Nobody can take credit for inventing insurance. All cultures have found ways to protect individuals from the full cost of bad luck.
- Farmers diversify their crops in type, location and timing to reduce their risks, but storage, trade and mutual assistance help unlucky farmers.
- Communities diversity their work, assets and family relations to reduce their risks, but migration, sharing and collaboration help unlucky neighbors.
- Investors diversity among liquid and illiquid assets with short-term or long-term maturities, but laws, family ties and social welfare protect the bankrupt.
For most of the 200,000-year history of our species, Nature delivered accidents and harm, but those risks became predictable over time and thus amenable to insurance, hedging, and other means of investing a little in good times to avoid occasional, catastrophic losses.
Among those who study climate, "stationarity" implies that patterns vary within clear boundaries over time. For the past 5,000 years, climate has been stationary in terms of temperatures, precipitation and storms. That pattern has been disrupted by acute forces — hurricanes, earthquakes and volcanic eruptions — just as it has evolved under the influence of solar radiation and other geological processes, but those changes (small and local or large and slow, respectively) have not been strong enough to overwhelm our primitive insurances or prevent us from migrating out of harm's way.
Welcome to non-stationarity
Anthropogenic climate change will bring unprecedented risks that will strain and occasionally break our formal and informal coping mechanisms. In October 2017, the World Meteorological Association noted that:
Concentrations of carbon dioxide in the atmosphere surged at a record-breaking speed in 2016 to the highest level in 800,000 years... The last time the Earth experienced a comparable concentration of CO2 was 3-5 million years ago, the temperature was 2-3°C warmer and sea level was 10-20 meters higher than now... The rate of increase of atmospheric CO2 over the past 70 years is nearly 100 times larger than that at the end of the last ice age. As far as direct and proxy observations can tell, such abrupt changes in the atmospheric levels of CO2 have never before been seen.The unprecedented levels of CO2 and other greenhouse gases (GHGs) and their unnatural accumulate rate in the atmosphere mean that our species is about to experience dramatic changes in temperatures, precipitation and storms.
As a water economist, I am well aware of climate change's impacts on the water cycle and thus on the various categories of water-related phenomena through which climate change will arrive. Given this experience, I would order the risks in these categories, in order of highest to lowest threat to humans, as follows:
- Temperatures too high or too low for unprotected exposure
- Droughts or precipitation too long to be buffered by storage or drainage
- Changes or crashes in biodiversity that destroy entire food systems
- Wind-driven storms stronger than natural or man-made defenses
- Changes in sea levels and currents that alter continental ecosystems
There are many ways to die
Our formal and informal means of insuring ourselves against risk and disaster are going to fail many people in the decades ahead. Poor people with incompetent or corrupt governments will try to help each other, but their resources can only go so far. Rich people will be partially insulated by financial and political coping mechanisms, but additional costs will undermine markets and overwhelm bureaucracies and taxpayers. People all over the world will face the reality of uninsured losses and the uncertainty of emerging, unprecedented risks.
In 2052: A Global Forecast for the Next 40 Years, Jorgen Randers (one of the original authors of The Limits to Growth) suggested that climate change would slow as humans diverted resources from consumption (and thus GHGs) to investments designed to offset climate change impacts. Although his logic is sound, I see few signs of that switch.
Bottom line: The damages from climate-change driven alterations to the water cycle will overwhelm our coping mechanisms, leading to unprecedented death, destruction and misery. It's unlikely that anyone will have the resources to help you when you need it, so now is the time to invest in securing yourself and your community against those risks.
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