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According to recent Gallup polls, 68 percent of Americans believe global warming is caused by human activities. Over 40 percent of Americans either worry a great deal about global warming or think that it will pose a serious threat in their lifetime.

The speakers on the NOW 2018 panel "The Economic Imperative of Climate Action," are in the business of providing policy, investment, and data-driven solutions for the climate change crisis. But not all of them were first movers in labeling climate change a problem in need of an urgent answer.

Had Jerry Taylor spoken on this panel 10 years ago, when he represented groups like The Cato Institute that resist the idea that climate change is a problem, he would have said that the economic imperative for climate action was minimal and that the consequences of climate change were exaggerated.

But over time, he stopped believing the argument he was paid to represent, and today he works with Republicans in Washington to think through policy solutions for a crisis he once dismissed. He told us that Bob Litterman, a top risk management professional at Goldman Sachs, changed his mind. “[Bob] said that there is a wide range of possible outcomes from climate change, and there very well may be a lot of uncertainty. But uncertainty is a reason to hedge. There are outlier outcomes with very major impacts. And that point eventually reduce my old arguments to rubble.”

Richard Sorkin and his firm, Jupiter Intelligence, which assesses risk related to severe weather and climate change, also believe in the philosophy that even at low probabilities, the potential losses from outlier climate scenarios demand serious attention from investors and businesses. “If you have a major asset that’s currently just outside of a high-risk flood zone, it doesn’t take a lot in terms of rising sea levels or storm intensification, on the margin, for that asset to degrade from low risk to high risk. We’re already seeing that some of these marginal impacts can become relevant in time horizons as short as five to eight years,” Sorkin said.

Sorkin is currently focused on gaining the trust of insurance companies and other prospective clients, some of whom are less convinced than others of the merits of climate risk analysis. Sanjeev Krishnan of S2G Ventures, a multistage food and agriculture venture fund, wrestles with similar issues of trust. “The universe of ‘Big Food’ companies has a lower approval rating than Congress, and consumer preferences are shifting away from large established brands and toward organic and local agriculture. But farmers continue to rely on a system built around traditional nutrient agriculture. That’s what we struggle with. With such fundamental dislocation, how do you build trust in a new system?”

Though they battle daily to win the hearts and minds of people and organizations that are highly resistant to climate change warnings, these panelists remain optimistic.

Krishnan finds promise in the openness of many farmers to new solutions (“Farmers are looking for the toolkits and the pricing signals to mitigate climate change …it’s already started”); Sorkin is confident that climate action increasingly makes good and obvious business sense (“There is a probability distribution of risk here, and smart decision-makers will factor that in”); and Taylor is optimistic that even seemingly radical notions like a carbon tax can happen. He noted that “green energy is so economically competitive that even a reasonably modest carbon tax would do a lot for market decarbonization. Once it becomes clear that we don’t need fossil fuels to run this economy—that’s the tipping point.” 




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