The seriousness of climate change is not undermined by recognizing that there are a lot of uncertainties and even unknowns when it comes to future climate outcomes (not only physical, but socioeconomic as well). In fact, those uncertainties and unknowns should actually increase our perception of climate risks, given that we’ll only get one “roll of the climate dice” over the next few decades, and there’s no reason to assume that the uncertainties and unknowns will end up being in our favor.
Many uncertainties about climate futures work against us rather than for us when it comes to climate change risks. There are quite a few ways, for example, that the triggering of climate change "tipping points" could accelerate or worsen climate change. Conversely, there are very few ways by which climate change suddenly stops or slows.
A Planetary Experiment
Regardless of what anyone might think about climate change, it is indisputable that adding trillions of tons of greenhouse gases (GHGs) to the atmosphere constitutes an unprecedented planetary experiment, a point very effectively made in the book Earth's Precarious History].
As you can see in the graphic below, average global temperature has already moved beyond it’s range over the last 10,000 years, during which time the human population has grown from millions to billions, putting planetary boundaries under a lot of stress even without considering climate change as a “stress multiplier.”
Climate change was first recognized as a potentially serious societal risk some 60 years ago. Strangely enough, based on the graphic below, we’ve have done almost nothing to meaningfully mitigate that risk. Greenhouse gas emissions have risen almost every year over the last 60 years, and average global temperature is steadily rising as well.
The good news (from a prediction markets perspective) is that due to our relative inaction to slow climate change, we’ve moved beyond the natural variability (noise) associated with the climate system, and can now bet on outcomes are that clearly related to the “climate signal.”
Why Climate Bets are Different
Although there is a lot of discussion of probabilities when it comes to climate change, unlike a card game, a roulette wheel, or flipping a coin, the climate change that scientists say is now underway will only happen once. That should make us incredibly risk averse. Imagine if we were allowed just one house during our lifetimes, with no possibility to replace that house if destroyed. Imagine the lengths we would go to protect it from fire, earthquakes, and other risks. In reality we’re not limited to a single house, and we can buy insurance against key risks. In effect we can buy down our risk adversity.
But we can’t buy insurance against many of the expected impacts of climate change, and certainly not the plausible worst case impacts. There’s only one planet earth, and whatever happens in the next several decades won’t be reversible for a very long time.
No matter how skeptical we might be of climate science, or how unlikely we might consider some of the worst potential climate outcomes, basic risk adversity should motivate us to take the steps necessary to avoid those outcomes at almost any cost.
We are now well into the course of this planetary experiment, an experiment in which we’re systematically discounting many of the potential risks associated with the experiment.