Senator Bob Smith
Environment & Public Works Committee
Climate Change Hearing March 13, 2002
Good Morning. Today we are here to talk about the economic and environmental risks associated with climate change.
I want to welcome all of our witnesses, and a special welcome to Adam Markham who has come down from New Hampshire. Mr. Markham will be discussing a recent report coordinated by the University of New Hampshire that describes much of the potential environmental and economic impact of climate change in New England--impact on industries such as skiing and sugar maple.
This study underscores concerns I have shared with members of this committee. Small, family-owned businesses are at risk. These are just a few of risks that New Hampshire would face --associated with the potential change in climate.
There are many more aspects to the question of risks posed by climate change than we could list today. When we talk about risk, I think it is worth looking to those whose entire business is based on putting a price on risk -- translating environmental risk into economic terms -- the insurance industry. Insurance companies are motivated to seek the clearest risk information available on subject of climate change.
This motivation is not clouded by politics or agendas, but focused squarely on the bottom line where accuracy is not a luxury. It is a necessity. If they do not estimate risks accurately, they will soon go bankrupt.
I would like reference a document that can be found on the web site of one of largest reinsurance companies in the world -- Swiss Re. I would ask unanimous consent that this document be part of the record. The document bears the title “Climate Research Does Not Remove the Uncertainty: Coping With The Risks of Climate Change.” The title pretty well sums up our hearing topic today.
The primary point of this paper is that climate change is happening and it poses financial risks. We still are unclear on how much of that change is natural and how much is human-induced. But for the insurance industry and their customers, CAUSES are of secondary importance in the face of weather-related losses.
As we examine the risk question, and as we consider the entirety of the climate change debate, we should focus more attention on economic risk posed by any climate change -- natural or human induced. The study points out that our “vulnerability to extreme weather conditions is increasing.” This is because in a global economy, local weather can have international consequences.
An example Swiss Re points to is the flooding of a Far East computer chip factory, causing supply bottlenecks for the entire technology sector.
The paper points out that climate change is not needed for that example to occur. But, evidence shows that human interference in the climate system exacerbates the problem already caused by natural climate change. The difference between natural variation in the climate, and natural variation coupled with human influences may be small. We don't know yet -- the scientists will continue to try to answer that question.
There are small differences between forces that can cause either negligible damage or catastrophic loss. These are the intelligent thoughts of experienced businessmen and women - people not driven by any political agenda. Their jobs are to ACCURATELY assess the economic risks posed by climate conditions - and they provide an excellent perspective for us to consider. I would like to share one last quote from the paper,
“The climate problem cannot be ignored, nor will it be solved merely by calls for optimum climate protection. We need to find ways of implementing the necessary climate protection measures in a manner which is both socially and economically acceptable.”
I believe that is reasonable counsel and even though I doubt the authors ever intended it for this committee, I would urge that we heed their advice.
Given the potential risks, we must begin to explore reasonable ways of mitigating the potential economic damages - regardless of the causes of the climate change. I have strongly advocated a system based on incentives for innovative measures to reduce greenhouse gases.
I believe that capitalizing on innovation and the free market will meet whatever challenges are presented -- we should think “out of the box.”
I don't believe that it is necessary to regulate -- through command-and-control -- carbon at power plants to cut atmospheric levels of greenhouse gases. We don't have to create economic damage as means to avoid economic and environmental risks. There are other ways.
And we shouldn't be in the business of choosing winners and losers.
Regardless of whatever the policy answer is - one thing is for certain: absent a bipartisan approach, we will achieve nothing. We cannot allow politics to trump reason and success.
Fortunately, this committee has a long tradition of bipartisanship. I can assure you this -- if a partisan approach is followed on this Committee with this, or any other issue, the only thing that will be achieved is failure -- what a terrible legacy that would be. There is tremendous diversity of opinion in this room on how to address these issues -- That diversity is both valuable and a challenge.
But, this isn't the first time this committee has been faced with such a challenge.
When people put political agendas aside and are willing to work toward a constructive solution, we ultimately find common ground. I have done my best to work on all environmental legislation applying the principles of cooperation, partnership, and bipartisanship.
It is my hope, Mr. Chairman, that we will continue to work together and find a good solution.