“go bankrupt and an extra 2 million people who should not be there will suffer”

Recently, I read a bit about climate change. Apparently, it is felt we did what we could do to minimize what we do today and to minimize Climate Change from our own actions. It was more likely than not, not enough, In AZ and even though it is illegal, Many vehicles have altered exhaust systems. They love the noise and to blow black exhaust. Fast starts and lots of smoke and noise. “Look at me!

I guess mama did not pay enough attention to them.

Daniel Zetland is talking about a science detected prophecy for Florida

The one-handed economist: Daniel Zetland having a conversation about climate change.

I was chatting with a guy yesterday about climate change damages and how insurance companies might estimate their future impacts. The Topic? “Florida, risk and bankruptcy.”

I (Daniel) said:

“You can not model risks with climate chaos; you should use scenarios, due to uncertainties. Risk is something like getting a flat tire as you ride around Amsterdam; uncertainty is getting hit by a car running a red light on the way over here today.”

Then he said, “so include what, for example?” and I replied “well, hurricanes [in the North Atlantic].”

Then he said “well, there aren’t any of thes–”
“…Yet,” I interrupted.

[Hurricanes are likely around 2050. They will batter the East coast of the US, but Western Europe is likely to face the combination of severe storms, flooding and ice-age climate (wiping out agriculture and infrastructure). Fuck.]

So, all of this conversation brings me back to risk, insurance, and Florida’s “nothing to lose” policy with respect to CChaos:

1. For-profit insurance companies do not like the risks of insuring against storms and floods in Florida, so the State is providing its own insurance, at subsidized rates (relative to the best-understood risks).
2. Subsidized insurance makes Florida more attractive as a place to live than it would be with “risk-corrected” rates, so people stay in the state or move to the state, supporting the government’s tax base as well as its real estate market.
3. If When “the big one” hits, then the State will go bankrupt, but better later than now, and it’s not like the State wouldn’t go broke anyways without the liability of the insurance payouts. (You can’t be “double bankrupt” so why not leverage your bets?)
4. The difference between doing (1) and not doing (1) is that Florida can party a little longer… but also that millions of extra people will suffer. So the benefits of Florida’s delusional party-on policy will come at a cost to millions of people who should be living elsewhere.

I asked Plex to review (1)-(4), and all of my points past the “sniff” test. Plex estimates that Florida will go bankrupt and an extra 2 million people who should not be there will suffer.

My one-handed conclusions is that people will not just suffer from the uncertainties of CC but also mispriced risks. Caveat emptor.

Florida, risk and bankruptcy, The one-handed economist