After the LA Fires:
The Sobering Math of Climate Change and What to do About It
I know this past week has been “Trump week.” But that hasn’t stopped wildfires from burning down more and more of Southern California. And so, if you want a switch of topics, then this somewhat lengthy (mea culpa) post is for you.
Even as parts of LA were burning to the ground, the political debate over the role of climate change, and finger pointing about the fire response have been raging. The climate debate, by now, is well-rehearsed on both sides.
Democrats who cite the scientific consensus that climate change played some role, not just in California this past week, but also in the unprecedented drenching of Hurricane Helene in North Carolina and surrounding states, and Hurricane Milton that hit Florida shortly thereafter (among an unusually large number of hurricanes in 2024) predictably call for even more aggressive policies to control CO2 emissions and promoting even more fervently the use of renewable energy sources. In contrast, President Trump and his media echo chamber routinely deny that climate change has anything to do so with these severe weather events. In California’s case, blame has been placed on local and state Democrats for forest and water mismanagement. There is some truth to that charge. In particular, there has been a chronic underinvestment in water infrastructure not just in LA, but elsewhere throughout the country, which will require a massive two-decade national investment of over $700 billion to fix. https://www.brookings.edu/articles/the-los-angeles-fires-and-americas-overwhelmed-water-infrastructure/.
But mismanagement is not the whole story. There was no way to have had that many fire trucks and that much water to deal with a 100, maybe a 500-year, event, as the LA fire chief explained on 60 Minutes on January 12. The notion that if LA had had enough water at the outset of the blazes, the fires wouldn’t have gotten out of control ignores the fact that the hurricane-force winds were blowing embers in random directions all over. More water certainly would have reduced the extent of the damage, but the fires still would have been horrible. Ditto if, as some in the area had been pushing for, utility lines had been buried throughout the burned-out areas (and indeed throughout LA). But that would have taken years, would have cost a lot of money that many (most) homeowners would have strongly objected to, and still would not have stopped those embers from spreading from house to house.
Clearly, both climate change and decades of under-investment in water/fire/forest management share the blame, and there is little point parsing how much of it goes to each factor. For reasons I will address shortly, more climate-related disasters lie ahead and thus this debate cycle – it’s all climate change, no it’s not, it’s something else -- surely will continue, until something breaks it. The climate debate talking points on both sides call to mind one widely repeated definition of insanity -- doing the same thing over and over and expecting different results – widely attributed to Einstein, but also Ben Franklin and Mark Twain may have said it too. To get out of this stalemate we (and by we, I mean not only Americans but citizens around the world), need a new paradigm. Hence, this post.
Some readers of my past climate change posts may know where I’m going with all this, but I hope to say it better and much more completely this time. Recent subscribers who are reading my views on this subject for the first time, may find some things I am about to say surprising. Trigger warning: the numbers involved are BIG, REALLY BIG. Pardon my one tease (to try to keep you reading, if you weren’t so inclined otherwise), there is a Trump fantasy as part of all this, you’ll see.
I begin with some bona fides. In a much earlier stage of my career, in my late 30s through my mid-50s when I worked mostly as a policy analyst as a Senior Fellow in Economic Studies at the Brookings Institution (a program I also directed for 7 years), I wrote books and articles about a range of policy topics, but among them were multiple articles and one book about catastrophes (earthquakes, hurricanes and floods) and the role of private and public insurance to reimburse victims of the costs. It was a lonely field at the time. The principal academic outside Brookings who made an entire career in this area was Wharton professor Howard Kunreuther, who tragically died of brain cancer in 2023: https://news.wharton.upenn.edu/in-memoriam/2023/08/howard-c-kunreuther/. Also, the incredibly prolific legal scholar and long-time federal judge, Richard Posner, dipped his brilliant toes into these waters with his book Catastrophe (more about this soon). https://www.law.uchicago.edu/faculty/posner-r. All this writing was probably read by a small audience in those days.
But now, 20 years later, catastrophes and insurance are all the rage. Indeed, what to do to mitigate catastrophes, principally weather-related ones, and how to insure against the enormous losses from them, are poised to be among the most debated political issues of our time. And so, I now find myself drawing on my old ideas, freshened up to address climate-induced CATs (as catastrophes are called in the insurance business) and the insurance crisis that is now here in a big way.
I’m going to do that first by stating two fact-based propositions and then outline options for dealing with our predicament. Caveat at the outset: since I’m just returning to my old research field, and maybe I’ve lost a cognitive step or two since, I reserve the right (especially prompted by your comments and criticism) to change my mind on some of these things in future writings.
1. Climate Change Very Likely is Increasing the Number and Severity of Weather-Related CATs in BOTH RED AND BLUE STATES (Florida and California, but also in Flyover Country in Between); And Even if You Don’t Believe This, It’s Common Sense to Take Account of the Risk that it Might be True
I’m not going to weigh you down with extensive citations to the scientific consensus that climate change is real. It’s undeniable that the world is getting hotter. As the Wall Street Journal reported on January 10 of this year, 2024 was the hottest year on record, averaging 1.47-1.62 degrees Celsius above preindustrial levels, and thus above the 1.5 degree limit set by the Paris Climate Accord (which President Trump has just pulled the US out of). https://www.wsj.com/science/environment/2024-hottest-year-record-climate-change-trends-0b89ca2e. And the federal agency that has long been in the forefront of climate science, NASA, among many other sources, reports that climate change has been leading to more severe weather events. https://science.nasa.gov/climate-change/extreme-weather/.
I realize that in this age, “expertise” is criticized or laughed at in some quarters, so let me appeal to your common sense. I am nearing 75 and grew up in what was once the heart of “tornado alley”, the south middle of Kansas (Wichita). Dorothy/Wizard of Oz territory. I vividly remember many nights crossing the street to shelter in the basements of our neighbors since we didn’t have one. Tornado warnings every spring were real, one came within a about ¼ of a mile from our house. Another tore apart the homes of friends who lived a couple of miles away. I also remember watching on TV the great hurricanes of the 1950s and 1960s. Not so many memories of forest fires out West.
Now roll the clock forward to the past 20 years. Katrina that wiped out New Orleans. Massive hurricanes in Florida that year and of course more recently. But never hurricanes like Helene that destroyed western North Carolina and environs. Or tornadoes in the middle of winter wiping out towns in Kentucky. And then the nights this past year when 50-100 tornadoes in one night would roll through parts of Texas and elsewhere in the south. The horrendous forest fires in California over the past 5-6 years, including of course the LA disaster most recently. The droughts that have plagued much of the country, and much of the west. The annual polar vortexes in the winters that now cause arctic cold and snowstorms in parts of the country that didn’t get such snow decades ago. And this is only in the US.
I don’t know about you, but I can tell you that these intense events are nothing like those I grew up with. The weather has changed! It is erratic, not only on the coasts but all over the US. You may not believe the scientists who keep telling us that climate change has contributed to all this -- maybe not the only cause, but certainly a fundamental factor. But you ought to trust your own eyes and your experiences. They’re tell us all something!
Indeed, even in their quietest moments when they’re not vamping for their friends on social media, climate change deniers must be thinking that there is at least a risk that climate change has something to do with all the crazy weather. To think otherwise is to put one’s head in the sand. It’s why all of us buy home insurance, to protect us against lots of risks we can’t predict, but which may visit us one day. Twenty years ago in his 2004 book Catastrophe, Richard Posner, that brilliant conservative judge I just mentioned, wrote words to the effect (I’m paraphrasing): “look, I may not believe in climate change (remember he was writing 20 years ago), but I have to concede that there may be at least a 10% chance I’m wrong. That being the case, it makes sense for society to have insurance, in the form of preventative and adaptive policies, to deal with this risk.” Precisely.
As I noted at the outset. One can criticize LA’s and California’s forest management and water policies and still concede that climate change had at least something to do with the intensity and breadth of the LA fires. But apparently not the writers of editorial page of the Wall Street Journal, the nation’s premier newspaper covering the financial industry, which is replete with risk. Writing the first weekend after the fires, the editorial writers proclaimed: “The evidence doesn’t support the climate explanation since (among other reasons) California has had a dry climate and Santa Anna winds, even with hurricane-force gusts on occasion, for centuries.”
News flash to the WSJ editorial page writers: read your own news stories, like the one from January 10 that I quoted above, and which I now quote here: “Those fires are the consequence of a growing phenomenon called “hydroclimate whiplash” – rapid swings between intensely wet and dangerous dry weather that increase the risk of deadlier wildfire” (emphasis added). The article then referred to the scientific study released earlier in January that documented this: https://www.nature.com/articles/s43017-024-00624-z). Thus, it doesn’t matter that Santa Anna winds have always been fierce and even unconnected to climate change, as this Yale University post documents from an interview with a prominent UCLA climate scientist: “with climate change, California’s dry season is extending into the early winter, when the Santa Ana winds typically take shape. This, he said, “is the key climate change connection to Southern California wildfires.” https://e360.yale.edu/digest/los-angeles-fires-climate-change. Again, the growing risks of disasters connected with climate change are the issue.
2. Climate Change and the Risk of Severe Weather Events Associated with it Reflect the Growing Concentrations of CO2 in the atmosphere That Are Already There and Likely to Remain at those Levels Even if Emissions Growth Slows or is even Halted.
So, what in the climate produces these growing risks? Answer: higher concentrations of CO2 in the atmosphere that, absent efforts to suck it out or offset it (I will get to those efforts shortly), are already there because of accumulations of past CO2 emissions from multiple sources. This graph, from NOAA (https://gml.noaa.gov/ccgg/trends/) tells the story better than words can (I wish I could reproduce here, but Substack won’t let me).
If you go to the website, you’ll see the latest reading: it’s above 420 parts per million, well past the 350 ppm once thought to be a “safe” level. In case you think that the chart is cherry-picking the data, then consider this from NASA: “Since the onset of industrial times in the 18th century, human activities have raised atmospheric CO2 by 50% – meaning the amount of CO2 is now 150% of its value in 1750. This human-induced rise is greater than the natural increase observed at the end of the last ice age 20,000 years ago.” https://climate.nasa.gov/vital-signs/carbon-dioxide/?intent=121 (emphasis added).
Now, here’s the kicker: all that CO2 up there in the atmosphere? How long will it be there? Well, let’s go to MIT’s climate portal to get the answer (Yes that MIT, the institution President Trump often cites as the university home of one of his uncles, of whom he is quite proud):
“And this brings up an important finding about CO2’s lifetime: it’s getting longer as humans emit more of it. The capacity of oceans and plants to take up carbon is simply not keeping pace with our emissions. As it stands, says Boyle [Ed Boyle, a professor of ocean geochemistry at MIT], human-generated carbon dioxide is expected to continue warming the planet for tens of thousands of years.” https://climate.mit.edu/ask-mit/how-do-we-know-how-long-carbon-dioxide-remains-atmosphere (emphasis added). Tens of thousands of years….
Here’s the next kicker: even if we replaced every car in the world with an EV, or we just stopped human (and animal) activity altogether, so that new emissions somehow fell to zero, with all that CO2 already there, the risk of continued severe weather events, and their catastrophic consequences will remain. These events are already costing us in the US alone a ton of money (and lost lives): From a government website: “The U.S. has sustained 403 weather and climate disasters since 1980 where overall damages/costs reached or exceeded $1 billion (including CPI adjustment to 2024). The total cost of these 403 events exceeds $2.915 trillion.” https://www.ncei.noaa.gov/access/billions/climatology. In 2024, the costs of severe weather were close to $200 billion. Of course, a big portion of these costs arises from the increased population affected by severe weather. Even if only $50 billion of the $200 billion can be attributed to climate-induced increases in event severity and frequency, that number alone is a big number. The $50 billion guestimate for the US is not unreasonable in light of recently published research indicating the global cost of severe weather attributable to climate in the range of $140 billion annually. https://www.nature.com/articles/s41467-023-41888-1. Or a study by the International Chamber of Commerce attributing $2 trillion of global costs to climate-change induced severe weather over the last decade. https://iccwbo.org/news-publications/policies-reports/new-report-extreme-weather-events-cost-economy-2-trillion-over-the-last-decade/. And here’s a shocker: if one accounts for all the costs of climate change, not just the immediate costs of severe weather, total annual climate-costs within 25 years could reach $38 trillion (that is not a typo): https://www.forbes.com/sites/roberthart/2024/04/17/climate-change-will-cost-global-economy-38-trillion-every-year-within-25-years-scientists-warn/. (Cut that number by 90% and it’s still an enormous number!).
Climate scientists often analogize the CO2 in the atmosphere as a bathtub that is already full of water. Emissions of new CO2 added to the atmosphere are like adding water to an overfull bathtub. Even if we (the world that is, not just the US) were to slow the growth of CO2 emissions, let alone bring them down to “net zero,” IT WON’T CHANGE THE FACT THAT THE ATMOSHPHERIC CO2 BATHTUB IS ALREADY FULL. (Pardon my “all caps” – I’m not crazy, I promise -- but I don’t know what else to do to try to get people, including our political leaders, to understand this simple fact).
Holman Jenkins, the brilliant, iconoclastic WSJ columnist, for all his brilliance doesn’t seem to get this. He repeatedly inveighs against EV subsidies, arguing that because they subsidize energy consumption, they don’t have a net emissions-reducing effect. Even if he is right about (and I’m not sure, it’s an empirical question), it’s missing the point. Regardless of how much emissions any policies reduce, they don’t make the CO2 bathtub any less full.
In short, the standard playbook of Democrats and climate activists worried about climate change – as they are right to be – which always entails doubling down on controlling CO2 emissions and pushing for renewables faster will not really provide social insurance against climate change-related events today, or tomorrow, or realistically even for the next fifty or hundred years, or even beyond. To be sure, more aggressive green policies will produce a lower rate of growth of emissions than would occur otherwise, and ideally once annual global emissions get to net zero, the overfull CO2 bathtub will at least stabilize. But even as emissions growth is slowed, and that is a big if, especially under the new Administration’s policies, no one will really notice the impact until the CO2 bathtub is drained to more acceptable levels, or the climate changing impact of the bathtub is offset, which is my next topic.
3. Given (1) and (2), There are only Two Ways to Reduce the Risks of Climate Change-Related Severe Weather: Suck CO2 out of the Air (Carbon Capture) or Offset its Effects with Cooling Measures (Geo-Engineering)
If you’re comfortable with the facts and logic laid out so far, you will understand that there are only two ways to counter the “bathtub is already full” problem: (1) suck CO2 out of the air and/or (2) implement ways to cool the earth in a way that offsets the climate change caused by the bathtub being full. As you see, once you do the math, it is very easy to get discouraged, but at the same time, it may make you more willing to consider an out-of-the-box idea.
Direct Air Capture (DAC) or taking CO2 out of the oceans to allow them to absorb more from air (which my purposes here I will lump together with direct air capture or DAC for short), seems like it would be the clear solution in the long run. DAC should be distinguished from just “carbon capture,” which are technologies placed near or adjacent to fossil fuel facilities that capture the CO2 emitted from those facilities. That’s good, carbon capture doesn’t add to CO2 already in the air. But what we really want is something that actually subtracts from the CO2 in the air. That’s DAC.
DAC is really hard to do and it’s expensive, however: you need to suck a lot of air (or water) in order to remove a lot of CO2. Nonetheless, some progress is being made: Twenty-seven DAC plants have been commissioned to date worldwide, while plans for at least large-scale (> 1000 tons of CO2 per year) at 130 DAC facilities are now at various stages of development. https://www.iea.org/energy-system/carbon-capture-utilisation-and-storage/direct-air-capture. Up to now, US also has been leading the way on DAC, thanks to the subsidies in the Inflation Reduction Act (IRA), which were increased, in the form of a tax credit, from $45/ton to $180/t CO2. Importantly, Canada, the EU and Japan are also subsidizing DAC. And there is growing private sector support for DAC.
But even with the US subsidies, DAC remains expensive, at around $500-1000/ton before subsidies. Climeworks, the industry leader, claims that long run costs might stabilize at $300/ton by 2030. https://www.forbes.com/sites/phildeluna/2024/11/29/will-direct-air-capture-ever-cost-less-than-100-per-ton-of-co/. If true, then the $180/ton subsidy (assuming it is not cancelled by this Congress) would bring the user cost down to $120/ton perhaps in five years. Still, even at $300/ton, the costs of DAC remain above the “social cost of carbon,” or the estimated costs on society imposed by greenhouse gas emissions, a number which remains contested. Obama/Biden had it around $50, until EPA in 2022 proposed raising it to $190. In contrast, the first Trump administration had it at just $3-5. https://www.brookings.edu/articles/what-is-the-social-cost-of-carbon/. The proposed EPA estimate is in line with the $185/ton estimate published by multiple scientists in the leading science journal Nature. https://www.nature.com/articles/s41586-022-05224-9. At this not implausible level, while DAC is still not yet economic, in the sense that benefits outweigh the costs, it’s getting close. To cross over to becoming net positive, a combination of more basic research and experimental deployment, which would accelerate “learning curve” effects, will be required.
So how much would it cost to deploy DAC at a scale that would make a real difference in reducing severe weather events, and who will pay for it? The cost depends on how much CO2 we want to suck out of the atmosphere, which in turn will depend on the rate of growth of emissions in the future. Before I give you my back of the envelope cost estimate, I should note that as long as reducing emissions, at the margin, is cheaper than DAC, then emissions-reducing policies should be pursued. But even if they are cost-effective, policies to curtail emissions, at best, will get us to zero emissions growth. Our problem is that, with the CO2 bathtub already full at 420 ppm, we need DAC to get that number (scaled up over time to take account of emissions growth until the world gets to net zero) down to a “safer” level, one that can meaningfully reduce the severe weather risks we now face.
There is no clear standard for what that lower CO2 concentration level should be, but for illustrative purposes here I use 350 ppm as the target, which Dr. James Hansen of NASA has said is the “upper limit” on a concentration level he deems to be “safe.” The internet tells me that since 1750, the world has emitted 1.5 trillion tons of CO2. https://ourworldindata.org/co2-emissions. ChatGPT tells me, however, that at 420 ppm, the total amount of CO2 in the atmosphere is closer to 2.4 trillion tons (that’s “short tons,” not metric tons). The difference in the two numbers must be the naturally occurring CO2 pre-industrial age. So, taking the 2.4 trillion number, if we want CO2 concentrations to drop to 350 ppm, that will require taking out 1/6 of the CO2 that is currently there (420-350 divided by 420), or 400 billion tons. At $100/ton, which I know is optimistic, it thus will cost the world $40 trillion, at minimum, to get back to a safe level of CO2.
How much is $40 trillion? Well, the dollar value of world GDP in 2023 was $105 trillion, although if one accounts for lower prices in developing countries, annual GDP measured at “purchasing power parity” (PPP) is $150 trillion, give or take. In other words, it will take a lump sum of roughly 3 months of the world’s entire GDP devoted to DAC, under the most generous of assumptions, to get the world’s climate back to a safe level.
There is no way in hell the world can be coaxed to devote $40 trillion in a lump sum. Maybe, at the outer reaches of possibility, 1% of the $40 billion lump sum for DAC, or $400 billion annually, might be spent, but even that’s a stretch. And spreading the cost over 100 years won’t do it. At some point in that time frame, the world will have crossed the tipping point, if that hasn’t already taken place!
Before I did the above math, I was more hopeful that DAC could be our silver bullet. But no more. I was even going to spell out a plan for divvying up the costs for deploying DAC around the world: based on each country’s share of cumulative GFDP since about 1750, since GDP is highly correlated with emissions. And in theory countries could enforce such an allocation by imposing tariffs on free riders, an idea proposed by Nobel-prize winning economist Bill Nordhaus of Yale (a long-time close friend, mentor and co-author) in connection with his “Climate Club” proposal to reduce emissions. https://williamnordhaus.com/files/williamdnordhaus/files/p161-2020-nordhaus-clubs-foreignaffairs-2020.pdf. If President Trump were so inclined, he could apply his tariff threats to a DAC initiative as well. But all this is moot with respect to a global effort to roll out DAC (though not necessarily moot in the case of geoengineering, which I discuss next).
That doesn’t mean, however, that we should abandon R&D efforts to make DAC cost-effective. Once it reaches that point, DAC would help to gradually reduce CO2 concentrations, once the world has hit net zero, or at the very least could accelerate the date at which net zero is achieved.
Geo-engineering: In the meantime, however, it would be great if we had a “bridge technology” that could offset the severe weather-producing effects of high CO2 concentrations. As it happens, there is such technology: geo-engineering, or the continuous spraying of particles, sulfites and/or salt crystals, into the upper atmosphere to reflect sunlight, thereby introducing a cooling offset to the warming of the more-than-full atmospheric CO2 bathtub. Geo-engineering is comparatively cheap: probably several billion dollars a year globally. That number is also tiny compared to the hundreds of billions being lost globally every year due to climate-related severe weather. https://www.foreignaffairs.com/world/time-geoengineering-now-climate-change.
Climate activists hate geoengineering, and many others legitimately worry, for at least 4 reasons: (1) it will encourage more fossil fuel use, given any warming effects of burning them can be offset by the cooling effects of increased sunlight reflectivity (the “moral hazard” problem); (2) side effects, especially if sulfite particles are used (since when mixed with water, they turn into sulfuric acid), which can adversely impact forests, biodiversity, and freshwater resources; (3) uncertainty over the extent to which it will work, namely reduce frequency and severity of severe weather events; and (4) the dangers of “termination shock” if deployment is paused or stopped, triggering a potentially sharp increase in global temperatures. https://www.ciel.org/why-geoengineering-is-a-false-solution-to-the-climate-crisis/.
The moral hazard problem is real and a serious one. With geo-engineering in place, policymakers not just here but in other countries (read China) will be tempted to curtail efforts to control emissions (as the Trump administration is poised to do even without geoengineering in place), requiring ever stronger doses of geo-engineering to counteract an increasingly overfull CO2 bathtub. We will then be like a cat chasing its tail. I have a couple of answers to this problem, none may satisfy some readers, and so the moral hazard issue will be a showstopper for them. I understand that, but come to a different conclusion at least with respect to more research and experimentation with geoengineering, based on the gravity of climate risks and the cost disparity between adopting geoengineering (provided it can be deployed with acceptable risks), DAC and even adaptation (which I come to shortly).
In effect, geoengineering, once deployed, becomes a Faustian bargain: in order to avoid the worst consequences of industrialization, the world may have to take a different set of risks. But we have already made Faustian bargains. Economic growth itself, which has enormously improved the material well-being and longevity of billions of people who have lived and will live in the future, would not have been possible without fossil fuels and the CO2 problem associated with it. Now, we are all wrestling with whether it is possible to undo that Faustian bargain (whose nature we didn’t realize until James Hansen and others began to highlight the risks in the 1960s) without making another one. And if it’s worry about messing with Mother Nature that you’re worried about, then what else is man-made climate change itself!
Second, the cost disparities are enormous: $40 trillion, at least, for sucking CO2 out of the air versus annual geoengineering costs in single digit billions. Call the latter $10 billion, apply a discount rate for the time value of money of 5%, and you get a present discounted lump sum cost of $200 billion, to put geoengineering costs on the same lump sum terms as for DAC. That $200 billion is also small compared to the massive costs of a global adaptation effort, which I will get to shortly.
Deployment of geoengineering should not dispense with the need to continue investing in measures to slow the growth of emissions, which must continue to avoid the moral hazard problem. Even if the risks of geoengineering are brought down – indeed they must as a predicate to deployment – the public and policymakers must be reminded that the technology still has risks and thus is still meant to be a complement, not a replacement for, emissions reduction. That message would be reinforced with the kind of global agreement I discuss shortly.
Let’s turn to the side effects and uncertainty issues. Clearly, much more testing and experimentation are needed to determine its effectiveness and to reduce side-effects: for example, by introducing alkaline in the oceans to offset sulfuric acid, assuming sulfites are used as the chosen particles. Yet up until recently, fears about geoengineering have prevented even very limited testing. Last year, for example, even one small-scale test of using salt crystals (which don’t turn into sulfuric acid) in the San Francisco area last year had to be carried out in a cloak-and-dagger fashion, while another experiment using sulfites scheduled to take place last year in Sweden was cancelled out of fear of backlash from climate activists. However, the pendulum may be swinging a bit the other way: in September 2024, UK’s government rolled out a $75 million plan to conduct small-scale tests of different forms of geoengineering. Still, for the broader public to be comfortable with geoengineering, tests must be carried out over larger geographic areas and for some reasonably sustained periods, say at least one or two years, once those tests are halted (but, gradually, to minimize termination shock).
Up to now, large scale sustained have been thought impossible without broad global consent. But given the division of the world into four blocs (US, Russia, China, and all the rest), gaining global consensus about broader testing any time soon is a pipedream. So, America has a choice: wait for that day to come or continue to suffer many more deaths and potentially hundreds of billions of dollars of severe damage that could be avoided if the risks of geo-engineering could be made manageable. I’ll bet if you asked the victims of the LA fires or the inland victims of Hurricane Helene: if given that choice, with suitable information about the balance of the risks, most would opt for geoengineering, or at least, this: “damn, let’s at least begin testing at sufficient scale to see whether geo-engineering could help us avoid what we just went through.”
Now, it’s time for my Trump fantasy that I teased at the outset: If the President could move off his “climate change is a hoax” mantra to “climate change is a risk¸ and though I don’t believe it, plenty of other people do,” (like insurance companies, see below), then he is the ideal president to at least push for large scale geo-engineering testing. As we all are seeing, Trump really doesn’t care what other countries think, and unfortunately, this is the kind of attitude (I reluctantly admit) that will greatly accelerate large scale testing of geo-engineering.
Here's the problem, though, if the President were to authorize testing (and Congress were to provide sufficient funds for this purpose). Given his anti-science bent, I don’t trust him, nor do I suspect many of the readers of this post, to decide when and how to deploy geo-engineering at scale. But at the very least, his administration could begin major testing, while ramping up R&D considerably, and leave future administrations in a better place to make the deployment decision.
In fact, actual deployment should be a global decision, or at least a decision of a coalition of the willing. Given the huge costs entailed not only in suffering continue climate-related severe weather events but also the heavy costs of climate adaptation discussed in the next section, especially those required in the developing world, that could be avoided if geoengineering were deployed, there should be a lot of “takers” for deploying geoengineering once the risks are brought down. To mitigate the moral hazard problem, which is global after all, this coalition should agree on enforcement measures against countries whose greenhouse emissions do not adhere to a downward path, ideally in absolute emissions or developed economies, but emissions as a ratio to GDP for less developed economies (to not penalize their ability for their living standards to catch up to richer countries). The best enforcement measure I know is a common set of tariffs, building off Nordhaus’ “climate club” notion, and (reluctantly) adopting President Trump’s use of tariffs as leverage (a model I believe should be the exception for matters of great global importance, such as climate, not the guiding principle of our foreign and economic policy, that Trump seems to want to tariff threats to be).
4. In the Meantime: Adaptation Big Time
So, is geo-engineering our only choice for dealing with the risks of climate change? No, we can as a society do a lot better job at climate adaptation. Unlike DAC or geoengineering, which ideally would benefit from global cooperation, the advantage of adaptation is that it is a strategy for each country, even more limited geographic areas within countries, can pursue.
There are many aspects to adaptation. Among the most important are insulating residential and commercial buildings against severe weather catastrophes by (1) Requiring all new construction to abide by the toughest building codes; and (2) Retrofitting existing structures as best we can. Moreover, if we’re really serious, states and local governments throughout the country would be greatly toughening local zoning rules to prohibit reconstruction in areas exposed to high risks.
Well, good luck with all that! I’ve been a fan of adaptation for some time: https://www.milkenreview.org/articles/climate-change?IssueID=41.Imposing tough building codes on new construction is the least politically painful thing to do, although it will raise construction costs. But even this option has its limits. Are all the homes in Asheville (and other cities wiped out by Hurricane Helene) going to be rebuilt on ten-foot stilts? I don’t think so. Are local authorities in all risk prone areas, or much of the country, going to require all current homeowners to retrofit their homes so that they can be better protected against severe weather? How many struggling homeowners will or can pay for all that? Are state regulators going to compel utilities in all cities with fire risks to bury all their utility lines, which will then cost homeowners everywhere? In highly populated areas, there will never be enough fire trucks for mega disasters. And the really big things that could make a real difference, in a world where the CO2 bathtub is already over-full how difference is not clear, will take time. That 20-year national water infrastructure challenge, after all, is a twenty year challenge.
In principle, Trump’s idea to reduce the federal cost share for future disaster recovery efforts, thereby imposing more of those costs on the states, would incentivize states and localities to be more aggressive about climate adaptation (Trump wouldn’t call it that, but that is what it is). But truly effective adaptation/resilience will cost a lot of money in the US alone. I couldn’t find a reliable number, but given our advanced economy and large exposure, it has to be north of $100 billion annually: consider that the cost of twenty-year water infrastructure effort alone is $700 billion (or $35 billion annually) and the cost for protecting coastlines from rising sea levels have been estimated at $400 billion over 20 years (or $20 billion). Add to these two numbers a much larger one for residential retrofitting across much of the country. For comparison purposes, the cost of adaptation for developing economies has been estimated at $300-500 billion annually, if they could afford to take such measures, which without transfers from developed countries, they almost certainly cannot. https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/charts/the-cost-of-climate-adaptation. Putting disaster recovery costs on the states comes at a time when the Trump administration also wants to shift more costs for other federal programs, like Medicaid, onto the states. At a time when states and their residents are struggling. And so shifting disaster recovery costs onto the states, given the large differences in incomes and GDP across states, especially with other things likely to happen, is likely to lead to very inequitable outcomes.
There is an alternative way to promote adaptation/resilience, however: through properly priced insurance, or ex ante (before the act, not after the disaster) incentives. In principle, if you know that you can save a lot on your sky-high homeowners’ insurance premiums by installing sprinklers in your home, changing your roof from wood to tile shingles, and so forth, you will be more likely to spend the money to do all that. The big question, not only in the wake of the recent disasters, but as more of these events continue to happen, is whether policymakers will let insurers charge rates that reflect true risks?
I am not optimistic. The temptation will be too great for politicians and voters instead simply to blame the insurance companies and cap their premiums – which, of course, will only drive insurers out of state markets. But stop and think for a moment. The business of insurance is to help people and companies deal with risk. Trust me, you won’t find anyone in this business who doubts that climate change is making it more expensive for insurance companies, and the companies that insure them (“reinsurers”), to provide home and auto insurance. In the wake of the LA fires, private insurance rates in LA, and anywhere else in the US exposed to fire risk (much of California outside LA, the Northwest, Boulder, Colorado anyone?) are going to skyrocket. And why wouldn’t they? If you were rich enough to be underwriting these insurance policies, you’d want to charge premiums that fully account for the risks. And not just risks based on historical experience, which is the way most insurance is underwritten. But with climate risks, you would want to use forward-looking climate models to figure out what rates to charge, because the future is not likely to be like the past. California recently allowed model-based pricing but paired it with a requirement to underwrite policies in most of the state, which is unlikely to induce insurers like Allstate and State Farm that had already announced they were not taking on new business in the state to change their minds. https://www.wsj.com/finance/california-home-insurance-los-angeles-palisades-fire-3cce96a9.
So, LA homeowners wanting to rebuild face a Hobson’s choice with respect to homeowners’ insurance. On the one hand, if California’s insurance regulator does not loosen the tie between its coverage mandate and the use of climate models for pricing, insurers are likely to cancel the policies of homeowners wanting to rebuild in the same locations a year from now (after the current one-year moratorium on such cancellations expires). Knowing that, who other than the mega-rich can afford to take that risk and rebuild in those areas? On the other hand, however, if California were to allow true risk based pricing without the coverage mandate, insurers would be more willing to offer policies, but the premiums likely would be so high as to be affordable only for the super-wealthy (a category that does not fit most of those who lived in the paradise of Pacific Palisades, let alone in Altadena or other areas of LA still exposed to fire risk). Either outcome will make it economically impossible for many residents burned out of their homes to return, unless….
The State’s insurance plan, FAIR, is pressured politically to provide more-than-bare-bones insurance policies at rates that do not fully reflect the risks. As it is, FAIR has less than $400 million on hand to cover claims from the LA fires that will surely exceed that number. Who will pay then? At first instance, insurers in the state will be required to cough up the difference. But that’s only at first. Insurers then will pass their costs on to all other California policyholders. In other words, there is no free lunch, even with state “last resort” insurers, which also operate in 32 other states (notably, Citizens in Florida, which hasn’t been able to cover its hurricane losses). https://www.nbcnews.com/news/first-fires-now-fight-flaws-california-insurance-plan-will-test-l-home-rcna187569.
To reduce their risks, FAIR plans, with the backing of political leaders in their states, at least can condition the sale of any insurance they provide on homeowners meeting those tough building codes, both for new construction and retrofits. Or, if homeowners don’t have the resources to do that, then offer very “skinny” policies that provide barebones coverage. Failure to do either of these things will mean that when future disasters strike, the plans will be forced to assess insurers to make up any shortfalls, whose costs as I have noted, will then be passed on to homeowners statewide.
The bottom lines: (1) it’s getting costlier to live not only in paradise states exposed to weather CATs, but everywhere in the US; (2) there is no way any time soon to avoid the costs of the mounting climate change-related severe weather throughout the country; and (3) somehow, some way, the costs of severe weather are being spread to everyone, not just those at highest risk. At some point – I can’t tell you when – I believe those costs will be high enough to induce enough people and their elected representatives at least to support much expanded efforts for research and experimentation with geo-engineering so that eventually, the US and other like-minded countries can be prepared to deploy the technology. In the meantime, all of us can expect to be paying a lot more for living in a world with that overfull CO2 bathtub.