Transcript an actuarial view

Climate Change
An Actuarial View





UK weather record; my wake up call
Fossil fuels, a long term view
Alternative greenhouse gas stabilisation targets
Psychology of climate change
Where should humanity aim?
Change to Climate in the United Kingdom
Carbon dioxide emissions from use of fossil fuels
From the beginning of the industrial revolution
Source: U.S.Environmental Protection Agency
Carbon dioxide emissions from use of fossil fuels
From the beginning of human history (c.3000 B.C.)
Now is the tip of the peak - a unique moment in history
Annual CO2 emissions from fossil-fuel burning 3000 B.C. to 7000 A.D.
35,000
Million metric tons carbon dioxide
30,000
25,000
20,000
15,000
10,000
5,000
0
-3000
-2000
-1000
Refer: M.King Hubbert
0
1000
2000
3000
4000
5000
6000
7000
Alternative Targets for Carbon Dioxide Stabilization
500 ppm CO2e (≈450 ppm CO2 + 50 ppm other)
 Nicholas Stern is calling for a target stabilization level of no more
than 500ppm CO2e.
 This target gives >10% chance of 4 degrees warming.
450 ppm CO2e (≈400 ppm CO2 + 50ppm other)
 David King (ex-UK Government chief scientists) says anything
above 450ppm CO2e carries an unacceptable risk.
 Even at 450ppm CO2e it is highly likely that there will be more
than 2 degrees C of warming. This is a critical point that is still
not appreciated by most people.
350 ppm CO2
 James Hansen (head of the NASA Goddard Institute) is now saying
that the maximum safe level of atmospheric CO2 is no more than
350ppm and it may be lower.
Worldview
 “Worldview” is the set of
beliefs, attitudes and values
that comprises our mental
model of the world.
 Our worldview is our window on the world, we
see the world through it.
 It is also a filter. We tend to see only information
that confirms our existing worldview.
Different Worldviews
“We, the human species, are confronting a
planetary emergency - a threat to the survival
of our civilization that is gathering ominous
and destructive potential” – Al Gore, Nobel
Prize acceptance speech, Dec 2007
“Goodbye from the world's
biggest polluter.”
– George Bush, G8 Summit,
July 2008
Why is our worldview so hard to change?
Neuroscience has started to tell us why. Our
brains have evolved to be:
 Slow, noisy and imprecise – as design features.
 But incredibly energy efficient. 20 watts power
requirement.
 We think as little as possible! Changing our
mental models takes energy, our brains avoid it
when possible.
Refer: “How we make decisions” by Read Montague
Psychological Biases and heuristics





Prospect theory (insurance as a magic word)
Availability
Inaccurate estimation of probabilities - valence
Overconfidence
Anchoring and adjustment – underreaction
Refer to: “Making Actuaries Less Human – lessons from behavioural finance”
Cognitive Dissonance
Inconsistent cognitions produce dissonance (a
state of unpleasant arousal) when:
 You have freedom to decide
 You are committed to your behaviour
 The behaviour leads to forseeable adverse
consequences
The easiest way to reduce dissonance is to
change beliefs.
Refer: “Mistakes were made (but not by me)” by C.Tavris and E.Aronson
Psychology of climate change recap
 Worldview - don’t see need for change
 Anchoring – wrong target
 Cognitive dissonance – don’t change target
Conclusions:
 We all need to make up our own minds
 Do not expect those responsible to choose the
right targets. Be prepared to fight.
How much time is left to act?
 “The Arctic epitomizes the global climate situation.
The most rapid feasible slowdown of CO2 emissions
… may just have a chance of avoiding disastrous
climate change.”
 “We are on the precipice of climate system tipping
points beyond which there is no redemption.”
- James Hansen, Director, NASA Goddard Institute for Space
Studies, New York
Target CO2:
< 350 ppm
To preserve creation, the planet on
which civilization developed
Al Gore’s proposal for clean energy
12th July 2008
“America must commit to
producing 100 percent
of our electricity from
renewable energy and
other clean sources
within 10 years.”