April 11, 2008

Munich Re: climate change one of mankind's greatest risks

Munich Re has released its 2007 review of natural catastrophe experience and its announcement of a strategic re-direction to address climate change, which it describes as "one of the greatest risks facing mankind."

It is especially valuable to remind U.S. policymakers that while 2007 was a relatively easy "natural catastrophe" year for the U.S., Europe, Asia and Australia were not so lucky. The U.S. will get its turn again, as it did in 2005.

In the report:
* The monsoon between a curse and a blessing
* North Atlantic hurricane activity in 2007
* Catastrophe portraits from Europe, United States, Oman, Australia, UK and Japan
* World Climate Conference in Bali smooths the way for the successor to the Kyoto Protocol
* Living with climate change – The strategic repositioning of the Munich Re Group
* NatCatSERVICE – The year in figures

Thanks to ClimateandInsurance.org for alerting us to this important report.

(read more after the break)

From Munich Re's Report, p. 39:

Climate change is one of the greatest risks facing mankind. In recent years, the insurance industry – and Munich Re in particular – has been instrumental in ensuring that this message is received loud and clear by politicians, industry, and society as a whole. Now we are going one step further and are turning our knowledge into even more action – with the aid of an all-embracing strategic approach – in the areas of “risk management”, “product development”, and “capital market management”.

Munich Re goes on to speak highly of the "visionary" Stern Review:

Investments in adaptation measures designed to deal with the effects of climate change and in the reduction of greenhouse gas emissions pay off: that is a view also shared by the former chief economist of the World Bank, Sir Nicolas Stern. One of the core messages in The Stern Review, published in autumn 2006 and recognised throughout the world as a visionary work, is as follows: Climate change is the greatest market failure of all time – the only economically reasonable solution: take action immediately!

That means:
– meeting the ambitious CO2 targets by initiating concrete legislative procedures and specifying energy production and efficiency requirements,
– implementing new energy production technologies and new energy-saving construction methods,
– employing new mechanisms to (further) develop carbon emissions trading.

Ibid., pp. 38 - 39.

The full report, "Topics Geo - Natural catastrophes 2007 - Analyses, assessments, positions" is available for free public download in PDF form.

According to the Stern Review of the Economics of Climate Change cited by Munich Re, unchecked human-caused global warming will cause trillions of dollars in damages in our lifetimes, with impact comparable to a world war or global depression, but shifting to a low-carbon economy will bring huge economic growth opportunities. The economic benefit of reducing carbon emissions could total $2.5 trillion each year, according to the most comprehensive economic analysis of the effects of global warming, released in October 2006 by Sir Nicholas Stern, Head of the U.K.'s Government Economic Service and former World Bank Chief Economist.

An index of the elements of the Stern Review of the Economics of Climate Change is available here: Stern Review Index page, which includes links to his presentation slides, comments on the report by other economists, supporting research.

See also some earlier thoughts on "Stern's Prescription and Dirty Harry's Question," Unintended Consequences, Nov. 4, 2006.


Posted by dougsimpson at April 11, 2008 08:27 AM