MONTHLY NEWSLETTER SEPTEMBER 2018
Woods Hole Research Center A new frontier: climate science and the financial sector Dr. Philip B. Duffy President & Executive Director Recently, WHRC announced a new initiative with Wellington Management to integrate climate science and asset management.
Meeting the challenge of climate change will require a broad societal effort, which is why WHRC is dedicated to with working with actors who have diverse perspectives, interests, and expertise.
The manifestations of climate change have never been more obvious to the scientific community. To cite just a few examples, this summer saw extreme heat in northern Europe, Siberia, Japan, and elsewhere, and record-breaking wildfires in California. Super typhoon Mangkhut was the most intense storm anywhere so far this year and the most intense ever recorded in Hong Kong. Most recently, Hurricane Florence exhibited nearly all of the characteristics that we expect to be enhanced by greenhouse warming. Events like these have enormous implications for financial markets. Scientists have clearly associated these weather events with climate change. Scientific “event attribution” studies rigorously estimate how much more likely a specific event is now than without climate change.
Extreme weather is costly and disruptive in the short term, and in the longer term can affect asset values as well as the cost and availability of property insurance. Several recent studies have shown that the threat of sea level rise is starting to affect the value of properties near the coast. Less dramatic aspects of climate change also have important financial ramifications.
For example, climate change affects crop yields, the nutritional content of food, and the risk from pest infestations. It also means longer growing seasons and changes in where crops will be grown. All of this has consequences for food prices and scarcity.
Illuminating the financial consequences of coming changes in climate is an enormous challenge; it involves understanding how climate change will effect human systems like agriculture, infrastructure, health care delivery, and so on. The good news is that we have tools—climate models—with a proven track record of making successful predictions, and that these tools and others have been used to create a broad and increasingly deep understanding of the likely societal impacts of climate change. Given this, it is perhaps remarkable that the financial implications of these impacts are relatively unexplored. At WHRC we believe that shedding light on these risks (and opportunities) is a chance to affect the thinking and actions of an industry that wields enormous influence. We are excited to have this opportunity and particularly excited to work with a recognized industry leader like Wellington. WHRC’s mission has always been to use science to inform how people think and act with respect to climate change, and this new initiative is no different. Thanks as always for your interest and support.
WHRC is an independent research institute where scientists investigate the causes and effects of climate change to identify and implement opportunities for conservation, restoration and economic development around the world. WHRC has been ranked as the top independent climate change think tank in the world for four years in a row. Learn more at www.whrc.org.