Fat Tails

According to Weitzman there is about a one in ten chance (10%) that climate change will result in temperature increases of 6 C in the business-as-usual scenario. That, to put it quite simply, spells catastrophe.

Reading the haunting book on Chernobyl you don't have any great confidence in nuclear energy as a solution.

Perhaps the key to thinking about climate change is not in terms of "consumption smoothing" (inter-temporal optimization) but in terms of insurance against catastrophic changes.

But maybe that, too, is the wrong way of thinking. After all, why should I buy insurance for someone else (future generations)?; also, if there is a pay-out that cannot replace the damaged environment nor can other people directly benefit from the pay-out (as in life insurance). So, what we're really talking about is risk management and our responsibility for avoiding a catastrophic situation.

The first approach (optimization) is fraught with all sorts of technical and ethical difficulties (not least: what discount rate should be used). I'll write a post on that later but W. Beckerman has, for me, the clearest exposition of the technicalities involved in the Ramsey equation.

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There's this amazing scene in one of my favourite films, the original Planet of the Apes (one is constantly reminded of this given the way in which ISIS and other fanatics have risen to prominence). And it's this: when the old religious order finds out that there is evidence of another kind of world, one that preceded theirs and that was in some sense more intelligent (but more violent). The apes replace that civilisation with something cruder but less violent because less technologically advanced.

And what is that evidence? A talking doll found in the rubble. 

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Given the possibility of threshold effects and feedback loops it's not absolutely clear what kind of "system" we'd enter if temperatures increase by 6 C. Will we be in a system of non-linear and irreversible changes? Certainly earth hasn't seen these levels of concentration of carbon dioxide (400 ppm) for 800,000 years. The period of settled agriculture is perhaps only 10,000 years long and has obviously depended on favourable climate changes.

So, the question is really about survival. Not just who survives but what survives? Will a recognizable human form, the Image of Man, continue to exist?