Buildings and infrastructure represent durable capital but they require ongoing maintenance and eventually they will be replaced. Climate change increases the risk of nasty weather events that increase the wear and tear on such past investments. Think of the Metrodome collapse in December 2010. This article neatly lays out some of the issues moving forward as engineers ponder more stringent building codes. The big private and public decision here is investment in the face of uncertainty over climate change’s impacts. I explore many of these issues in my 2010 Climatopolis book.
Similar to what I argue in Climatopolis, the author is optimistic that richer people and nations will make investments to protect themselves.
“In most parts of the developed world, people will probably make the necessary adjustments. This winter, travelers were stranded for days at airports in parts of Europe and the United States, as severe snowstorms interrupted flights. But, Dr. Hoeppe noted, air traffic continued almost normally in places like Helsinki, Finland, which is used to heavy snows. “Perhaps we’ll have to learn to deal with more snowfall — extreme snowfall,” he said. “We’ll have to get used to that.”
The insurance industry has the profit motive to incentivize the insured to take precautions to minimize the damage that future volatile storms will cause.
The challenge here is in the developing world. My previous work on deaths from natural disasters highlights the differences in deaths that rich and poor nations suffer from the same shock. To protect people from climate change, we need more economic development.
“There’s not enough money to design for every eventuality,” said Mr. Klotz. “You try to design for the worst-case scenario. But the question now is, what you can expect?”
So, this is the key issue. The climate scientists need to make progress on quantifying the new risks we face and then rational investors will respond to demand homes and structures that can withstand these blows. On the supply side, there will be strong innovation incentives to deliver these needed new products.
I agree that it is impossible to “prove” that climate change causes any specific weather event. I do believe that the variance of weather events (extreme temperature events and rain events) will increase because of climate change. The question is whether we have the tools at hand to defend ourselves against these “fat tail” events? Richer people with more responsive governments will have such tools. The climate scientists give us an “early warning” system that gives us the planning time to be prepared.
We have to rebuild our cities. We will even rebuild Detroit. How we build this infrastructure will play a key role in how climate change affects our quality of life.