The vast economic implications of climate change are explored here as we acknowledge the interrelationships of economic and financial risk that are associated and often amplify one another –for example, weather-related property destruction can lead to bank losses, leading to less lending, leading to reduced investment, etc. We are watching, in these pages, the federal reserve closely as they monitor these connections – along with the actions of international organizations, governments, businesses as we search to develop an understanding of the implications of climate change for the financial sector and the financial stability of ourselves, our families, and our world.
We are also looking to gain information which can, in turn, wield influence and encourage action by individuals, communities, financial organizations (such as pension funds), insurance companies, corporations and governments. Each member of the economy can influence change within their area of influence if they realize the extent of their power and wish to exercise it.
The section is organized in the following way:
•CORONAVIRUS: As a result of the pandemic, global emission dropped in 2020 but the decline wasn’t nearly enough to halt the buildup of greenhouse gases in the atmosphere. This page also appears in the HEALTH section of the website.
•COSTS: Extreme weather events cost U.S. taxpayers $99 billion in 2020 and things are only getting worse, and that is not taking into consideration the health impacts, and other side effects of climate change. Economic experts and climate insurers have warned that if climate change continues unmitigated, the world economy (particularly in developing countries) will lose growth opportunities in the trillions of dollars.
•JOBS: Our future economic health will be heavily impacted by the jobs a clean energy future can deliver. It focuses on where the green jobs are growing.
•INVESTMENTS AND DIVESTMENTS: As individual shareholders, we can take advantage of ESG (Energy, Sustainability, and Governance) investing and deliver our dollars to organizations, corporations and ideologies that are fighting against climate change. We can also divest from those organizations as can university, government and union pension funds.
•INSURANCE: Insurance companies are in the business of predicting future loss, and so must ensure that they reserve for such events. What happens when history is no longer a reliable guide for predicting the future? Going forward, insurance companies may have a heavier hand in shaping human behavior. It’s unlikely that homebuyers would purchase (or be able to purchase) a house in uninsurable areas, for example.
•HOUSING: Extreme weather has caused the burning and flooding of thousands of homes. It has destroyed power in both the 2019/20 Texas winter freeze and the 2021 summer hurricanes. It has disproportionately harmed the poor who have fewer resources to move. We have numerous mitigation and adaptation measures to explore.
•THE CIRCULAR ECONOMY: Eliminating waste and pollution, this is instead a closed-loop system emphasizing reuse, recycling, sharing, and repair. Ideally, waste and pollution are cut out of the equation in the design phase, and products and materials are kept in use. One of the tools in our tool box.
•CARBON PRICING: Burning fossil fuels is by far the greatest source of the greenhouse gases causing climate change. However, the full cost of fossil fuel energy is not included in the price of the fuel. We pay for that later when we deal with the consequences of global warming. Using a car to illustrate this point, “We pay for the gas, we pay for the car, and we pay for the insurance, but we don’t pay for the pollution that comes out of the tail pipe.” This page explores different carbon pricing solutions and appears again in our POLITICS section.