact, and therefore are not adequately included in assessments are:

  • Ice sheet and ice shelf hydrology and dynamics
  • Severe storms and floods – including tornados, tropical cyclones and heavy rainfall events
  • Coastal erosion and its impact on infrastructure
  • Cascading ecosystem losses
  • Feedback loops that accelerate climate change – including permafrost thaw and forest die-off
  • Extreme heatwaves, droughts and associated wildfires

Other processes that need to be better represented in models include:

  • The determinants of agricultural productivity and consumption demand • Health impacts of climate change and labor productivity effects
  • Responses to extreme events – such as food shocks and destruction of assets • Health impacts from extreme events – such as wildfires and disease outbreaks and their interactions with air pollution
  • Political responses – such as changes in trade policies that can affect food security and prices
  • Adaptation responses – such as agricultural breeding, urban planning and land-use management

Models also struggle to represent compound events, such as sea level rise and storm surge impacts on exposed coastal populations, heatwaves and droughts, and pest and disease outbreaks. Other linked hazards that are not well represented include compound extremes (e.g. a coastal flood event striking a region already facing a river flood), sequential extremes (e.g. a drought event followed by a heatwave), and concurrent extremes (e.g. multiple breadbasket failures). Recent research indicates that compound, sequential and concurrent extremes would lead to more substantial aggregate impacts.

Even when the economic consequences of these impacts can be represented in policy assessments, they may be downplayed if they are not due to occur imminently. Inappropriate discounting by economists can lead very significant future impacts – such as long-term sea level rise during the 22nd century – to be treated as if they are relatively trivial compared with current impacts.

In addition, economic assessments often present consequences in terms of the impact on gross domestic product only, a measure of economic output that is too narrow to be able to convey the true nature and scale of damage to lives and livelihoods.

Finally, some risks are likely to be missed simply because scientists have not yet detected their possibility. As we have entered a period of climate change that is unprecedented in human history, there may be additional impacts that have not yet emerged and that we are not yet anticipating.

Some advances are being made in improving economic assessments of climate change impacts, but much more progress is required if these assessments are to offer reliable guidance for political and business leaders about the biggest risks. Some of the risks are difficult to model satisfactorily, but more progress might be made. Other risks are currently impossible to assess numerically, which economists need to acknowledge with greater openness and clarity.

Clearly this is an enormous issue that needs to be tackled. I’ll be looking at some of the specific economic issues that climate change is impacting now as well as some quantifiable, non-linear aspects of climate change.

Meanwhile, happy holidays to all of you!

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Pay Now or Pay Later: The Economic Costs of Climate Change

Climate Quid Pro Quo, cartoon, future, kids, children, generation, action

As an old guy who still teaches students and does scientific research, I have to be up-to-date on the science that relates to what I do. To study and teach climate change, I have to be current not only with regards to the relevant scientific literature but also with daily current events on a global scale. Therefore, I supplement my intake of daily papers and magazines with a broader spectrum of news sources. Fortunately (or not, debatably), our internet age provides a variety of gadgets to facilitate this.

In addition to the other outlets and media types, I get the “News in Cartoons,” which I greatly appreciate. Scanning through the cartoons, I often come across ones that directly relate to some topic that I have been discussing. Occasionally, I post these on blogs to illustrate certain points. The opening cartoon on this blog was published around the same time as our 73-year-old president was having a Twitter fight with 16-year-old Greta Thunberg (see the August 6, 2019 blog for more on Greta); I see it as ironically appropriate. The cartoon satirically advocates a quid pro quo from our children and grandchildren. They want us to fight climate change but what will they give us in return?

To get a bit more serious, let’s focus on dollars and cents and look at what kind of inheritance we are leaving future generations. If I search this blog for “economic impact” or “economic impact of climate change,” I find more than 50 entries.

Looking outside my blog, I am citing part of an opinion piece from The New York Times, written by Naomi Oreskes and Nicholas Stern. It describes a recent report, which argues that today’s economic reports strongly underestimate both short-term and especially long-term consequences of the costs of climate change to the economy. Nicholas Stern is also a co-author of the report:

“Climate Change Will Cost Us Even More Than We Think”

Economists greatly underestimate the price tag on harsher weather and higher seas. Why is that?

For some time now it has been clear that the effects of climate change are appearing faster than scientists anticipated. Now it turns out that there is another form of underestimation as bad as or worse than the scientific one: the underestimating by economists of the costs.

The result of this failure by economists is that world leaders understand neither the magnitude of the risks to lives and livelihoods, nor the urgency of action. How and why this has occurred is explained in a recent report by scientists and economists at the London School of Economics and Political Science, the Potsdam Institute for Climate Impact Research and the Earth Institute at Columbia University.

One reason is obvious: Since climate scientists have been underestimating the rate of climate change and the severity of its effects, then economists will necessarily underestimate their costs.

…Typically, our estimates of the value or cost of something, whether it is a pair of shoes, a loaf of bread or the impact of a hurricane, are based on experience. Statisticians call this “stationarity.” But when conditions change so much that experience is no longer a reliable guide to the future — when stationarity no longer applies — then estimates become more and more uncertain.

Hydrologists have recognized for some time that climate change has undermined stationarity in water management — indeed, they have declared that stationarity is dead. But economists have by and large not recognized that this applies to climate effects across the board. They approach climate damages as minor perturbations around an underlying path of economic growth, and take little account of the fundamental destruction that we might be facing because it is so outside humanity’s experience.

A second difficulty involves parameters that scientists do not feel they can adequately quantify, like the value of biodiversity or the costs of ocean acidification. Research shows that when scientists lack good data for a variable, even if they know it to be salient, they are loath to assign a value out of a fear that they would be “making it up.”

Therefore, in many cases, they simply omit it from the model, assessment or discussion. In economic assessments of climate change, some of the largest factors, like thresholds in the climate system, when a tiny change could tip the system catastrophically, and possible limits to the human capacity to adapt, are omitted for this reason. In effect, economists have assigned them a value of zero, when the risks are decidedly not.

…A third and terrifying problem involves cascading effects. One reason the harms of climate change are hard to fathom is that they will not occur in isolation, but will reinforce one another in damaging ways. In some cases, they may produce a sequence of serious, and perhaps irreversible, damage.

…In a worst-case scenario, climate impacts could set off a feedback loop in which climate change leads to economic losses, which lead to social and political disruption, which undermines both democracy and our capacity to prevent further climate damage. These sorts of cascading effects are rarely captured in economic models of climate impacts. And this set of known omissions does not, of course, include additional risks that we may have failed to have identified.

I will look deeper into the report next week. Meanwhile, if you want to read the whole thing, you can find it here.

This op-ed is so important that I felt it necessary to establish the credentials of the two authors. Stern’s biography on Wikipedia includes a description of what is known as the “Stern Report,” which serves today as one of the most influential attempts to analyze the economic impacts of climate change. Reading the piece above, I believe that the new report is a self-criticism of Stern’s original report.

Nicholas Stern

He is professor of economics and government and chair of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics (LSE), and 2010 Professor of Collège de France. From 2013–2017, he was President of the British Academy.

The Stern Review (2005–2006)[edit]

The Stern Review Report on the Economics of Climate Change was produced by a team led by Stern at HM Treasury, and was released in October 2006. In the review, climate change is described as an economic externality. Stern has subsequently referred to the climate change externality as the largest ever market failure:

Climate change is a result of the greatest market failure the world has seen. The evidence on the seriousness of the risks from inaction or delayed action is now overwhelming … The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay[9]

Regulation, carbon taxes and carbon trading are recommended to reduce greenhouse gas emissions. It is argued that the world economy can lower its greenhouse gas emissions at a significant but manageable cost. The review concludes that immediate reductions of greenhouse gas emissions are necessary to reduce the worst risks of climate change. The review’s conclusions were widely reported in the press. Stern’s relatively large cost estimates of ‘business-as-usual’ climate change damages received particular attention.[10][11] These are the estimated damages that might occur should no further effort be made to cut greenhouse gas emissions.

There has been a mixed reaction to the Stern Review from economists. Several economists have been critical of the review,[12][13] for example, a paper by Byatt et al. (2006) describes the review as “deeply flawed”.[14] Some have supported the Review,[15][16] [17] while others have argued that Stern’s conclusions are reasonable, even if the method by which he reached them is incorrect.[18] The Stern Review team has responded to criticisms of the review in several papers.[19] Stern has also gone on to say that he underestimated the risks of climate change in the Stern Review.[20]

Stern’s approach to discounting has been debated amongst economists. The discount rate allows economic effects occurring at different times to be compared. Stern used a discount rate in his calculation of the effects of “business-as-usual” climate change damages. A high discount rate reduces the calculated benefit of reducing greenhouse gas emissions. Using too low a discount rate wastes resources because it will result in too much investment in cutting emissions (Arrow et al., 1996, p. 130).[21] Too high a discount rate will have the opposite effect, and lead to under-investment in cutting emissions. Most studies on the damages of climate change use a higher discount rate than that used in the Stern Review. Some economists support Stern’s choice of discount rate (Cline, 2008;[22] Shah, 2008[17] Heal, 2008)[23] while others are critical (Yohe and Tol, 2008;[24] Nordhaus, 2007).[25]

Another criticism of the Stern Review is that it is a political rather than an analytical document. Writing in the Daily Telegraph newspaper, columnist Charles Moore compared the Stern Review to the UK Government’s “dodgy dossier” on Iraqi weapons of mass destruction.[26]

Naomi Oreskes

(born November 25, 1958)[1] is an American historian of science. She became Professor of the History of Science and Affiliated Professor of Earth and Planetary Sciences at Harvard University in 2013, after 15 years as Professor of History and Science Studies at the University of California, San Diego.[2] She has worked on studies of geophysics, environmental issues such as global warming, and the history of science. In 2010, Oreskes co-authored Merchants of Doubt which identified some parallels between the climate change debate and earlier public controversies.[3]

Clearly, Nicholas Stern’s aim with the op-ed was to guide people to the recent report. Short of that, he was appealing to policy makers and the general public to take the new analysis of the economic impact more seriously—hopefully helping to minimize it. It is a bit more puzzling to me why Naomi Oreskes is a co-author. She is neither a co-author of the recent report nor a member of one of the major institutions that sponsored it. My hypothesis is that she lent her familiarity with deniers to the strategy of grabbing people’s attention. Her book, Merchants of Doubt, is a must-read for anybody interested in the fights over tobacco, climate change, the ozone hole, and any other instances where science has come up against societal norms. While the article is several months old, the authors have since published a Q&A.

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Is California Unlivable?

A few weeks ago, I read an eye-opening op-ed in the NYT:

“It’s the end of California as we know it”By Farhad Manjoo

But lately my affinity for my home state has soured. Maybe it’s the smoke and the blackouts, but a very un-Californian nihilism has been creeping into my thinking. I’m starting to suspect we’re over. It’s the end of California as we know it. I don’t feel fine.

It isn’t just the fires — although, my God, the fires. Is this what life in America’s most populous, most prosperous state is going to be like from now on? Every year, hundreds of thousands evacuating, millions losing power, hundreds losing property and lives? Last year, the air near where I live in Northern California — within driving distance of some of the largest and most powerful and advanced corporations in the history of the world — was more hazardous than the air in Beijing and New Delhi. There’s a good chance that will happen again this month, and that it will keep happening every year from now on. Is this really the best America can do?

Now choking under the smoke of a changing climate, California feels stuck. We are BlackBerry after the iPhone, Blockbuster after Netflix: We’ve got the wrong design, we bet on the wrong technologies, we’ve got the wrong incentives, and we’re saddled with the wrong culture. The founding idea of this place is infinitude — mile after endless mile of cute houses connected by freeways and uninsulated power lines stretching out far into the forested hills. Our whole way of life is built on a series of myths — the myth of endless space, endless fuel, endless water, endless optimism, endless outward reach and endless free parking.

I realized that I didn’t know the status of either BlackBerry or Blockbuster but the sentence sounded like a remembrance of things long dead. I checked on BlackBerry. The company is not dead but it shifted from being the dominant maker of smart phones to creating software and becoming an internet security service provider. Its stock plunged from 140 in the beginning of 2008 to around 5 today. Blockbuster, meanwhile, is down to one brick and mortar store (from 9,000 in the US at its peak) but has paired up (merged) with the satellite TV provider, DISH.

Mr. Manjoo laments the increasingly frequent and ever stronger California fires and their consequences: blackouts for millions, massive evacuations, hundreds of people’s lives and properties lost, and poisoned air.

The main question is whether the author represents a single voice among the 40 million Californians—or is expressing the feelings of a significant fraction of California’s residents—when he doubts its future livability.

Figure 1 shows the US states’ population growth from 1950-2016. California has grown by 271%, one of the highest rates in the US.

us-states-population-growth-rate, California

Figure 1

Figure 2 shows the more recent growth in population (2000-2017), GDP, and greenhouse gas (GHG) emissions in California. Again, the growth in population and GDP is impressive, as is the state’s decline in climate change-causing GHG emissions. The latter serves as a great example to others.

Annual-California-Percent-Change-in-GDP-Population-and-Green-House-Gas-Emissions-20190813Figure 2

However, as we learn in our first lessons about investments, “Past performance is not a guarantee of future performance.” We know the history of California so far but we cannot make a perfect prediction with regards to its future.

One of the devastating impacts of the California fires that Mr. Manjoo cites is the PG&E utility company’s response:

In California, Pacific Gas and Electric (PG&E) cut off power to 500,000 homes in 20 counties (with more to come). More than 2 million people could ultimately be left in the dark. PG&E is testing a new strategy to avoid last year’s killer wildfires, which left 1.8 million acres scorched and more than 100 dead, after its errant power lines touched off massive infernos, the worst toll in state history.

Now, the utility is shutting off the power. PG&E, accused of neglecting its infrastructure and the flammable vegetation near its power lines, faces forests left tinder-dry by a series of brutal droughts in the past decade. As the climate dries out the West, wildfires are burning hotter, longer, and bigger than before. Overwhelmed, the utility has decided its only strategy is to stop delivery of its essential service to millions.

I wrote a blog on December 18, 2018, about the Yellow Vest demonstrations in France. While at first glance the two matters might seem unrelated, I don’t believe that is the case:

There are large similarities (at least in my mind) between how these protests started and how atomic bombs explode. With atomic bombs, people use materials such as uranium (235) or plutonium (239), which are fissile elements – meaning that if suitable particles such as neutrons hit their nuclei, their nuclei will break – and in the process, will release more neutrons that will continue the reaction. That chain, in turn, releases a very large amount of energy that can be used to either power or destroy a big city. Where does the first neutron that starts this chain reaction come from? The answer is that these neutrons are all around, mostly originating from the sun. They don’t usually cause any harm but if the right conditions exist – such as a critical mass of fissionable elements – they can demolish a city. The same sort of questionable sensitivity to an initial trigger can be seen in deadly fires such as the ones that devastated California recently. People are still working hard to figure out who triggered the fires and how. Some potential culprits include utility companies (putting wires below trees), car drivers who cause sparks on the road, barbecuing tourists, etc. The fact is that if the conditions are right for wildfires, triggers will always be available in abundance.

Both situations started with tinderbox conditions (whether metaphorical or more physical) PG&E is accused of being the random neutron that set off these large fires. This accusation triggered massive lawsuits that led to a temporary bankruptcy. The company’s remedy was to turn off the lights for massive numbers of its customers.

There was another solution that really should have been implemented long ago: utility companies ought to have buried the electrical wires underground, effectively insulating them from the dry countryside. As usual, the obstacle to this massive undertaking was cost:

In the United States, the California Public Utilities Commission (CPUC) Rule 20 permits the undergrounding of electrical power cables under certain situations. Rule 20A projects are paid for by all customers of the utility companies. Rule 20B projects are partially funded this way and cover the cost of an equivalent overhead system. Rule 20C projects enable property owners to fund the undergrounding

Undergrounding is more expensive, since the cost of burying cables at transmission voltages is several times greater than overhead power lines, and the life-cycle cost of an underground power cable is two to four times the cost of an overhead power line. Above-ground lines cost around $10 per foot and underground lines cost in the range of $20 to $40 per foot.[7] In highly urbanized areas, the cost of underground transmission can be 10–14 times as expensive as overhead.[8] However, these calculations may neglect the cost of power interruptions. The lifetime cost difference is smaller for lower-voltage distribution networks, on the range of 12-28% higher than overhead lines of equivalent voltage.

This particular canary in the coal mine is dead—we can see the consequences of inaction—fires and blackouts are already becoming commonplace and we must take notice. It’s past time to bury our utility lines. We cannot put the price of the future on layaway. We have to pay it now or be disconnected from the electric grid on a yearly basis. Alternatively, we could leave the state entirely but every year the impact will expand farther and farther; eventually, we will run out of places to go.

The electric wires were not the only possible triggers that were removed. Cigarette smoking bans followed:

Gov. Gavin Newsom on Friday did what two of his predecessors refused to do: He prohibited smoking and vaping in most areas of California state parks and beaches.

People caught using cigarettes, cigars, pipes or electronic cigarettes will face a fine of up to $25 under a bill signed by the governor and authored by state Sen. Steve Glazer (D-Orinda), who cited the public risk of exposure to chemicals in tobacco smoke.

While this measure is laudable both from a public health and a fire risk perspective, it will ultimately be futile with regards to the latter. Once a critical mass of burnable countryside accumulates, it is almost impossible to prevent the devastating fires by trying to eliminate possible triggers. Like the neutrons in fissionable uranium, sooner or later they will show up in some form or another.

Insurance companies make money by predicting the future and gauging the likelihood of various disasters. But they also have to pay out when something actually goes wrong. Some of these companies started to cancel insurance policies in locations that are now obviously susceptible to accelerating risk from the strong negative impacts of climate change. California quickly outlawed this practice but, “government regulators are struggling with their own conundrum: They must balance the need to protect consumers from high insurance rates with the need to keep insurance companies from going out of business entirely.”

The message: insurance companies must bear the cost of the impacts of climate change. Those companies that don’t want to carry a similar burden to that PG&E is under now have an option—leave the state completely and relocate to an environment with less risk (and most likely less reward).

The World Meteorological Organization (WMO) published the “WMO Provisional Statement on the State of the Global Climate in 2019” : the climate change impacts that are the primary causes for the high temperature and droughts that exacerbate the massive fires are accelerating:

More devastating fires in California. Persistent drought in the Southwest. Record flooding in Europe and Africa. A heat wave, of all things, in Greenland.”

Climate change and its effects are accelerating, with climate related disasters piling up, season after season.

“Things are getting worse,” said Petteri Taalas, Secretary General of the World Meteorological Organization, which on Tuesday issued its annual state of the global climate report, concluding a decade of what it called exceptional global heat. “It’s more urgent than ever to proceed with mitigation.”

But reducing greenhouse gas emissions to fight climate change will require drastic measures, Dr. Taalas said. “The only solution is to get rid of fossil fuels in power production, industry and transportation,” he said.

California is not unique in its responsibility to try to mitigate the impacts of climate change. We all have to do it and do it now. In the next series of blogs I will try to summarize how our outlooks on the economic consequences of the deteriorating climate are changing.

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