bank-o-meter.com

Paying for Climate Change

by Sinclair Noe

DOW – 10 = 13,096
SPX +0.22 = 1412
NAS – 10 = 2977
10 YR YLD -.06 = 1.69%
OIL - .16 = 88.56
GOLD + 11.20 = 1721.20
SILV + .51 = 32.36

Hurricane Sandy remains the compelling story; the latest count is that the storm killed 64 people in the US. The latest estimates are for up to $15 billion in insured losses, double that for uninsured losses, toss in at least $20 billion in lost business; we're looking at $50 billion and counting. Lumber futures soared on expectations for increased demand, while gasoline surged on concerns that a Phillips 66 refinery in Linden, New Jersey, could shut for an extended period after Sandy cut power to the plant that produces 238,000 barrels a day of fuel. The aftermath of Hurricane Sandy looks to be a soggy, protracted, costly affair. Over 8 million people are still without electricity. Blackouts could last beyond the election. Transportation is still clogged. The pictures and video out of New York and New Jersey look like war scenes. It will be a challenge but if you think it was a knockout punch, Fougeddaboudit.

A 13 foot surge of water hit the southern tip of Manhattan. That's a big wall of water. New Yorkers may be tough but what if the flooding happens again, and what if the water doesn't go away? A 13 foot rise in sea level might over time render uninhabitable many of the parts of New York City we've seen flooded during Sandy. Scary, right?

If you’ve followed the news and weather in the past 24 hours you have no doubt run across a journalist or blogger explaining why it’s difficult to say that climate change could be causing big storms like Sandy. Well: it is.

Scientific American had this great explanation:

The hedge expressed by journalists is that many variables go into creating a big storm, so the size of Hurricane Sandy, or any specific storm, cannot be attributed to climate change. That’s true, and it’s based on good science. However, that statement does not mean that we cannot say that climate change is making storms bigger. It is doing just that—a statement also based on good science, and one that the insurance industry is embracing, by the way. (Huh? More on that in a moment.)

Scientists have long taken a similarly cautious stance, but more are starting to drop the caveat and link climate change directly to intense storms and other extreme weather events, such as the warm 2012 winter in the eastern U.S. and the frigid one in Europe at the same time. They are emboldened because researchers have gotten very good in the past decade at determining what affects the variables that create big storms. Hurricane Sandy got large because it wandered north along the U.S. coast, where ocean water is still warm this time of year, pumping energy into the swirling system. But it got even larger when a cold Jet Stream made a sharp dip southward from Canada down into the eastern U.S. The cold air, positioned against warm Atlantic air, added energy to the atmosphere and therefore to Sandy, just as it moved into that region, expanding the storm even further.

Here’s where climate change comes in. The atmospheric pattern that sent the Jet Stream south is colloquially known as a “blocking high”—a big pressure center stuck over the very northern Atlantic Ocean and southern Arctic Ocean. And what led to that? A climate phenomenon called the North Atlantic Oscillation (NAO)—essentially, the state of atmospheric pressure in that region. This state can be positive or negative, and it had changed from positive to negative two weeks before Sandy arrived. The climate kicker? Recent research by Charles Greene at Cornell University and other climate scientists has shown that as more Arctic sea ice melts in the summer—because of global warming—the NAO is more likely  to be negative during the autumn and winter. A negative NAO makes the Jet Stream more likely to move in a big, wavy pattern across the U.S., Canada and the Atlantic, causing the kind of big southward dip that occurred during Sandy.

Climate change amps up other basic factors that contribute to big storms. For example, the oceans have warmed, providing more energy for storms. And the Earth’s atmosphere has warmed, so it retains more moisture, which is drawn into storms and is then dumped on us.

These changes contribute to all sorts of extreme weather. In a recent op-ed in the Washington Post, James Hansen at NASA’s Goddard Institute for Space Studies in New York blamed climate change for excessive drought, based on six decades of measurements, not computer models: “Our analysis shows that it is no longer enough to say that global warming will increase the likelihood of extreme weather and to repeat the caveat that no individual weather event can be directly linked to climate change. To the contrary, our analysis shows that, for the extreme hot weather of the recent past, there is virtually no explanation other than climate change.”

He went on to write that the Russian heat wave of 2010 and catastrophic droughts in Texas and Oklahoma in 2011 could each be attributed to climate change, concluding that “The odds that natural variability created these extremes are minuscule, vanishingly small. To count on those odds would be like quitting your job and playing the lottery every morning to pay the bills.”

Hansen also argued a year ago that Earth is entering a period of rapid climate change, so radical weather will be upon us sooner than we’d like. Scientific American just published a big feature article detailing the same point.

...you might recall that another well-regarded scientist predicted behemoths such as Sandy in 2007. The article in Scientific American, by Kevin Trenberth, a senior scientist at the National Center for Atmospheric Research, was presciently titled, “Warmer Oceans, Stronger Hurricanes.” Trenberth’s extensive analysis concluded that although the number of Atlantic hurricanes each year might not rise, the strength of them would.

Hurricane Sandy has emboldened more scientists to directly link climate change and storms, without the hedge. On Monday, as Sandy came ashore in New Jersey, Jonathan Foley, director of the Institute on the Environment at the University of Minnesota, tweeted: “Would this kind of storm happen without climate change? Yes. Fueled by many factors. Is [the] storm stronger because of climate change? Yes.”

Raymond Bradley, director of the Climate Systems Research Center at the University of Massachusetts, was quoted in the Vancouver Sun saying: “When storms develop, when they do hit the coast, they are going to be bigger and I think that’s a fair statement that most people could sign onto.”

A recent, peer-reviewed study published by several authors in the Proceedings of the National Academy of Science concludes: “The largest cyclones are most affected by warmer conditions and we detect a statistically significant trend in the frequency of large surge events (roughly corresponding to tropical storm size) since 1923.”

Greg Laden, an anthropologist who blogs about culture and science, wrote this week in an online piece: “There is always going to be variation in temperature or some other weather related factor, but global warming raises the baseline. That’s true. But the corollary to that is NOT that you can’t link climate change to a given storm. All storms are weather, all weather is the immediate manifestation of climate, climate change is about climate.”

Now, as promised: If you still don’t believe scientists, then believe insurance giant Munich Re:

Munich Re, one of the world’s largest reinsurance firms, issued a study titled “Severe Weather in North America.” According to the press release that accompanied the report, “Nowhere in the world is the rising number of natural catastrophes more evident than in North America.” … While many factors have contributed to this trend, including an increase in the number of people living in flood-prone areas, the report identified global warming as one of the major culprits: “Climate change particularly affects formation of heat-waves, droughts, intense precipitation events, and in the long run most probably also tropical cyclone intensity.”

Insurers, scientists and journalist are beginning to drop the caveats and simply say that climate change is causing big storms. As scientists collect more and more data over time, more of them will be willing to make the same data-based statements.

The bottom line is, it doesn't matter whether you believe in climate change, you will pay for climate change.

The New York Stock Exchange and the Nasdaq were open again, running on back-up generators. For the month, the Dow fell 2.5 percent, the S&P 500 slipped 2 percent and the Nasdaq was off 4.5 percent. For the past six months, going back to the old idea of “Sell in May”; if you had sold on May 1^st, you would have avoided a 182 point decline in the Dow Industrials, you would have missed a 7 point gain in the S&P 500, you would have avoided a 73 point loss. I told you back in March and April. You're welcome.

I feel less certain about the best six months from October through May, but you place your bets and you take your chances.