Point/Counterpoint

Take Note of Global Warming

by Donald Bashline

In his 1983 Presidential Address, Fred Kilbourne defined actuaries as "financial futurists," and called us "experts in evaluating the current and long-term financial implications of programs involving uncertain future events." But his article "Global Warming: Just a Lot of Hot Air" (Actuarial Update, March 1998) ironically gives actuaries an object lesson in how not to evaluate the uncertain future event of global warming.

What is everyone worried about? Atmospheric concentrations of carbon dioxide (CO2) have increased 30 percent from pre-industrial levels. CO2 and other "greenhouse gases" help trap heat in the atmosphere. The observed increase in greenhouse gases has been accompanied by warmer temperatures: eight of the nine warmest years on record (accurate records have been kept for more than one hundred years) occurred in the 1980s and early 1990s. The consequences of continued warming could be severe: warmer ocean water expands to raise sea levels; weather extremes become more common; food and water supplies are affected.

But long-term predictions of large-scale climate changes are complex and uncertain. The consensus reached by the Intergovernmental Panel on Climate Change (IPCC), set up by the United Nations to study the issue, acknowledges that incomplete understanding of the processes of climate change "means that we cannot rule out surprises." The economic and environmental costs of global warming could be cataclysmic or relatively benign. The range of possible responses is wide. Who will decide what is to be done?

Here is where the 1983 Fred, well ahead of his time, would have the actuary exercise her expertise and begin her evaluation of this uncertain event. The 1998 Fred, alas, does no such thing. Instead, he compares scientists concerned about global warming to (I am not making this up) Stalin's "favorite geneticist," and with only the testimony of Dr. Fred Seitz, Chairman of the Board of the George C. Marshall Institute, a think tank funded by the far right Scaife Foundation, purports to show that "the scientific community" was unimpressed by the IPCC's conclusions.

Fred's conclusion is that "global warming is far more a matter of politics than of climate and pseudoscience in the service of politics." In fact, it is Fred and not the IPCC who has fallen into the political trap. The American Right's pathological fear of the U.N. and "international intervention" are threatening to obstruct the scientist's and the actuary's ability to work on one of the most important problems of our time.

Actuaries have begun to work with computer climate models for property insurance. These hurricane and earthquake models are still relatively crude, and their predictive value is questionable, but actuaries rely on them as accurate enough to make very precise estimates of insurance rates. With much more at stake, the actuarial profession must not let politics shut it out of participation in the ongoing evaluation of the proper response to global warming. As Fred so aptly put it at the end of his presidential address: "We can do much, and we make a difference. The children need us." Fred, you were right in 1983—Let's get to work!

Editor's note: For readers who are interested in learning more about global warming, Donald Bashline suggests Global Warming: The Complete Briefing, by John Houghton, and Risk vs. Risk: Tradeoffs in Protecting Health and the Environment, edited by John D. Graham and Jonathan Baert Wiener.

Global Warming: Just a Lot of Hot Air?