Climate change, its existence, causes and effects, has been disputed by researchers, academics and policy makers. The given degree of international consensus varies greatly between those most affected by changes to climatic conditions in contrast to those who are estimated to only experience a limited effect.
Controversially, it can also be claimed that some regions are set to gain from climate change such as the polar region nations currently disputing resource claims and logistic networks. In analysis of available data, research suggests the increased intensity of storms, hurricanes, cyclones, flooding, droughts, bushfires, mudslides and hailstorms along with increased temperatures, rising sea levels, and changing to pressure systems. With climate change as a global phenomenon, not isolated to a certain region, the interest of stakeholders remains strongest in those with the ‘smallest’ voice such as the coastal areas, islands, commonly catastrophe prone and ‘future’ catastrophe prone regions in South East Asia.
The re-insurance industry does not have the luxury of time in which to debate the ‘possibility,’ of climate change but rather to focus on the ‘probability’ of the consequences. With the cost of natural disasters predicted to rise exponentially in coming decades, the issue of human security is measured in economic terms. The economic effect of climate change is vague with popular measures of market costs, changes in quality of life, lives lost, species lost and variations in cost distribution and subsequent benefits. These costs are summoned into willingness to pay (the readiness of people to exchange their capital or income for improved human security) and willingness to accept compensation (the amount of compensation needed to see inhabitants forgo certain standards and accept deteriorating conditions).
With 2005 noted by the insurance industry as holding the highest economic loss (USD $230 billion), the economic implications of natural catastrophes is apparent holding 2-9% of GDP in aggregated monetized damage. As 1-1.5% of this aggregated monetized damage occurs in OECD nations and 2-9% in developing nations the interests of regional stakeholders can be distinguished according to strength of climatic conditions on their area. In response, the re-industry has moved to new catastrophe modeling systems, developed new insurance products, flaunted ‘green’ initiatives and created new defenses against climate-related claims in order to analyse and more effectively assess the probability of risks and integrate problem solving mechanisms.
As in all industries, re-insurance is a case of supply and demand with dominant players holding the reins of the insurance industry to mitigate larger risks by providing financial backing, reduced exposure to insolvency, and stability due to the geographically spread risk. The North American market has long been the most strongly insured of the regional global markets with the Asian region seen as the rising star due to the increased economic development and subsequent demand for insurance. Depending on the region, insurance coverage as well as government relief funding, will be limited in relation to the location’s level of risk. As the South East Asian region hosts increasingly prospering nations, situation in medium to high risk areas for natural disasters, the risk must be carefully calculated; after all, it is a business. This region holds a high propensity for natural disasters including earthquakes, tsunamis, flooding, mudslides, and storms whereby currently effected regions are expected to be joined with newly affected regions due to global warming.
Whilst the economic imperative is addressed through the continuous revision of insurance policy and claim trends, the question of ‘protection’ remains. The role of insurance is that of a safety net; to catch those who stumble and fall in situations which could not have been circumvented. With the individual and the community at the centre of the human security issue the issue prevails; who will catch them when they fall?
Human security surpasses traditional notions of security to comprehensively include environmental, political, social and economic aspects. In the case of environmental security, the threat thereto is not isolated to a particular individual or community, but rather an intensified affected core with global repercussions. Risk management, as in the case of insurance risk, credit risk, market risk, and operational risk, is the cornerstone of re-insurance with underwriting controlling the limits of insurance and identifying information such as in the case of natural catastrophes and environmental threats. Re-insurance is not a philanthropic concept or support network, but rather an industry interdependent with the global economy and market trends whereby weakened global financial markets and investor pessimism are critical factors.
The re-insurance industry, particularly internationally, is marginally transparent with the safety net not extending to all areas. The series of ‘no-go zones’ demonstrates the economic imperative and business rationalism which conducts the insurance, and indeed protection, of regions. The ‘no-go zones’ are specific geographic regions considered too ‘high risk’ for re-insurance and subsequently insurance companies to insure. Thus, the plight of these areas is dependent on effective fiscal policy and a strong national welfare system to mitigate risks associated with climate change.
In the case of the South East Asian region, particularly in coastal areas and islands, the ‘no-go zones’ will have a profound effect on human security as inhabitants seek protection and welfare support. From this it can be suggested that environmental peril may be grounds on which seek and be granted asylum. This may lead to new migration trends and subsequently strain inter-regional relations, immigration policies and welfares systems as well as setting precedents for future ‘no-go zones’ and other un-protected areas.
The economic paradigms dominating the global must be considered in relation to the interests of human securities by examining the re-insurance market and the implications for humanitarian issues in the South East Asian region and subsequent international policy development to cater for social developments.
You never miss the water, till the well runs dry
In the past twenty years, virtually every country around the world has experienced natural calamities if we have experienced it in the form of drought, famine, immense downpours, and snowfall – in the same vein the world experienced it in the way of wildfire, Tsunami, hurricanes, flood, volcanic eruptions, earthquakes and pandemic ailments. The question is, who is accountable for all the calamities and who will pay the price? Nevertheless, it is hard to deny that human civilization is having profound effects on our planet, and very few places persisted unharmed.
This article gives a minor insight into reality, stressing that climate change is not only a threat to water availability or food scarcity but also a significant threat to biodiversity and all the major causes of environmental disasters. The above problems are coupled with one single problem “the rise in global temperature.” Since the dawn of industrialization, the average global temperature increases gradually – no serious step has been taken to tackle the problem.
As the sun’s rays reach the earth’s surface, most are absorbed and re-emitted as heat. Greenhouses gasses such as water vapors and carbon dioxide absorb and re-radiate some of this heat; an increased number of greenhouses gases in the atmosphere mean more heat is trapped – warming the earth. The continued burning of fossil fuels like gas and coal, as well as other anthropogenic activities, have increased the concentration of carbon dioxide in the atmosphere by 45% since the industrial revolution. As a consequence of the human egoistic actions, the global average surface temperature has raised by 0.8OC over that time. However, it is not just a number we should worry about; the costs of the rising temperature is already being felt here and now.
In current 0.8OC rise in temperature, further changes to the climate in recent times can be seen in the warming of the ocean, a rise in sea level, immense heatstroke, decreasing ice sheet and snow in the northern hemisphere as well as a decline in the sea ice in the Arctic. In the coming future, if the emission continues unimpeded, then further warming of 2.6OC to 4.8OC is predictable by the end of this century. Nonetheless, at the low end, this would have a serious implication on human societies and other natural habitats.
Like other greenhouse gases, carbon dioxide is a dynamic gas in global warming. When a considerable amount of carbon dioxide gas is released to the atmosphere, it acts like a blanket preventing the heat from absconding, which comes back to the earth with no place to escape, further intensifying the average temperature. As per the world, average temperature rise, ice sheets, and glacier melt and the sea level expand, which disrupts the coastal communities, infrastructure, and small lands nearby sea.
Climate change also making weather more extremely hot or cold, and further, sever warmer weather and ocean produce a considerable number of hurricanes as well as torrential downpour and wind. In drier areas, global warming is linked with wildfire, drought, amidst all the wildfire has experienced very recently in many countries around the world.
Remarks: In the past years, most of the countries around the globe have witnessed record-breaking changes in the weather; in the same vein, thousands of agreements have been signed by the states to reduce carbon emission; nevertheless, all deals are nothing more than words on pages. The question is, who will make those words a reality. Despite a large number of the accords, none of the agreements came into a function; lack of seriousness is the leading cause. In such circumstances, combine efforts are essential; it is also the concern of the United Nations to push those countries which emit a high amount of greenhouse gases.
The Paris agreement on climate change means working with UN member states to reduce the number of carbon emission by 1.5%, which indeed is the only choice to contest climate change. Since the Paris accord, global banks have invested $1.9 trillion in fossil fuels. The world’s top 100 productive industries are responsible for 70% of global carbon emissions; the G20 countries account for 80% of global carbon emissions; the wealthiest 10% of the world’s population produces half of the carbon emissions while the poorest 50% is account for just 1/10. Indeed, overcoming climate change need mighty force, but some must pay more than others.
Recently a handful of rich countries pledged to reduce the emission of greenhouse gases by so and so % or to become fully climate neutral by this or that date, and nothing has been achieved in the past four years since the accord came into power. The G20 countries are accountable for climate change, and they must take serious action to mitigate or at least lessen the impacts of natural calamities. Instead of signing agreements to satisfy the world, a gravity in their accords is utmost besides with their substantial contribution and thoughtfulness; the global emission may perhaps remain below 1.5%, every friction in the degree matter and even a 1% rise in the global average temperature is detrimental to the ecosystem.
It is now the right time to think and act, spread awareness among people, take deliberate actions, discrete climate changes from politics, and ultimately stop the burning of fossil fuel and re-make this world a green-clean place for living. If we fail to overcome climate change, the world must prepare for long-term everlasting disasters; immense heat-waves, the rise of sea level, acidification of seawater, pure water scarcity, pandemic diseases, wildfire, the extinction of vital species as well as the disruption in food cycle which will, directly and indirectly, disturb the living life.
A World in Distress
World mean temperature is up 1.1C since the industrial revolution. Climate experts believe we have 12 years before it rises enough to set up a self-reinforcing cycle, meaning trouble. All the same, Trump and Brazil’s Bolsonaro remain in denial when climate scientists have already shown human agency and the facts are measurable.
Australia’s mean temperature is up 1.5C since 1910. It has had prolonged severe drought causing vegetation to lose moisture and become fuel for a fire lit accidentally by lightning or careless human activity. The bush fires raging in New South Wales are one result. Thousands of homes have been lost despite the valiant efforts of overstretched firefighters, and some have even made the ultimate sacrifice.
The air is difficult to breathe even in the neighboring state of Victoria where the Australian Tennis Open is being held in Melbourne. Players affected have been forced to withdraw.
Human agency and the effects of key gas emissions have been proven by scientists and the longer nothing is done, the more difficult, even drastic, the solution. The UN Panel on Climate Change offered a prescription in 2018 to keep temperature rise in the future below danger levels. But implementation is another problem altogether stymied by the rich and powerful nations.
The Panel’s COP25 talks in Madrid last month ended more or less in failure though that word is seldom used. Major fossil fuel producers, principally Saudi Arabia and the US, managed to thwart the rest of the world. In the final agreement, all countries are required merely to decide their pledges for COP25 in Glasgow this November. They do actually nothing to abate climate change.
Ironically, Australia with its right-wing government was a key supporter of the US, and Scott Morrison the prime minister is possibly the least welcome man in New South Wales, one community telling him point blank he was not wanted when he tried to visit. And the uncontrollable bush fires keep burning, continually exhausting firefighters in their efforts to abate them.
So where do we stand before the Glasgow COP26 meeting in November? Current policies will lead to an estimated 3C rise above preindustrial levels. As a point of reference, we are currently at 1.1C above and 1.5C begins troublesome coastal flooding. Current pledges will give us a 2.5 – 2.8C rise, still far from necessary for a comfortable livable planet.
Firm action is required, and thus the push for more ambitious pledges before COP26. World leaders have also been invited to Kunming in China for a major conference on safeguarding nature as more and more species become extinct. A month before COP26 it should reinforce the importance of reducing global warming.
The task ahead is clear. The earth needs a halving of emissions from vehicles, power stations, industry and agriculture; instead, CO2 levels are still rising. We can only hope the working groups meeting in preparation can push through what is necessary for success at the Fall conference.
Larry Fink’s letter to CEOs: Climate change finance goes mainstream, finally
My jaw dropped when on Tuesday I saw BlackRock’s Chairman and CEO Larry Fink’s letter to CEOs, which he issues every year ahead of Davos to chart the finance and investment trends ahead.
BlackRock is now placing climate change at the center of its strategy. This could as well be the climate change news of the decade. With its close to USD 7 trillion in assets under management, BlackRock is the largest asset manager in the world.
The tide is turning. For the past 10-15 years, all of us in the UN and sustainability field were trying to move climate change finance mainstream. Ten years ago, when I was at the UN environmental agency, the efforts by me and hundreds of others were significant, but change was incremental. Yes, there were joint investor statements on climate change but they were mostly calling on governments to create the incentives for the finance industry to do the switch rather than pledging investors’ own commitments. Building the “business case for sustainable finance” had its financial arguments but few followers.
Things have changed. Greta Thunberg did what hundreds of us couldn’t do for a decade. Climate change is the number one issue now and you hear about it everywhere.
We will be looking forward to Greta’s call at Davos to end the coal industry, as unrealistic as the proposition might sound to many. Greta should be pitted against Donald Trump in a Davos duel to corner publicly the US President. That would be the debate of the year — and the US presidential election debates have not even started. It is in the DNA of the World Economic Forum to keep top VIPs as comfortable as possible, so that premier league match on climate change will not happen. But we have BlackRock’s news.
Change has come. We now see the day in which the largest global asset manager sounds like an environmental activist. I will open a beer and cheer to Larry Fink.
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