Climate change futures: health, ecological and economic dimensions

Finally, new technologies need to be clean and safe.
Those intended to adapt to climate change and disease,
such as genetically modified organisms, need to
be fully evaluated as to their implications for natural
systems. Those aimed at climate mitigation, including
carbon sequestration, coal gasification and expanded
use of nuclear power, must undergo thorough scrutiny
regarding their repercussions for health, ecology and
economies. Life cycle analysis of proposed solutions
can form the basis of those assessments.
Corporate executive managements can declare their
commitment to principles of sustainability, such as
those of Ceres and the Carbon Disclosure Project, and
develop codes, such as those enunciated by the
Equator Principles, to guide financial institutions in
assessing climate-related risks and specifying environmental
and social risks in project financing. Firms can
make their own facilities energy-efficient and encourage
carbon-reducing measures, such as telecommuting
and the use of virtual business tools.
108 | FINANCIAL IMPLICATIONS
ACTION: SEIZING OPPORTUNITIES AND CUTTING
CARBON EMISSIONS
The next step is reducing the output of greenhouse
gases, and this will require concerted efforts by all
stakeholders. A framework for solutions is the following:
• Significant, financial incentives for businesses
and consumers.
• Elimination of perverse incentives (Myers and Kent
1997) that subsidize carbon-based fuels and
environmentally destructive practices.
• A regulatory and institutional framework designed to
promote sustainable use of resources and constrain
the generation of wastes.
A set of integrated, reinforcing policy measures is
needed. The chief issue is the order of magnitude
of the response. The Kyoto Protocol calls for 6-7%
reduction of carbon emissions below 1990 levels by
2012, while the IPCC calculates that a 60-70%
reduction in emissions is necessary to stabilize atmospheric
concentrations. How large an investment we
make in our common future will be a function of the
educational process and how rapidly the reality of climate
change affects our lives.
The scenario process enables us to envision a future
with widespread impacts and even climate shocks
(such as slippage of portions of Greenland).
”Imagining the unmanageable” can help us take constructive
steps in the short term, while making contingency
plans for even bolder, more rapid transformations
in the future.
Each sector can play a part and develop partnerships
to catalyze progress. Individuals and the institutions in
which they are active (schools, religious institutions,
workplaces, communities and municipalities) can make
consumption decisions and political choices that influence
how our future unfolds.
An enormous challenge — that can spawn many economic
activities — is the task of ecological restoration.
Large programs are needed to restore Florida’s
ecosystems and the Gulf coast’s barrier wetlands and
islands. Other industries will be needed to construct
buildings and new infrastructure, improve transport systems
and plan cities to meet the requirements of the
coming climate.
Governments, in partnerships with international organizations
and businesses, can help transfer new technologies
and manufacturing capability to developing
nations. Encouraging consumers to purchase products
that set aside part of the price to pursue climate friendly
(‘footprint neutral’) projects is just one commercial
innovation being developed. The global sharing of
best practices can help reduce the number and intensity
of resource wars that may loom if only temporizing
measures are adopted.
Insurers, along with their clients, can facilitate development
of low carbon technologies through their policies
and new products and can set the pace for others
striving to become greenhouse gas neutral. Risk perception
can be an obstacle to adopting new technologies,
and the insurance industry can influence commercial
behavior by creating products that transfer some
of the risk away from investors. It was insurance coverage
only for buildings with sprinkler systems, for example,
that enabled the construction of skyscrapers in the
early 20th century. Policies today could help redirect
society’s future energy diet and speed development of
beneficial technologies.
Investors at all levels, and especially institutional
investors such as state and union pension funds, can
direct capital toward renewable energy technologies.
Project finance and new financial instruments can provide
stimulus for solar, wind, geothermal, tidal and
hybrid technologies and help drive the clean energy
transition. Capital markets can foster the development