A report on climate change risk was prepared for US president Lyndon Johnson in 1965. It proposed that trillions of ping pong balls should be floated on the oceans in order to reflect sunlight and reduce warming. It is not known if the president read the report, but clearly nothing happened.
Fifty-four years later, despite many conferences, climate change risk is crystallising, and growing still greater (CO2 levels continue to rise at 2 parts per million per annum and feedback loops are starting to kick in as well: warming promotes more warming). Reducing emissions is costly, but the benefit may not be felt for generations. And a single country’s efforts (with the exceptions of USA and China) will not have an impact unless everyone does it. The problem is that despite the urgency, there are no incentives working to push everyone to make the really radical changes required.
Most risk management methodologies ignore incentive controls and yet they are the most powerful. At the moment, the greatest emitters of greenhouse gases are not the ones who are being hurt most; the small island developing states (the SIDS) and poorer countries of Africa are the ones feeling the impacts right now, and these are the ones least able to take adaptive measures.
So how to incentivise USA, China and others to cut emissions drastically? The profit motive is probably the most powerful incentive, so taxes, tariffs, subsidies are all things that countries might use more vigorously to incentivise reduction. Or perhaps the SIDS could galvanise global popular opinion to avoid certain countries’ products and help prevent the SIDS disappearing under the waves? In either case, the scenarios required would have to be worked through in detail to understand the impacts and avoid unintended consequences. Standard risk management stuff….yes, but who is going to do it?
Data Source: The Economist