By Clement Booth
The recent extreme weather conditions with deadly consequences and losses running into billions increasingly remind us of the cost of climate change. After only eleven years we had another "flood of the century" in Central and Eastern Europe, this time with economic costs of twelve billion euros. In New York, after hurricane "Sandy", the underground shafts filled up like a bathtub and there was no power for five days. The total damage in the city alone is estimated at 14 billion euros. There are 400,000 people living in the threatened areas of New York, with 270,000 workplaces and 68,000 buildings. Many businesses are on the ground floor and heating systems are in the basement, below sea level, which has specific flooding risks.
As long as the threat posed by global warming seemed abstract and distant, it was perhaps easy to shrug it off. Due to the increase of heavy rain, flooding, droughts and tropical tornadoes, with ever increasing powers of destruction, climate change is getting more specific and threatening. It is obvious that more needs to be done in terms of prevention, than to rebuild what has been destroyed after each disaster.
The wide-spread hope to put a stop to it by means of global agreements under the UN system has yielded few tangible results so far. For all the theoretical elegance on which such globally binding solutions are based, in practical politics they encounter insurmountable conflicts of interest. As desirable as it might be to reach enforceable, internationally binding commitments, in this way - such a scenario is not likely because sovereign states shy away from allowing themselves to be bound for 20 years or more. This holds for industrialized as well as emerging countries.
However greenhouse gas emissions continue to increase - and so do climate-related weather events. The noble goal of not letting the global temperature increase more than two degrees Celsius above the average temperature in pre-industrial times is difficult to achieve; in fact, experts consider it hardly feasible. The World Bank, which is no overzealous environmentalist, warns of the consequences of a more probable scenario, i.e. of an average temperature increase of 3.5 to 4 degrees Celsius: heat waves, sea levels rising by at least half a meter by 2100 and failed harvests would have particularly serious consequences for the poorest of the poor.
Florida: From one million inhabitants in the year 1920 to 19 million in 2013
Meanwhile, construction on the coast, particularly in the US, continues practically unabated. And yet, here the danger to life and property is already particularly striking, not only because of hurricanes and rising sea levels, but also because of the high concentration of assets which has been reached there, in the meantime. In 1920, for example, one million people lived in Florida, today there are 19 million. What severe weather conditions can mean for highly developed cities that don't have flood gates like Rotterdam, London and St. Petersburg, when disaster strikes, was evident when hurricane "Sandy" hit New York. Hardly any precautions had been taken there, there was nothing in place but evacuation plans. That is definitely not sufficient today.
So how do we go on, if we don't manage to conclude agreements to reduce CO2 emissions and to slow climate change down? Even if emissions could be halted shortly, the earth's atmosphere would still continue to warm up over several decades, sea levels would rise and extreme weather conditions would become more frequent. After all, CO2 remains in the earth's atmosphere for a considerable length of time.
There is no other way out, we need to get used to this new extreme situation, every one of us individually with regard to our lifestyle and consumption habits, and all of us together by taking pragmatic precautions against climate impacts at a local level. And the public sector must, as far as possible, make towns and regions more "climate proof" locally. Dikes, flood gates, floodplains and precautions, which protect power, transport and communication networks, are all signs of a precautionary climate policy. This also includes refraining from building further settlements in high-risk areas. As insurers, we support this process by investing in climate-friendly technologies and shaking up our insurance portfolio gradually, so that customers will have the option of purchasing a "green" alternative. This will mean a differentiation in prices because taking an ecological approach to repairing a damaged building, for example, is more expensive than using traditional building materials and technologies.
Climate protection: more international cooperation needed
However, in order to initiate behavior changes on a broad basis and to not simply call for climate-friendly production and consumption, but to control it economically, harmful CO2 emissions must be costed and emission trading systems need to ensure climate-friendly resource allocation across the globe if possible. Unfortunately, this is where some approaches have stalled. The EU market, which functions quite well in principle, is suffering because the supply of certificates cannot be adapted to a crisis-induced slump in demand. But there are other encouraging signs: in California, Quebec, South Korea, a few Chinese provinces, Tokyo and Australia CO2 trading systems have emerged. These isolated solutions need to coalesce as fast as possible. We will be dependent on the success of these measures.
CLEMENT BOOTH is a member of the Board of Management of Allianz SE
This op-ed was first published in Frankfurter Rundschau.
