The Embarrassment That is the Allianz Climate Change Report

I am an actuary in the insurance industry, and so receive information of all sorts that are supposed to enlighten me and assist me in my job.   Whether it is a better model to use in forecasting future experience based on current trends for the purpose of pricing products, or accurate assessment of ultimate losses on current inforce products, it is imperative that I understand new advancements in predictive modeling, underlying trends, and results of different studies to most benefit my company and the customers we serve.

In this capacity, I recently came across a 97 page effort by Allianz, in partnership with – get this – the WWF (World Wide Fund for Nature), entitled “Major Tipping Points in the Earth’s Climate System and Consequences of the Insurance Sector.”   As someone who wants to base pricing considerations on observed experience and modeled trends, I was curious about this paper, and how it is implied that this is to be used by the insurance industry.   The report isn’t a new one, but it was  the first I had run across it.

The very first line of the paper reads:  “Climate change resulting from emissions of CO2 and other greenhouse gases (GHGs) is widely regarded to be the greatest environmental challenge facing the world today.”

 

Ominous.

 

Page one teaches us some interesting details.   I learned that there is no global agreement or scientific consensus for delineating ‘dangerous’ from ‘acceptable’ climate change, but 2 degrees Celsius seems like a good number.   The origin of that 2 degree number is not clear, but seems to be promoted based on the UNFCCC Assessment Report (AR4).

 

We then learn about tipping points.   The theory here is that, while temperature may increase gradually, there are points where a small change can make a big difference in the system.  The cited reference here is M. Gladwell, “The Tipping Point: How Little Things Can Make a Big Difference.”    It is unclear to me if this is a how-to book on marriage, or something spelling out the global catastrophes to come, but apparently it’s good enough for the reinsurance industry.

 

Well, anyway, this is just the Executive Summary, which includes examples of Tipping Points.   It appears we are talking about disasters such as effects of rise in sea levels, a shift in monsoon seasons, Amazon drought, and an overly arid Southwest U.S.   No mention of comets or alien attack, so I guess we’re sticking to “things we can control.”

 

There is then a touching “Take Home Message” to conclude the Executive Summary.   We learn that past emissions have already committed us to at least 0.6 degrees of further warming.   Because we’re lazy and lackluster in our efforts to combat it, the 2-3 degrees scenario is almost certain to happen.

 

Ominous.

 

I must say, as I read the actual body of the document, I was pretty disappointed with my reinsurance brothers and sisters.    We start with simply references to other works, clearly fed to them by WWF and other environmentalist groups.    UN studies, IPCC papers, etc. tell us there will not be a smooth transition into warmer temperatures.  This leads into the definitions and characteristics of tipping points, which – let’s be honest – insurance people will not know whether the studies they are reading are right or wrong.   They’re insurance people.  But in any case, it doesn’t appear that there was a serious attempt to reach out to alternative opinons on the matter.   Nobody called me, which can be expected.   More importantly, I don’t think Dr. Roy Spencer got a call either.   I don’t even think Jeff from the Air Vent was consulted.   A travesty.

 

Section 2 focuses on identifying tipping elements based on IPCC AR4.  

On a serious note, from a reinsurance standpoint, the things they are looking at need to be considered for the purpose of understanding exposure to risk.   What kind of storm activity tends to occur with changes in the ENSO amplitude?   What is the exposure in the event of differences in monsoon activity around the globe?   What are the insurance impacts to glaciers melting? What are the impacts of this event or that event?   All legitimate questions to make sure the company can sustain viability should certain things occur that impact loss payouts.   The issue I have here is putting such study in a document that doesn’t just use global warming theory as a “what if” scenario, but presents it as a given.

 

We then get into all sorts of scenarios around different tipping points.   It’s all the same stuff: Greenland, Arctic Ice, sea level rises, the Antarctic, carbon stores in permafrost (amplified global warming, you know), and so on.   Then, we get into tipping points that can tip other points, or something like that.

 

Section 3 highlights the greatest risks to our dismal future.  

 

So, what am I most disappointed in?   My disappointment is mainly that this is a piece of propaganda disguised as an insurance study.   If it is an insurance study, it’s a horrible one, and I’d fire anyone who resented it to me as a definitive assessment.   I see no industry experience and actual trends presented.   It is a “study” in the sense that it covers a lot of “what if” scenarios, which is an entirely legitimate exercise, but it provides them as a near certainty as opposed to a random probabilistic event.   Oh, sure, there are a lot of graphs and charts that lead one to believe that this is a rigorous study, but it is not.    It is a study that has, at its basis, a complete trust in the views and conclusions of a few UN-sponsored reports and other data that is derived in its entirety from the pro-AGW side.   It reeks of being a UN lapdog in anticipation of taking advantage of climate change scenarios and scare tactics for a lining of the pockets and future power grab.  

 

The study into the “what-ifs” seems pretty sound.    This part is fine, which is what I would expect from experts in the reinsurance industry, because this is what they do: they assess exposures, risks, and loss impacts GIVEN A SCENARIO IN WHICH TO ESTIMATE THAT IMPACT.     This paper, however, assumes the scenario to be reality.

 

So, what is my analysis on why Allianz would release an otherwise legitimate exposure analysis in the form of a drivel-packed, politically correct, report?

 

M.   O.   N.   E.   Y.

 

Suppose that Allianz convinces regulators and customers alike of the need for a “loss provision due to global warming impacts” in their policies.   Imagine tax advantages for surplus funds set aside for these events.   Now, imagine that every future weather event can be attributed to global warming…   wait…   I mean, Climate Change, so that a demonstrable drawdown on “global warming reserves” reinforces the idea of human-cause impacts on the weather and storms.   The propaganda becomes self-perpetuating, and ever more profitable.   At some point, it is likely that all weather risk can be transferred at a guaranteed margin to a global fund to cover all climate-change related events.  More conspiratorial, imagine a world of crony capitalism where those who were on the “right side” benefit disproportionately as the UN wields more power and is able to give preferential treatment to its friends with the “right” message.

 

This is simply Allianz seeing the future and hoping to profit from it.   And to help it along, what better than to actually promote the entire idea yourself?   All-in, so to speak.

 

Yeah, color me skeptical.   

 

I’ve got news for everyone who wants to give reinsurers the benefit of the doubt.   I’ve been in this business long enough to realize that despite all their fancy modeling and theories, they are the least rational reactionaries to risk there is.   Supposedly, this price is based on long-term history until something happens, at which time your rates quadruple.    Then, as competitors enter the market, they end up underpricing products.    So, whatever sophistication they start with, it goes out the window in a real hurry.

 

But I’m sure this is different.   And I’m sure they mean well.

 

For more fun with Allianz and climate change tipping points, check this out: http://knowledge.allianz.com/climate_tipping_points/climate_en.html

Planetary Skin

An admitted conspiracy nut on another board posted this link, but it is kind of interesting. I hadn’t heard of this before.

Planetary Skin

The policies and actions that will help move the world to a low-carbon economy and address the large-scale risks associated with climate change are profound and far-reaching. They require many different individuals and groups to take between them a vast array of small and large decisions, every day. Today, those decisions are made with only partial knowledge of the possible options, benefits, costs, and risks. Decision-makers are, in essence, flying blind. Whether acting globally or locally, they lack a trusted decision information infrastructure for mitigation of, and adaptation to, climate change.

The skin that covers our bodies provides information from ‘sensors’ distributed throughout the body. Nerve endings in the skin gather sensory information and transmit it through the central nervous system for processing. The body responds with appropriate remedial action to regulate and adapt to change.

Planetary Skin can be thought of as a nervous system, covering the entire planet and providing a research and development platform for open collaboration between the public, private, academic and NGO sectors. It will collect data from space, airborne, maritime, terrestrial and people-based sensor networks and other sources of structured and unstructured data. It will model, predict, analyze and report in a standardized usable format over an open and adaptable cloud platform that is governed as a global public-good.

Planetary Skin Institute will research, develop and prototype an approach to provide near-to-real-time global monitoring of environmental conditions and changes. This will deliver the required decision support capabilities to manage global resources, risks and build environmental markets.

Thoughts?

And, from another article:

Mr Brown and French President Nicholas Sarkozy now are working proposals for a “European monitoring organisation” that will oversee every country’s actions on emissions.

The plan emerged after US President Barack Obama suggested that monitoring could be done using spy satellites.

Mr Brown revealed the plan in the early hours of Saturday morning, shortly before leaving Copenhagen.

He said: “I will work with President Sarkozy for a European organisation that will monitor the transparency that is being achieved not just in Europe and our own countries, but in every country around the world.

He added: “We’re in favour of transparency; we’re in favour of looking at what’s happening not just in our country and our own continent, but around the world.

“I think people deserve for there to be international reporting at the highest standards of what is being done.”

Spy satellites? Ummm….. what?!

The Real Cost of Cap and Trade

There is a lot of stuff flying around for and against the Cap-n-Trade Scheme that dares to lurk as a possibility for enactment. So, what do the internal goverment memos say about it? I’ve heard it won’t really cost anything. And it’s green. If it’s green, it must be good, right? Yeah. We like green. Go into a store now and you’ll find green everything. It’s green because batteries last 10% longer, or because it used 5% less energy. It’s green because it’s made with 10% recycled plastic. We just moved into a new corproate office not long ago, and I’m pleased to let everyone know that it’s green. Ironically, they damn A/C is always on too high, and I’m one of the few who seems to think it’s a waste of energy, even though I’m not really a “greenie” because I don’t buy into global warming.

But I digress.

In a Washington Times article we get the scoop, thanks to the Freedom of Information Act:

Officials at the Treasury Department think cap-and-trade legislation would cost taxpayers hundreds of billion in taxes, according to internal documents circulated within the agency and provided to The Washington Times.

Huh. Go figure. Who’d have thought that this might actually cost us money?

I’ll Be Back Soon…

Sorry for the hiatus. I actually do have a HadCrut analysis worked up that’s been sitting here for over a week, but I’ve been caught up in other things. Hey… I warned everyone that there would be times like this, as I juggle a number of things. Blogging is cool, and I consider this important enough to keep doing, but at times it just needs to take a back seat. I’m during one of those times right at the moment.

But I should get that HadCrut analysis up sooner rather than later, and soon we’ll be talking about June anomalies.

Here’s my quick hits:

• Thank goodness the House of Representatives passed that climate bill.  They did it just when we in Wisconsin was enjoying some of the few unseasonably warm temperatures we’ve had in the last couple years.   Three days after passage, we’re back to 15 degrees below normal.  Coincidence?   I think not!  Thank you, Nancy Pelosi!
• Obama says the White House will be changing light bulbs.   If they are looking for a place to donate their old incandescents, please let them know that I am accepting.
• I’ve learned a great lesson in economics this week.  I’ve learned that passing a bill that restricts any development of energy that is efficient and trades it for alternative energy systems that are (as of now) inefficient, and that will increase electical costs, that it means “Jobs, Jobs, Jobs, Jobs, and Jobs!”   To quote one of my favorite movies: “You keep saying that word.  I do not think it means what you think it means.”

Taking a Break to Evaluate a Really Stupid Idea

Some people wonder why people like you and me actually care whether or not the Anthropogenic nature of Global Warming is real. Or, for that matter, whether it’s even a bad thing. After all, they argue, even if it isn’t real isn’t it a good thing that people are more aware of pollution and alternative energy and all those things, so that we are better stewards of the environment?

The answer isn’t a simple “yes” or “no.” It would be simple if you eliminated the first part of the equation and simply said that we should be good stewards of the environment. I couldn’t agree more. And I am all for research into ways to make existing fuels burn cleaner and to make alternative energy forms useful and efficient.

But the reality is that whenever you base decision-making on bad information or bad assumptions, you end up harming more than helping. Even if the goal is generally a good thing (cleaner, safer environment), it just isn’t that simple.

There is no better example of this than the agenda of AGW proponents in the sphere of politics. We all likely agree with the statement, “We should reduce pollution as much as possible, within our means to do so.” The question that needs to be clarified, though, is “What is pollution?”

The day we started accepting Carbon Dioxide as a pollutant was the day all common sense went to hell in a handbasket. The mind-boggling dollars that are being discussed as a part of the solution to reduce Carbon Dioxide emissions is so numbing that most of us don’t even flinch any more with numbers in the hundreds of billions. We don’t even bother to consider the tax implications, on a global scale let alone a regional scale, of what these numbers mean. And that doesn’t even take into account lost efficiencies.

Jeff on “The Air Vent” (link to the right) has a number of posts on the impact of continuing to promote biofuels as a solution. Even if one could argue that the day will come when alternative fuels like these can be used more cleanly and efficiently, trying to do that now is not only premature, but counterproductive to efficiency, cost, opportunity cost, and the actual benefit in the end to a cleaner environment. At best, you can say that the current state of biofuels is a stepping stone in research to something better in the future, but as it stands now it is an outright lie to believe we are doing anything but hurting ourselves by this ignorant and obstinate push for biofuels. Check Jeff’s work.

So, today I open up a link on Drudge to find the following story:
Proposed Fee on Smelly Cows, Hogs Angers Farmers.

Your meat will now cost 20% more, suckers.

Here is an excerpt:

MONTGOMERY, Ala. – For farmers, this stinks: Belching and gaseous cows and hogs could start costing them money if a federal proposal to charge fees for air-polluting animals becomes law.

Farmers so far are turning their noses up at the notion, which is one of several put forward by the Environmental Protection Agency after the U.S. Supreme Court ruled in 2007 that greenhouse gases emitted by belching and flatulence amounts to air pollution.

“This is one of the most ridiculous things the federal government has tried to do,” said Alabama Agriculture Commissioner Ron Sparks, an outspoken opponent of the proposal.

It would require farms or ranches with more than 25 dairy cows, 50 beef cattle or 200 hogs to pay an annual fee of about $175 for each dairy cow, $87.50 per head of beef cattle and $20 for each hog.

The executive vice president of the Wyoming Farm Bureau Federation, Ken Hamilton, estimated the fee would cost owners of a modest-sized cattle ranch $30,000 to $40,000 a year. He said he has talked to a number of livestock owners about the proposals, and “all have said if the fees were carried out, it would bankrupt them.”

Sparks said Wednesday he’s worried the fee could be extended to chickens and other farm animals and cause more meat to be imported.

“We’ll let other countries put food on our tables like they are putting gas in our cars. Other countries don’t have the health standards we have,” Sparks said.

EPA spokesman Nick Butterfield said the fee was proposed for farms with livestock operations that emit more than 100 tons of carbon emissions in a year and fall under federal Clean Air Act provisions.

There is simply no way to overstate how ridiculously stupid such a proposal would be. I grew up on a dairy farm. We milked 60-70 cows at any given time, and had a number of heifers that we were raising both to replace the older cows or to send to market (or butcher for ourselves.) Now, I can guarantee you that 60-70 cows is a small, family operation. My dad was great with his money and so he did well, but he certainly didn’t rake in huge dollars. This was in no way some large-scale operation.

This proposal would have cost my dad another $12,000 per year. That means that one of two things would have to happen: food costs go up in order to cover the additional cost to the farmer, or the farmer goes out of business. There is no way he could have absorbed another 12 grand.

The rest of the article burned me up, too:

The fee would cover the cost of a permit for the livestock operations. While farmers say it would drive them out of business, an organization supporting the proposal hopes it forces the farms and ranches to switch to healthier crops.

“It makes perfect sense if you are looking for ways to cut down on meat consumption and recoup environmental losses,” said Bruce Friedrich, a spokesman in Washington for People for the Ethical Treatment of Animals.

“We certainly support making factory farms pay their fair share,” he said.

PETA… need I say more? Yeah, let’s just fail to recognize that people who have invested in all the equipment and infrastructure to operate a Dairy farm can just switch to crop-raising. No big deal, right? After all, they should pay their “fair share.”

Morons.

At least there was a heartening end to the article:

U.S. Rep. Robert Aderholt, a Republican from Haleyville in northwest Alabama, said he has spoken with EPA officials and doesn’t believe the cow tax is a serious proposal that will ever be adopted by the agency.

I am happy to see that. But a quick note to Representative Aderholt: Assume nothing! Many of the stupid things we do today were considered to be so ridiculous a few years ago that it couldn’t possibly be a serious proposal. These things start off as trial balloons until the ballon actually starts to float. It may not be now, but these inane proposals will continue and more will be passed.

The Validity, or Lack Thereof, of Data presented by a self-proclaimed Idiot

Occasionally, when time allows, I enjoy tracking back on certain incoming links. Most of my incoming links are simply from other blog posts, where people find the graphs interesting enough to supplement whatever point they are trying to make. Where it is more fun, though, is when I find a link to my charts embedded into a forum or comments responding to another blog or article, and people from both sides of the Global Warming argument are found. I find it both amazing and humorous what tactic people will use.

One common thing that occurs is that someone will link to a post of mine that demonstrates the cooling trends, and then someone will respond by pointing out that another one of my charts shows warming. That makes me feel somewhat unbiased, so I think it’s generally a good thing when the same post can be used to support two opposing arguments. It also means that life isn’t quite as clear-cut as we’d all like to make it, and perhaps everyone needs to take a breath and think about how dogmatic they really want to be on this issue.

Every now and then, I enjoy using certain responses as a topic for a post of mine. I am going to do that right now. The trackback in question is from EdCone.com, which is a site I had no previous knowledge of. This post, at least, appears to have an unabashedly pro-Anthropogenic Global Warming bias. Well a poster, “Thunderpig,” who isn’t afraid to stir up a hornet’s nest, linked to my September UAH Analysis, as well as to the general site. He properly provided the link with the name of my site, “Digital Diatribes of a Random Idiot.”

The Global Warming Boys’ Club

This fish is a boy. Can't you tell?

I’ll start with the quote from This chicken-little story:

“We found that in fish that do have temperature-dependent sex determination [TSD], a rise in water temperature of just 1.5 degrees Celsius can change the male-to-female ratio from 1:1 to 3:1,” says Piferrer, the study’s co-author. In especially sensitive fish, a greater increase can throw the balance even more out of whack. Ospina-Alvarez and Piferrer have found that in the South American pejerrey, for example, an increase of 4 degrees Celsius can result in a population that is 98% male.

What makes these findings especially troubling, of course, is that the International Panel on Climate Change (IPCC) predicts that ocean-water temperatures are likely to rise by 1.5 degrees over the course of this century — and they may even go up a few degrees more. “If climate change really does result in a rise of 4 degrees, which is the maximum the IPCC predicts, and if species can’t adapt in time or migrate, then in the most sensitive cases of TSD, we’re looking at extinction,” says Piferrer.

Let’s pay attention, here. This is news. Why? because they have found a dramatic rise in the ratio of male to female fish populations, right? Well, not really. There is a reference to a study that alludes to a rise in one specific population of fish in one specific area of the globe. Of course, we would never jump to conclusions based on anecdotal regional evidence and extrapolate it to global trends, would we? Of course not. More importantly, and you can almost sense the anguish in which they need to toss other potential factors into the equation, there are other potential explanations for the ratio shift. We don’t want to talk about those, though, because it detracts from the horrific nature of global warming.

The paragraphs I quoted are nearly 100% conjecture. It’s all an “if” based on IPCC models that are already failures.

Something stinks here, and it isn’t the fish.

Obama’s Speech in Germany Was Ridiculous (and other stuff)

Eeek! Barack, only say the word and I shall be healed!

OK, that’s a pretty general statement, but it was. Excerpts from Planet Gore:

“As we speak,” said Obama, “cars in Boston and factories in Beijing are melting the ice caps in the Arctic, shrinking coastlines in the Atlantic, and bringing drought to farms from Kansas to Kenya.”

He followed that up by suggesting that the world “reduce the carbon we send into our atmosphere” with “the same seriousness of purpose as has your nation,” apparently unaware that CO2 emissions in Europe, to which he was appealing, grew 2.1% from 2000 to 2004, while U.S. emissions increased just 1.3% over the same time.

“This is the moment when we must come together to save this planet,” Obama declared. “Let us resolve that we will not leave our children a world where the oceans rise and famine spreads and terrible storms devastate our lands.”

Ugh.

Gore gives me hope. Oh, and you too, Obama...

To make matters worse, comes this gem from Senator Patrick Leahy:

‘In an Obama administration, you’d see one of his closest advisers would be Al Gore. And that gives me a lot of hope.

Ugh.

Anecdote ALERT!

I wouldn’t want anyone accusing me of using anecdotes as evidence without being up-front about it. But on the heels of the reports a couple days ago about the coldest summer ever in Anchorage comes something from the other side of the globe: Adelaide was freakin’ cold.

Adelaide’s temperature plummeted to 0.8C about 6.25am, this mark the lowest since the winter of 1983.

I picked this picture because Murtha looks happier than he usually does on this one.

In a related story, we find out that Nancy Pelosi is trying to save our planet. At least, that’s the excuse for stalling a proposal to lift the moratorium on drilling.

With fewer than 20 legislative days before the new fiscal year begins Oct. 1, the entire appropriations process has largely ground to a halt because of the ham-handed fighting that followed Republican attempts to lift the moratorium on offshore oil and gas exploration. And after promising fairness and open debate, Pelosi has resorted to hard-nosed parliamentary devices that effectively bar any chance for Republicans to offer policy alternatives.

“I’m trying to save the planet; I’m trying to save the planet,” she says impatiently when questioned. “I will not have this debate trivialized by their excuse for their failed policy.”

“I respect the office that I hold,” she says. “And when you win the election, you win the majority, and what is the power of the speaker? To set the agenda, the power of recognition, and I am not giving the gavel away to anyone.”

Huh. Sounds more like someone who just doesn’t want to lose a grip on her little empire. No drilling, no coal, no nuclear, years away from efficient alternatives that are not sufficiently funded. Am I the only one who sees the problem with this picture?

James Hansen, Congress, GISS, and Adding Fuel to the Fire for Skeptics

If you’ve followed this blog, you know that I have willingly used the GISS data for analysis of global temperature trends.  The GISS (Goddard Institute of Space Studies) uses surface temperature readings to derive monthly average temperature on regional and global bases, but not before incorporating some complicated – but publicly available – smoothing of the current data, and adjustments of past data through an algorithm process.   These adjustments are somewhat controversial for different reasons.  The smoothing process stretches to 1200km, and it is suspect that such large distances can be trusted to proxy intermediate distances.  We know that temperatures can vary widely across such distances.   It is not so much that smoothing is incorporated that is the problem as much as the paucity of measuring stations in some areas, and exclusion of others with little explanation as to why.

The algorithmic adjustment process is also suspect in that it continues to tweak historical temperature data.   This would not be problematic to many if the results were unbiased as to a particular direction and the adjustments distributed relatively evenly both up and down across all periods.   This, however, has not been the case.  The historical adjustment process has lowered early century temperatures and increased more recent temperatures.  This increases the trend line’s slope and increases the estimate of warming rates.   One result of this can be seen by looking at the comparison I did between GISS and NCDC monthly anomalies.   While I cannot say all the difference in the early data is due to adjustment, it is clear that the greatest divergence between the two data sets is early in the period, and any such adjustments only exacerbate this difference.

Why Alaska Hates Polar Bears

After all… if the Governor of Alaska is suing to pull the newly-tabbed “threatened” Polar Bear off that list and she is the elected representative of that state, then the logical question is “Why do you hate Polar Bears so much?”

Yes, I’m being sarcastic.

A lot has been said about our fuzzy white friends to the north lately. Are they really threatened? Is it true that the population has increased over the last 25 years? Can they really drink a Coke while sliding down a hill? And what ever happened to those unfortunate cubs that floated off into the ocean on a block of ice, like Yukon Cornelius avoiding the abominable snow monster (which, come to think of it, kind of looks like a 4-year-old’s rendition of a Polar Bear).