We've solved many environmental risks, why not climate change?

<p>2012 Trexler_Changing Nature of Business Climate Risk

Societal risk management has

been reasonably successful for many environmental risks, from air

pollution and oil spills to the ozone hole. Why, then, after 25 years of

active engagement, has the problem of climate change not been tackled

by policies or other measures that can reasonably be expected to have a

material impact on the problem?

Some of the reasons for our difficulties in this area are quite obvious,

others more subtle. What is safe to say is that the problem of climate

change is not characterized by any of the attributes that make a problem

relatively easy to solve. Quite the contrary, as explored below:

• Almost all human activities, from energy consumption to food

production, contribute to GHG emissions. Compare this to efforts

to address the ozone hole, where just a few chemicals being

produced by a small number of factories in a small number of

countries had to be tackled.

• There are no silver bullet technological solutions for GHG

emissions. Scrubbing sulfur dioxide from the flue gas of coal-fired&nbsp;

power plants, for example, radically reduces sulfur emissions at

modest cost. The same is not true of CO2.

• Climate change occurs over very long periods of time and is

almost invisible to human perception against the backdrop of

natural variability. Compare this to virtually all environmental

problems that we’ve successfully tackled, from oil spills to severe

air pollution.

• Perceptions of climate change risk suffer at the hands of typically

employed risk assessment tools and metrics such as cost–benefit

analysis. Even the costs of extreme climate change, occurring

more than 10–20 years in the future, can appear immaterial if

discounted at sufficiently high discount rates.

• The costs of mitigating climate change tend to be front-loaded,

and could be very expensive if they are undertaken suddenly.

Large quantities of capital stock could be ‘stranded’ if not enough

time is provided for technologies and systems to evolve that would

cushion costs.

• Climate change is a difficult concept to communicate. Our

primary scientific measure of climate change – tenths of degree

changes in the world’s average global temperature – is unsuited

to the realities of human risk perception and hides projected

localized effects.

• The magnitude of what scientists believe is needed to address

climate change is immense. Simply stabilizing the concentration

of carbon dioxide in the atmosphere would require greater

than 70% reductions in global CO2 emissions. Yet the Kyoto&nbsp;

Protocol’s targets – while widely perceived as having been costly

and challenging – only called for very modest reductions from

industrialized countries against a 1990 baseline, while global

emissions actually continued to increase.

• Climate change has all the attributes of a ‘tragedy of the commons’.

The benefits of mitigating climate risks are widespread, but the

impacts of aggressive climate policies would fall heavily on certain

countries and certain sectors, including those with political veto

power. The countries perhaps most immediately facing global

climate change, including small island states threatened with

being wiped out by sea level rise, don’t actually emit many GHGs.

These are a few of the variables that make climate change risk

management so difficult. When considering the perceived near-term

costs of tackling climate change, against the hoped-for long-term

benefits, it should be no surprise that material climate change policy

has proven so difficult when political decision–makers have electoral

outlooks of two to six years.</p>