Money talks and bull**** walks, as the old saying goes. When it comes to the debate over Global Warming, a formidable quantity of the latter is in evidence. Ideology and partisanship have badly skewed the debate over public policy, as journalists, politicians and special interests on both sides of the debate cherry pick the evidence that fits their preconceived views. I trust relatively little of what I read of the debate as filtered through non-scientists. And I’m even beginning to wonder about the scientists — they are, after all, beholden to the politicians and special interests for their research funding.
There is one group, however, that I am inclined to trust — the insurance industry. Insurance companies have skin in the game. Politicians can say anything they want, pass any law they want, and if they get it wrong, big deal, it’s only other peoples’ money. But insurance companies have a vested interest in accurately appraising the risks associated with Global Warming because, if they get it wrong, they’ll end up bankrupt.
That’s why I was particularly interested to view the presentation materials supplied by Elizabeth Costle, former Vermont Commissioner of Banking, Insurance, Securities and Health Care Administration and now a resident of McLean, entitled “Impacts of Climate Change on the Insurance Industry” as part of the testimony at the May 13 hearing of Gov. Timothy M. Kaine’s Commission on Climate Change.
The insurance industry is increasingly concerned that climate change could increase the frequency and severity of losses from hurricanes, flooding and severe winds. From the likes of Lord Levene, chairman of Lloyds of London, we now get such quotes as: “At Lloyds we do not subscribe to scare stories… We believe that a $100 billion dollar U.S. mega-catastrophe is getting closer for the insurance industry — and it could hit almost anywhere on the Atlantic Coast.”
As Costle notes in her slides, “The past may no longer predict the future so the cost of insurance is likely to include a premium for uncertainty.” Translation: Insurance premiums will rise. And, if markets are allowed to operate freely, they will rise higher and faster in areas at greatest risk.
One of those places is Virginia. Rates here increased 67.2 percent between 2001 and 2006, compared to 46.3 percent nationally. Ranked by assets exposed to increased flooding from sea level rise, Virginia Beach is the 10th largest coastal city in the world. (I presume that Costle is referring to the Virginia Beach-Norfolk metropolitan area, not the municipality of Virginia Beach.) At least we’re not Florida where insurance got so costly, if it was available at all, that the state government stepped in to buffer homeowners from the reality of the marketplace. For the moment, insurance markets in the Old Dominion are still functioning properly.
If Virginia’s state-level politicians are sincere about adapting to climate change, as opposed to posturing, they should stop prattling about cap-and-trade mechanisms for capping greenhouse gases — a decision that will be made in Washington, D.C. — and focus on what they can influence here in Virginia. At the top of the list: Resist the temptation to meddle with insurance markets as rates rise. High insurance rates send a signal to home builders and home owners: Think twice about where you build.
On a more proactive note, state and municipal government in Virginia can (a) work to protect wetlands, which function as natural buffers against storm surges, (b) stop subsidizing scattered development in areas exposed to rising sea levels, and (c) anticipate the impact on critical infrastructure like highways and power plants. Regarding that last point, a presentation by Chris Munson, senior manager-technology & management solutions for ICF International, was particularly germane. The federal government has begun the process of appraising the impact on infrastructure, including on Virginia. Virginia needs to follow up with more detailed study.
Finally, even though I think the cap-and-trade issue is a federal matter, not a local one, I have to plug a presentation by Noah Sachs, an environmental law professor at the University of Richmond, “The EU Climate Change Strategy: Lessons for Virginia,” which considers the European Union CO2 trading scheme in some detail. (Noah is a fellow member of the West End Gentlemen’s Eating, Drinking and Bloviation Club which convenes monthly to fulminate on such topics as Global Warming.)
Just one set of numbers from Noah’s presentation drives home the argument we’ve made here at Bacon’s Rebellion that there is vast potential for Virginia to shrink its energy/environmental footprint. In 2005, per capita energy consumption in Virginia was 345 million BTUs. In Germany, per capita consumpion was 176 million BTUs. Our standard of living may be higher overall, but it’s nowhere close to twice as high. We waste a lot of energy.
