An Open Letter to Libertarian Candidates ... (Part 2)

Part 2. The Insurance angle. So picking up where we left off: Don’t be a denier. And don’t waffle. Instead stick to your line, the science is uncertain. (At some level the science is always uncertain, if not about the fact that the climate is changing, if not about the fact that humans are primarily responsible for the recent rapid changes, if not about the almost certainly bad consequences—then about precisely what will happen, and how bad ‘bad’ will be.)

And play the insurance angle. The science is uncertain. Bad things might happen, (if 97% of the scientists are right), if not to you then to your grandchildren. (So no need to panic, but we all care about our grandchildren, right? Play, sincerely, to family values.)

So what do we do in real life when bad things might happen? Unpredictable things. With catastrophic consequences.  (Like floods. People in Cedar Rapids and Iowa City will never forget the 2008 flood, in case you happen to be speaking there.) We buy insurance. (Pause) In the face of uncertainty, even when the likelihood of disaster is small or far in the future (like our own deaths, we hope)—if we have enough at stake and we are smart, we buy insurance.

Life insurance. Health insurance. Insurance against fire and flood. Liability insurance. Crop insurance. Even terrorism insurance. To protect yourself against things you can’t (in large measure) control. Or against suits by others for harm you may have contributed to or caused (initially unwittingly, but increasingly with culpability).

So why should climate change be any different? We have a risk (big or small, we can differ on that, though someone impartial, someone expert, must estimate it). We have potential consequences too large for the risk takers to deal with individually (again, we need to bound this, e.g. at least x, at most y), and no knowledge of precisely who will be affected and how. So everyone contributes premiums according to the coverage they need and collects from the pool when (and if) bad things (made more probable by climate change) actually occur.

The trick is to evaluate the risk, to bound the potential costs, and set to the premiums right. Those who contribute most to the risk (put the most carbon in the atmosphere) should pay the highest premiums. And everyone (with a carbon footprint greater than zero) should pay a little. Conversely, if there are people or companies who take actions that remove carbon from the atmosphere, they should be paid for the corresponding risk reduction.

This, at least, is how it should work in principle.

To eliminate the overhead and technical complexity of monitoring emissions, we can impose the premium at the point where fuels (such as oil and gas) are extracted. And, to avoid double taxation, we can count on the fact that these costs are being passed on to consumers (so consumers have no premium to pay except what is passed on, in the price).

Okay, there are some issues still to consider. Like who would administer all this? The private insurance industry? (Can they deal with it, worldwide?)  Governments? (They have to deal with the consequences of climate change that private industry cannot—but really, why should they? They didn’t create the problem). Shudder, some big international organization, with UN backing?

And what if not everyone wants to buy climate insurance (if whole countries want to opt out)? Echoes of the Obamacare mandate? More government meddling in the insurance industry? No, no, no.

And how about prevention? Prevention is certainly preferable to a pay out, especially when it comes to life insurance or terrorism. Or irreversible climate change.

So tune in next time—same bat time, same bat channel.

And be assured, there is a (libertarian) way out.