Is there a carbon bubble whose bursting could lead to financial instability?
In this episode you’ll learn:
- The evidence that human activity is leading to global warming.
- The environmental and economic consequences of climate change.
- What is a carbon bubble and how environmental damage and policy changes could lead to a revaluation of assets.
- What can we do personally to minimize greenhouse gas emissions that contribute to climate change.
Show Notes
But What If We’re Wrong: Thinking About the Present As If It Were the Past – Chuck Klosterman
Superforecasting: The Art and Science of Prediction – Philip E. Tetlock and Dan Gardner
The Science Before Science: A Guide To Thinking In the 21st Century – Anthony Rizzi
Intergovernmental Panel On Climate Change 2014 Synthesis Report
Ipsos Mori Global Environment Survey 2014
Lung Cancer and Smoking: What We Really Know – Charles Cameron – The Atlantic – January 1956
Spirit and Place – Christopher Day
As Donald Trump Denies Climate Change These Kids Die of It – Nicholas Kristof
Warmer Oceans Seen To Spur Drought In Africa – USGS
Trump, Putin and the Pipelies To Nowhere – Alex Steffen – Medium
Become a Better Investor With Our Investing Checklist
Become a Better Investor With Our Investing Checklist
Master successful investing with our Checklist and get expert weekly insights to help you build your wealth with confidence.
Summary Article
Nobody Really Knows Anything
Last month, president-elect Donald Trump said on Fox News regarding climate change that “I’m still open-minded. Nobody really knows. Look, I’m somebody that gets it, and nobody really knows. It’s not something that’s so hard and fast. I do know this: Other countries are eating our lunch.”
Trump also mentioned he was studying the Paris Accord, the global climate agreement signed by 194 countries and ratified by over 100 nations, that seeks to hold “the increase in the global average temperature to well below 2 °C above pre-industrial levels.”
According to the agreement, each country will determine their respective non-binding level of contribution to reduce greenhouse gas emissions.
Trump said he doesn’t want the Paris Agreement to put the U.S. at a disadvantage relative to other countries.
I’m not sure what Trump’s threshold is for really knowing something is absolutely certain. But if the standard of “really knowing” is 100% confidence with no qualifiers or room for doubt then nobody really knows anything.
Doubt About Gravity
Chuck Klosterman in his book, “But What If We’re Wrong” points out that nobody really knows even when it comes to something as seemingly uncontroversial as gravity.
Klosterman quotes author and theoretical physicist Brian Greene who says, “There is a very, very good chance that our understanding of gravity will not be the same in five hundred years. In fact, that’s the one arena where I think that most of our contemporary evidence is circumstantial, and that the way we think about gravity will be very different.”
Greene explained that for two hundred years from the days of Isaac Newton until the early 1900s there was no change in the consensus view regarding gravity. That’s when Albert Einstein radically changed the perspective on gravity from being just a force to a warping of space and time. Now quantum mechanics is having an impact on how we describe gravity and some scientists suspect gravity might not even be a fundamental force but an emergent force.
Greene says, “So I do think—and I think many would agree—that gravity is the least stable of our ideas, and the most ripe for a major shift.”
What Scientists Do
Philip Tetlock writes in his book “Superforecasting,” “In science, the best evidence that a hypothesis is true is often an experiment designed to prove the hypothesis is false, but which fails to do so. Scientists must be able to answer the question, what would convince me that I am wrong.”
Scientists test their hypothesis by collecting data and then use their senses to evaluate and interpret the data to see if it disproves the hypothesis.
The Science of Climate Change
To the best of scientists’ understanding (based on their leading hypotheses which have been tested and not yet proven wrong using data they collected and then interpreted with their senses) “each of the last three decades has been successfully warmer at the Earth’s surface than any preceding decade since 1850.” The was the conclusion detailed in the Intergovernmental Panel on Global Climate Change 2014 Synthesis Report.
The report states, “The period from 1983 to 2012 was likely the warmest 30-year period of the last 1400 years in the Northern Hemisphere. The globally averaged combined land and ocean surface temperature data as calculated by a linear trend show a warming of 0.85 degree Celsius over the period 1880 to 2012, when multiple independently produced datasets exist.”
When the report uses the term “likely” they assign a 66% to 100% probability of it being true. That means they don’t “really know” with complete certitude. Other qualifiers include “virtually certain,” which they assign a 99–100% probability, “very likely,” which they assign a 90–100% probability and “extremely likely,” which they assign a 95% to 100% probability.
The report states that “anthropogenic greenhouse gas emissions [i.e. caused by human activity] have increased since the pre-industrial era, driven largely by economic and population growth, and are now higher than ever. This has led to atmospheric concentrations of carbon dioxide, methane and nitrous oxide that are unprecedented in at least the last 800,000 years. Their effects, together with those of other anthropogenic drivers, have been detected throughout the climate system and are extremely likely to have been the dominant cause of the observed warming since the mid-20th century.”
In other words, the scientific consensus is there is a 95% to 100% probability that the majority of global warming is the result of human activity.
Disbelief Despite Unequivocal Evidence
Evidence of this warming is “unequivocal” according to the report including diminished levels of snow and ice, rising sea levels and an increase in the frequency of extreme weather events including heat waves, droughts and heavy precipitation events that cause flooding.
Of course, as Trump says, “nobody really knows” for sure.
Many Americans seem to agree with him. A 2014 survey in twenty countries by UK market research group Ipsos Mori found that United States came in last in terms of the percentage of respondents (54%) who believe “the climate change we are currently seeing is the result of human activity.” The next lowest countries were Great Britain and Australia at 64%.
In the survey, Americans were evenly split on whether they agree with the statement that “even scientists don’t really know what they are talking about on environmental issues.”
Doubt About Smoking and Cancer
In the 1950s, the first comprehensive studies were conducted of lung cancer cases among smokers and non-smokers.
The studies found the death rates from lung cancer were at least five times higher in the heavy smoking group than in nonsmokers.
In reviewing these studies, Charles Cameron in a January 1956 article in the Atlantic wrote, “There is in some quarters an unbecoming skepticism of statistics in general and of these remarkably consistent results in particular. By some…the findings are rejected because there is not ‘laboratory proof’” linking tobacco use and cancer.
Sixties years later, the evidence linking smoking and cancer continues to mount. A recent study published in the JAMA Internal medicine found that of the 167,000 cancer deaths in the United States in 2014, 29% were attributable to cigarette smoking.
Those numbers were based on a 95% statistical confidence level, which means nobody knows with absolute certainty that the linkage is there.
Perhaps this lack of absolute proof linking smoking and cancer partially explains why 15% of adult Americans still smoke. After all, nobody really knows.
What Would It Take
Climate change and smoking skeptics should ask as any good scientist does, “What would it take to convince me that I’m wrong?”
Related Episodes
77: Does Ethical Investing Outperform the Market?
118: Are Renewable Energy ETFs A Good Investment?
160: Why Ethical Consumption Is A Myth
251: Impact Investing and Intentionality
340: Climate Change, ESG, and What Should Investors Do?
