World - Preparing the insurance industry for climate change, Susan Crawford's warning
Until recently, Harvard professor Susan Crawford was concerned about the effect of telecom monopolies on our internet lives (see her books) but recently she has pivoted to climate change.
For those who don’t believe in climate justice or doing the right thing for its own sake, she has a pragmatic, economic argument that should be persuasive: what if the next economic crisis hits the banks with the costs of climate change? What if the next economic crisis is caused by climate change flooding?
For proactive nations such as New Zealand, the answer is to reduce flood insurance in areas and risk and move people out of the way of the coming floods.
Banks will have to talk about 2070. Banks will have to talk about "intermediate-high" levels of water arriving on coastlines, the Gulf Stream slowing, and West Antarctica melting.
Those data sources will tell banks where long-term coastal risks are, and they'll need to report the implications of this data for the assets they hold (loans as well as buildings) up the chain to their boards, federal supervisors, and secondary markets. This will cause banks to tighten their mortgage standards, particularly when Fannie Mae and Freddie Mac, the GSEs who now hold 60-70 percent of mortgages, eventually say they won't ingest mortgages for properties that are likely to be chronically inundated before the debt is paid off.
The science for all of this risk is strong. There's tons of data. It's just that the public isn't getting clear communication about risks. But the financial institutions are getting their acts together.
As Kossack Pakalolo writes, the U.S. media is useless on climate change.
The free market will never value issues that the public cares about, Crawford writes:
In other words, insurance retreat in NZ (as in the US) is preceding by decades the permanent inundation of properties by sea level rise.
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This issue is so painful and difficult: these places actually are predictably unsafe, but instead of facing that fact and enacting policies that would get money and help to people who need assistance in relocating, NZ like the US prefers to keep the status quo in place. We’re keeping insurance “affordable and available” rather than just reducing the risk.
Her most recent book, Charleston: Race, Water, and the Coming Storm, focuses on Charleston because:
At least thirteen million Americans will have to move away from American coasts in the coming decades, as rising sea levels and increasingly severe storms put lives at risk and cause billions of dollars in damages. In Charleston, South Carolina, denial, boosterism, widespread development, and public complacency about racial issues compound; the city, like our country, has no plan to protect its most vulnerable. In these pages, Susan Crawford tells the story of a city that has played a central role in America's painful racial history for centuries and now, as the waters rise, stands at the intersection of climate and race.
