The Dismal Science On Climate And The Future - It's Even Worse Than You Could Imagine
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Glendon had spent the majority of his career working in finance, but he makes a point to stand out slightly, with spiky gray hair, a yellow plaid bow tie, and rectangular brown-and-red glasses. He grew up outside Detroit, in the nineteen-seventies, where he became “familiar at a very young age with things going badly,” he told me. “I became fascinated by the question: Why does that happen in some places and not in others?” Early in his career, he moved back and forth between places that worked well and places that worked poorly: he was an engineer in an auto factory in Detroit and a banker on the South Side of Chicago before moving to a small-business lending program in Russia; then he got a Ph.D. in economic history at Harvard. He joined the investment firm Wellington Management in the late nineties, first as a researcher trying to understand what might become of Asia after the financial crisis. He eventually became a partner. Seven years ago, he started asking questions about climate change.
“What I discovered was that investment professionals talked in a weird way about it,” he said. “They used language for climate change that they wouldn’t use for anything else. They wanted certainty, belief. They didn’t think or talk probabilistically. They talked about it in a way that was binary. That is not how you should think about investing.” He went on, “You can get people in the business community interested in just about anything. You can get uptight white guys to talk about erectile dysfunction and diarrhea, if there are stocks involved. But you couldn’t get them to talk about climate change.”
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Glendon said, “The economics of climate change,” as it has been calculated and analyzed to date, “will be seen as one of the worst mistakes humans have made, much worse than any of the denialists.” The models are all calibrated on the past fifty to seventy-five years, a period of time when, at least in rich countries, “nothing happened,” he said. “No wars, no Great Depression—one bit of inflation and one financial crisis and that’s it.” Many typical models take data from that historic period and project what might happen in the future. They are also based on the assumption that the experience of the economy is contingent on the climate at that time. But, Glendon said, they haven’t incorporated thresholds, or breaking points. “The actual experience of the economy is contingent on the climate of the future.”
For instance, many economic models still assume that India will keep growing indefinitely. “They just have seven-per-cent growth forever of G.D.P., of demand,” Glendon said. “There is no question about whether climate change might impact this growth. India gets rich forever.” This leads to a major assumption, which “underpins the entire oil market,” among others, Glendon said. But the report found that three hundred and eighty million people work outdoors in India, and less than ten per cent of the country’s homes have air-conditioning. By 2030, possibly two hundred million Indians could be exposed to lethal heat waves, in which the temperature could kill a well-hydrated person who spent only four hours outside, even in the shade, and by which the average number of lost daylight working hours could increase to the point where between 2.5 and 4.5 per cent of G.D.P. could be at risk annually. Florida is another one of the report’s case studies. Many mortgages on homes and properties along the Florida coast now require owners to have flood insurance. Insurance contracts are renewed every year. If, at a certain point, insurance companies will no longer cover properties in a given area, owing to their climate exposure, then owners may risk defaulting on their mortgages. “If you say there are parts of the country where thirty-year mortgages don’t make sense, even just because of uncertainty, bad things will happen in that place,” Glendon told me. “These places will be financially underwater long before they are physically underwater.”
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https://www.newyorker.com/news/annals-of-a-warming-planet/will-big-business-finally-reckon-with-the-climate-crisis
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