For many decades, climate scientists have warned of an accelerating rate of climate change, which would bring about more extreme weather patterns heralding an age of consequences. These dire warnings were easy to ignore, especially as climate change went by the comparatively gentle misnomer global warming. The future tense description climate change, where most of the impacts were long range externalities outside of the advanced economies, the worst polluters, is similarly misleading. Today, however, the seemingly endless raft of extreme weather events suggests that the climate is not changing, it has changed and our societal imperative is to end the causality debate and begin responding to effects in the present tense and with great urgency.
With this change, which is upon us from the wild fires in California that resemble a hellscape, to record city-level flooding in Houston (the 4th largest city in the U.S. and a choke point for the oil industry) and the apocalyptic scenes in Hurricane Irma and Maria’s wake, the case for resilience could not be more urgent. Looking at the complete collapse of Puerto Rico’s infrastructure and the inability or unwillingness to send in the cavalry drives home the point that in the face of extreme weather, we can no longer be islands unto ourselves. In all, tallying up the economic costs of the 2017 hurricane season, perhaps the most damaging on record, exceeds $200 billion in a little over 2 months.
While the impact of these events goes far beyond economic costs, the financial toll is catching households, businesses and political leaders flat-footed. Certainly, the financial calculus must change in the risk-bearing industry, where insurers and reinsurers rely on dated actuarial and catastrophe models that do not adequately contemplate the turbulent world we are living in. Highlighting this issue of model error, Texas has had 3 500-year flooding events in the last 3 years consecutively. Perniciously, only 15% of Houston households had flood insurance passing unfunded losses on to tax payers and relief organizations. The vulnerable fall through the tears in our financial fabric and when resources run dry, disaster fatigue sets in and the unfocused media cycle moves on.
Insidiously, this model error creates a vicious cycle where insurers undercapitalize for catastrophic losses, resulting in cost-prohibitive private solutions against flood, wind or earthquakes, where government-backed programs fill the void. This in turn results in adverse selection, where the worst risks are the only buyers. The result is the type of troubling uninsured or underinsured rates against predictable risks, such as earthquakes in California, where a mere 10% of homeowners are insured. Similarly, it is doubtful property insurers – or the building code for that matter – contemplated Oklahoma becoming the seismic capital of the continental U.S. A dubious distinction that highlights the collision course between man-made and natural risks. At $200 billion and mounting, the U.S. is facing a hefty down payment on doubt and should retake its seat at the global climate change table leading the world to a more engaged and resilient future.
All too often, when our first lines of defense fail, with nature being the outermost layer, we are left with no other choice but a Federal or military response, which is the costliest of interventions we have. An emblem of this is the fact that the Federal Emergency Management Agency, FEMA, had $1 billion left in its budget when Hurricane Harvey unleashed its rain bomb on Houston. An emergency line of credit of $15 billion, which was passed by Congress at the 11th hour is hardly a strategy on long term resilience, no more than having to send a military relief flotilla to the Caribbean to respond to Irma and Maria’s wrath. The human and natural toll from these events is truly astounding, raising calls to build back better with resilience at the design level – if to build back at all.
In terms of the human toll, in Puerto Rico for example, 16 lives were claimed during the initial phase of Hurricane Maria. More than twice that number have died in the aftermath largely due to preventable illnesses exacerbated by the collapse of the island’s healthcare system. The number is sure to rise as vulnerable people, especially the chronically ill, elderly and children are exposed to a crumbling healthcare system and an appallingly slow humanitarian response. Another human challenge posed by climate change is disaster-displacement. While millions of people have been dislocated in 2017 due to weather-related events, the longer-term prospect of permanent displacement (what are known as internally displaced people (IDPs) in humanitarian parlance or climate refugees in the case of Barbuda) is a very real specter of climate change. Forever changing the cultural and economic character of stricken communities, cities and regions in many ways adds insult to injury. A decade after Hurricane Katrina levelled New Orleans, for example, pre-disaster population levels and vibrancy have been slow to return.
While humanity has grown accustomed to challenging nature’s boundaries and ignoring Cassandra’s prophesying about long term consequences, the fact that climate changed can no longer be ignored. Against raging wild fires, it will be hard to fight the urge to cut back the forest line to make way for human habitation and our economic motives. Perhaps the line of human habitation and our profit motive should be abated to strike equilibrium with nature? The Fort McMurray fire in Alberta, which triggered a mass exodus of 80,000 people, was more severe because of oil sands, showing that we cannot win a collision course with nature. Indeed, if there is any lasting lesson from the recent wave of devastating natural disasters is that prevention and natural resilience are better than cures. Moving from a position of conflict with nature to co-movement requires profound change at all levels of human adaptation. This is not only the greatest challenge humanity has ever faced, it is also our greatest investment opportunity.