Good News on Global Warming

There’s plenty of bad news about global warming, but one bit of good news has popped up recently.

It was a report by the Reuters news agency that a few far-sighted Wall Street investors, insurance executives and pension managers are beginning to see global climate change as an urgent economic issue.

This issue surfaced at a recent conference of the Investor Network on Climate Risk (INCR) at the University of Chicago. Richard Sandor, head of the Chicago Climate Exchange, was quoted as saying that every institutional investor should “push companies to evaluate and estimate their climate risk.”

There are three reasons for doing so, according to Win Neuger. chief executive of AIG Global Investment Group. He cited these reasons: “financial risk from liabilities, investing opportunities in ‘green’ technologies and rising public concern.”

Other speakers noted the huge insurance costs of the recent hurricane Katrina and of Hurricane Andrew in 1992. One speaker estimated that if a hurricane with the force of hurricane Andrew struck Florida and Louisiana today, it would cause $150 billion in damage --- one-third of the $450 billion capital base of the property and casualty insurance industry.

Since the U.S. government has refused to acknowledge the threat of global warming, it is encouraging to note that at least a few of the nation’s top business leaders are beginning to give it a high priority in planning for the future. It is proof that the concerns about climate change are not simply the result of exaggerated fears of environmentalists.

An October report by a British economist also focused on the likely catastrophic effects of global warming on the world economy. In a report for the British government, Sir Nicholas Stern warned that failure to take action on global warming “could create risks of major disruption to economic and social activity, later in this century and the next, on a scale similar to those of the great wars and the economic depression of the first half of the 20th century.”

A few other business leaders have seen outstanding business opportunities in attacking global warming by developing renewable fuels and designing fuel-efficient buildings. The science of genomics is opening up vast new opportunities for new jobs and new businesses. Similar results could be achieved by investing in new ways to reduce greenhouse gas emissions by abandoning fossil fuels and maximizing energy conservation.

Only one state --- California --- has taken substantive action on a program to reduce global warming. Its legislature has passed, and Gov. Arnold Schwarzenegger has approved, a bill calling for reducing greenhouse gas emissions by 25 percent by 2020.

The first necessity is to develop a realistic understanding of the worldwide impact of global warming if nothing is done. Action by leading business leaders and by the state of California are major steps in that direction. That doesn’t mean the problem is likely to be solved soon, however. Recent news reports demonstrate that, while some world leaders debate the issue, actual conditions are getting progressively worse. For example:

--- The 41-square-mile Ayles Ice Shelf --- packed with ice that is more than 3,000 years old --- has broken away from Ellesmere Island in the Canadian Arctic, about 500 miles south of the North Pole.

--- An inhabited island in the Bay of Bengal near India has been flooded by rising sea waters. Lohachra Island once was the home of 10,000 people.
If global warming is not stopped, the same fate will await other islands, coastal cities and low-lying coastal lands throughout he world.

--- The U.S. Interior Department has proposed designating polar bears as a threatened species because the melting of arctic ice is destroying their habitat.

--- Villages inhabited by Inuit tribes in Northern Canada are being abandoned because the permafrost on which they are built is melting.

--- Glaciers are melting in mountain areas all over the world, from Alaska to the Alps.

--- Some scientists have predicted that, if nothing is done soon to reduce greenhouse gas emissions and solve the global warming problem, the process may reach a point where it cannot be stopped.

The world is a long way from a realistic and practical response to the problem --- but at least a few leaders in the business world and in California have seen the light. Each of us has a responsibility to support their efforts.