Tuesday, March 11, 2008

On climate change, think fire insurance

We live in a time when a number of people will tell you human impact on climate change has yet to be "proven." And the new reports will not change their minds.

I believe the perspective people ought to take regarding the cause of climate change is that of the actuary, the statistician, the successful gambler, and the homeowner. After so many studies, it all comes down to probability, degrees of risk. Are the scientists right or wrong? None of us stand a hope of answering this question with certainty. But lack of certainty does not diminish the arguments for taking decisive action to mitigate known risks.

Take fire insurance. You don't need the certainty of knowing that your house will in fact burn down before you go out and buy fire insurance and support your local fire department. Risk is risk is risk. The greater the risk, the more money people -- rational people -- are willing pay to insure themselves against risk.

The odds that humans are contributing significantly to global warming are greater than the odds of most houses catching on fire. Yet concerning climate change, there is no fire department, there is no insurance policy, and we continue to play with matches in our wooden house. You don't need to believe the climate scientists are "right" to see that -- at least collectively* -- our present behavior is irrational.

Nevertheless, humans tend to behave rationally (otherwise there would be no insurance companies). I supect that pretty soon, it's not going to be OK to play with matches in our wooden house. And there will be a fire department. The insurance policy we will have bought will be expensive. But what other choice do we all have in an uncertain world?
* Granted a lone individual's decision to do nothing is not irrational if he knows others will do nothing. That's why collective action is both rational and neccessary on climate change.

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