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Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention

Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention

Author: Kate Eskra
This lesson will explain Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention
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Hi, welcome to economics. This is Kate. This tutorial is called, Assessing Costs of Anthropomorphic Climate Change-Regulatory Intervention. As always, my key terms are in red and my examples will be in green.

So in this tutorial, first of all, we'll define and talk about what anthropomorphic climate change involves and the effects of it.

We'll talk about the impact of weather volatility effects on the market for insurance.

And you'll understand some of the ways that governments and economists view this issue and are actually trying to address it for our future.

First of all, let's start with the definition of this really big word, anthropomorphic climate change. It's simply climate change resulting from human causes. So these are climate change events that are specific to man made activities. And they involve things like the emission of greenhouse gases, the treatment of waste water and solid waste, our overuse and grazing of lands, our deforestation and use of pesticides. And then many other changes to the natural ecosystem that are a result of man-made activities.

There is a lot of public debate over this. And there are many, many different perspectives on climate change. And I don't know where you fall with it. I was just reading an article from The New York Times, from a few months ago. And the subject of it was about how our levels of carbon dioxide actually just passed a pretty frightening milestone.

So scientists had, certainly, something to say about it. And then underneath the article online there were posted over 700 comments from people. And some people were really talking about how, yes, this is so frightening, our Politicians, absolutely, need to step up to the plate and start doing something about it.

And then others were just furious saying that this is a doomsday-er way of looking at it, and this is ridiculous. And this is just a political way to get our government to do something else that's going to cost too much money. So people are all over the map with it. Certainly, there are moderate people who recognize that there are some issues.

But then there are people on both sides that are very passionate either way. So I just wanted to let you know that this is a topic that creates much public debate.

Currently though there are economists who believe that climate change is a major concern, and they are studying ways to address the issue. And that's what we want to do in this tutorial is look at how these economists are addressing the issue.

First of all, anthropomorphic activities have definitely resulted in heightened weather related volatility according to people who study this. And how they have measured that, especially with economists, is by the number of insurance claims, actually.

Insurance companies have been reporting a significant increase in the number of claims due to natural disasters. There's been an increase in premiums because a lot of these companies can't afford to keep the premiums at the levels where they were.

And unfortunately, some people have been unable to get any kind of private insurance in some areas because insurance companies were recording absolutely negative returns. They were answering so many of the claims.

One question that economists are starting to ask is, could limited insurance actually begin to slow our economic growth? And you may think, how would that actually happen? But if you think about it, developing new products or entering new markets involves a lot of risk. And risk sharing with insurance companies has a least helped with that.

So will people suddenly become way to risk adverse to continue innovating? We need in our country, and all over the world, people innovating and coming up with new things. And if it becomes too risky for them to do that that could certainly slow economic growth.

It could also have a major impact on people's ability to get health insurance or just an impact in the health insurance business in general. We know that climate change could certainly affect human health in terms of sanitation, increase in vector-born diseases and in food and water shortages potentially. So that could have an impact on health insurance.

What is the government response? Well, it is being addressed on a global scale, in some countries much more than in others. President Obama has claimed that this is really a national priority for him and for his administration. And there are many organizations, worldwide, that really, their entire focus is trying to get firms and consumers to change their behaviors and to improve the environment.

An economist-- their view of the future is pretty simple. Number one, we know we cannot change the past. What we do know for certain is that there will be some long-term impact, whether it is as extreme as some people are saying or are not as bad as some people think, there will be some sort of long-term impact. And what else do we know? Well, we know that the outcomes actually remain unknown. So that's, right now, how economists are viewing the future.

But presently, some feel that we definitely need to take action in terms of mitigation and adaptation. So mitigation would involve changing our activities right now, doing what we can. Since we can't change the past we need to do everything we can, right now, to reduce further emissions and reduce anything that could cause anymore climate change in terms of our behaviors.

Adaptation, though, is different. Adaptation is saying, OK, since we know we can't change what's happened, and since we know that there are going to be some long-term impacts-- and, in fact, we're already starting to see some of them. How can we adapt, how can we develop infrastructure to keep us as safe as possible from our more volatile climate.

And these both are going to require intergenerational value. And, actually, intergenerational decisions is one of your key terms. This is decision making in the present, today, that considers the future cost and benefit as well as the current cost and benefit.

And this is one of the problems, in my opinion, at least, with politicians because what incentive do they have to consider future costs and benefits? Their entire job revolves around current costs and benefits. Pleasing constituents right now, today, so that they get re-elected.

And most people, unfortunately, aren't as forward-looking as we would hope or as needs to be in this case of fixing our climate change behaviors. And so what incentive do Politicians really have to consider the impact on future generations when they're just trying to get re-elected in the short term. So intergenerational decisions really do need to come into play here if anything is going to be done about it.

So in this tutorial, we talked about how anthropomorphic climate change refers to our human impact on climate change, and how it's caused increased whether volatility. We looked at the effect that has had on insurance availability and if, in fact, that may or may not hamper economic growth in the future. And finally, I made some comments about how governments and economists are working right now to address the issue but, again, that's going to really require intergenerational value considering the future as well as the present. Thank you so much for listening. Have a great day.

Notes on "Assessing Costs of Anthropomorphic Climate Change--Regulatory Intervention"

Terms to Know

Anthropomorphic Climate Change

Climate change resulting from human causes.

Intergenerational Decisions

Decision making in the present that considers the future cost and benefit as well as the current cost and benefit.