02 March 2012

An Embarassment of Riches

There is seemingly a bottomless well of nonsense on disasters and climate change. I have long ago accepted that such nonsense is, like the presence of arguments rejecting the basic science of climate change, a situation to be lived with rather than changed. Even so, I can still poke some fun.
  • Climatewire reports uncritically a claim coming from Swiss Re that "the financial toll of global weather disasters amounts to between 1 and 12 percent of U.S. gross domestic product annually." This totals $160 billion to almost $2 trillion.
Reality Check: The actual number for global losses as a percent of US GDP is closer to 0.1%, with the maximum about 1.2% in 2005. The total cost of all hurricanes since 1900 in normalized dollars is about $1.4 trillion. The media (in general) rarely question numbers given to them from the reinsurance industry and on disasters and climate change have a strange aversion to the peer reviewed scientific literature. Innumeracy.
Reality Check: Lubchenco and Karl somehow failed to note that NOAA and NCDC have cautioned against drawing any such conclusions from the "billion dollar disasters." And even though Lubchenco and Karl cite the recent IPCC Special Report on Extreme Events, they also somehow forgot to mention this part: "Long-term trends in economic disaster losses adjusted for wealth and population increases have not been attributed to climate change, but a role for climate change has not been excluded." Deceiving.
  • Swiss Reinsurance and the Reinsurance Association of America teamed up yesterday with a few US Senators to call for the US government to adopt policies to protect their industry from extreme events resulting from climate change. They also ite the NOAA billionz analysis and explain via press release ""From our industry's perspective, the footprints of climate change are around us and the trend of increasing damage to property and threat to lives is clear," said Franklin Nutter, president of the Reinsurance Association of America."
Reality Check: The ability of the reinsurance industry to accurately reflect the state of the science of disasters and climate change has long been questionable. The industry is currently awash in money, a condition that Guy Carpenpter characterized just a few months ago as "the reinsurance sector remains adequately capitalized with a significant excess capital position" (PDF). In such a context, when reinsurers ask the government to take on some of their risks justified by "climate change," you should hold tight to your wallet. Conflicted.
For anyone who is interested in the actual science of disasters and climate change, I'll be speaking on the subject later today here at CU (for others, just have a look at TCF, chapters 7 and 8).

15 comments:

Gerard Harbison said...

Roger: Do you think the reinsurance industry has really mis-estimated the probability of climate-driven catastrophe, or is it merely a useful sales pitch?

And how would one know?

Roger Pielke, Jr. said...

-1-Gerard Harbison

No, there are many brilliant people in reinsurance (and insurance) who know the science as well as anyone. The views that I have critiqued here (and sometimes by other companies) are decidedly in the minority of opinion in my experience, but they are loudly amplified (so much so that they occasionally appear in reports of the IPCC;-)

I do think that some in the industry fail to distinguish science from marketing/politics, which is of course not at all surprising or unique to this industry -- the resulting statements do however happen to jibe nicely with the biases found in many journalists and advocates for action of climate change.

n.n said...

Is there an analogy between the justification AGCC offers government to raise taxes and the insurance industry to raise premiums and seek mitigating legal arguments? I presume that is the reason for exaggerating predictive skills and inflating the assessed cost of historical natural disasters, right?

The first seems likely given the evidence that the government has promised a return to individuals and cooperatives beyond its capacity to deliver. For example, in Utah, the teachers' union is requesting a pay raise in order to compensate for underperforming pension funds. Of course, the return promised had no basis in reality and could only have been delivered through the accumulation of debt, inflationary practices, and increased direct taxation.

The second seems likely, because as you have noted, people are increasing their risk through both voluntary and involuntary behavior. This behavior is equally evident in circumstances ranging from their perception of personal responsibility to geographical siting.

Both the public and private sectors have amassed and preserved extraordinary wealth through the -- apparently excessive -- exploitation of leverage. During the last few years, their risk profile has been revealed, and their material damages have been exposed. This was the reason for the bailouts, the various stimulus programs, QE#s, and other redistributive (and distorting) schemes.

"the reinsurance sector remains adequately capitalized with a significant excess capital position"

Is there any reason to believe this to be true? We know these positions have been misrepresented by both private and sovereign actors, where the latter was most notably evident in Europe.

This seems to be one big, global game. Individuals dreamed of instant gratification, which in a world where resources have limited availability and accessibility promotes corruption, and now they are manufacturing schemes to mitigate the risk they developed. This would certainly explain the -- perhaps -- extraordinary exhibitions of both immoral and unethical behavior we have witnessed in recent years.

Still, our ability to distinguish between cause and effect seems to be only slightly better than our skill to predict the chaotic behavior of our Earth system. Both are complex, unwieldy, and temporal.

Len Ornstein said...

Roger:

How about critiquing: "Executive Order (2011) Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866.

http://www.epa.gov/oms/climate/regulations/scc-tsd.pdf

that estimates a global ‘2010-social cost’ of AGW to between $140 billion and $4.1 trillion?

n-g said...

Reality check #2: NOAA said "caution should be used in interpreting any trends", not "you should not even try to interpret any trends".

And even if NOAA had "warned against drawing any such conclusions", Lubchenko and Karl did not attempt to draw any such conclusions. They said "There are likely a number of contributing factors, including upward trends in population and infrastructure, migration to vulnerable areas, and climate change. The contribution of each of these factors remains an important research issue." That's about as far from drawing conclusions as you can get.

I always know there's something fishy when I read a strong critique and agree with it, then I read the original source article and agree with it too.

Roger Pielke, Jr. said...

-5-n-g

Thanks, apparently there is a sucker born every minute:

"One significant reason why demand for services is growing is the increased frequency and intensity of extreme weather events. Last year, new records were set in the US for tornadoes, drought, wind, floods, and wildfires."

Sure sounds like trends to me ;-)

kmye said...

Between following this blog and reading The Climate Fix, feel like I have pretty good grasp of your perspective on the current science of weather disasters and climate change.

That said, if you give talks on the subject somewhat regularly these days, it would be great if you captured one of them on video and linked it here. I'd enjoy seeing the lecture myself, but it would especially nice to have to send to those contacts of all of ours who are more amenable to watching something online/listening to a lecture than reading forward-linked text.

Roger Pielke, Jr. said...

-7-kmye

Thanks ... here is a recent Climate Fix talk, focused on decarbonization:

http://www.youtube.com/watch?v=6TMrzZqnIPE

Yesterday's talk is not videoed to my knowledge, thanks!

n-g said...

RPJr - Good idea to switch from an indefensible criticism to a defensible one. Last year set records...as has every other year since records were kept.

Roger Pielke, Jr. said...

-9-n-g

So your defense of K/L is that instead of writing something misleading they merely wrote something meaningless? You climate guys have a soft spot for the "accurate but not true" ;-)

I'll stand by everything I wrote in this post, Thanks!

William Teach said...

A simple smell test should be applied to any Warmist claims: "have they changed their own behavior and lifestyle to match their dogma?"

The answer is usually "no." And, if they won't change their own lives to match their rhetoric, it becomes difficult to believe any unhinged prediction they posit.

n-g said...

RPJr (10)- I was agreeing with you on the second point! It IS possible for some things to support your thesis while other things to fail to support your thesis.

Now back to my original criticism at (5): I note that you stand by what you wrote. I stand by what I wrote too. I guess that makes us even, though I don't know what that accomplishes.

Roger Pielke, Jr. said...

-12-n-g

Thanks (I think;-) and apologies if I've misunderstood your comments.

Charlie said...

I've just started to read it, but based upon news reports, the recent report by Asian Development Bank is another alarmist document.

Full text report at: http://beta.adb.org/publications/addressing-climate-change-and-migration-asia-and-pacific

HowardW said...

Coumou & Rahmstorf repeat the "fourteen $1B disasters" factoid in a new article in Nature Climate Change. http://www.pik-potsdam.de/news/press-releases/wetterrekorde-als-folge-des-klimawandels-ein-spiel-mit-gezinkten-wurfeln

Post a Comment

Note: Only a member of this blog may post a comment.