Adaptation to Climate Change

 (This is a current extract from the Patterns of Power Repository.  An archived copy of this page is held at http://www.patternsofpower.org/edition02/3573.htm)

Adaptation to climate change might be more cost-effective than trying to prevent it.  Those most at risk could insure themselves and insurance companies could, by offering flexible premiums, encourage people to take action to avoid or reduce the anticipated problems.  But conventional insurance can only be of indirect help: it is possible to insure against specific types of risk, such as flooding, but the policy would be for the place where the floods happen, not where the causes lie.  Since some of the populations under threat of displacement are in poor countries, a fund would be needed for financial assistance to help them with flood defences and water supplies etc. so that they could stay in their homes and avoid large displacements of population.  Climate change is a global problem, irrespective of the degree to which it is caused by man-made emissions of greenhouse gases. 

There is a good argument for taking out collective insurance, for example in the form of a global carbon tax, which would be designed to raise enough revenue to create a contingency fund to recompense countries damaged by climate change and help pay for adaptation projects.  There would have to be some way of collecting ‘premiums’ and – even if it isn’t certain that man-made emissions are causing global warming – a global carbon tax would be progressive (falling most heavily on wealthy countries); it would also incentivise the reduction of emissions,[1] which most scientist think will help to reduce the problem.  The projects to be funded in this way could be selected on the basis of financial justification, irrespective of whether the applicant is a rich or poor country, so that the measure would be seen as fair – even by wealthier countries who would be contributing more. 

An intergovernmental body, perhaps a UN agency, would have to be chosen to manage the collection of the taxes and the payment of claims.  The G20 has the right sort of decision-making capability, but it doesn't (by definition) have any representation from poorer countries that are much affected by the global economic challenges listed in this section.  The IMF’s representation is also unsuitable for this purpose (3.5.5).   The political difficulties of introducing such a scheme would be immense,[2] but it would reduce the unfairness that might otherwise occur.

© PatternsofPower.org, 2014

[1] There are many papers which advocate the introduction of a carbon tax as a means of incentivising the reduction of emissions.  One example, by Reuven S. Avi-Yonah and David M. Uhlmann, is entitled Combating Global Climate Change: Why a Carbon Tax is a Better Response to Global Warming than Cap and Trade.  In its abstract it stated that:

“A carbon tax (1) could be implemented almost immediately, (2) would not raise complicated enforcement issues, and (3) would generate revenues to fund research and development of alternative energy and other programs to reduce greenhouse gas emissions.”

This article was available in April 2014 at http://climatechangeecon.org/index.php?option=com_mtree&task=viewlink&link_id=114&Itemid=15

[2] Europe had its own political problems in reaching agreement on introducing a carbon tax, as described in the TED Case Study 226: EC Carbon Tax, which was available in April 2014 at http://www1.american.edu/TED/eccarbon.htm.  For the world as a whole, needless to say, the political problems would be much greater.