Abstract
How large a risk is society prepared to run with the climate system? This is a question of the utmost difficulty and it admits a variety of perspectives. In this paper we draw an analogy with the management and regulation of insurance companies, which are required to hold capital against the risk of their own financial ruin. Accordingly, we suggest that discussions about how much to reduce global emissions of greenhouse gases could be framed in terms of managing the risk of ‘climate ruin’. This shifts the focus towards deciding upon an acceptable risk of the very worst-case scenario, and away from how “avoiding dangerous anthropogenic interference with the climate system” has come to be framed politically. Moreover it leads to the conclusion that, in terms of greenhouse gas emissions today and in the future, the world is running a higher risk with the climate system than insurance companies run with their own solvency.
Highlights
Risk and uncertainty are central to assessing the consequences of climate change and formulating response strategies (e.g. Kunreuther et al 2013; IPCC 2014)
Whereas ruin of an insurance company is relatively clear-cut – the company becomes insolvent – what might ruin mean in the context of climate change? Climate ruin could mean different things at different spatial scales, but in this paper we focus on global reductions in greenhouse gas emissions
The aim of this paper has been to augment our understanding of the level of risk that society is running with the climate system, based on historical and likely future emissions of greenhouse gases
Summary
Risk and uncertainty are central to assessing the consequences of climate change and formulating response strategies (e.g. Kunreuther et al 2013; IPCC 2014). In this paper we seek to add a new perspective to the debate, which is to compare the risk that the world is running with the climate system, defined in terms of the risk of ‘climate ruin’, with the comparable risk that insurance companies are prepared or allowed to run with their own financial ruin. This forms the basis of our comparison of the risk that the world is running with the climate system and the risk that insurance companies are prepared or allowed to run with their own financial ruin.
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