Extreme Flooding
Cities across the Midwest are preparing for even more floods, following torrential rains and tornados that have already caused significant damage. Some in the area have noted that such flooding has “become more the rule than the exception,” with rainfall increasing in both quantity and intensity.
With increased flooding comes increased claims to the National Flood Insurance Program—and it seems that extreme events and damage are becoming “even more extreme,” according to RFF’s Roger Cooke, Carolyn Kousky, and colleague Erwann Michel-Kerjan of the Wharton Risk Management and Decision Processes Center. They note that “yearly losses can be hopelessly volatile and, as such, historical averages are not good predictors of future losses” and suggest that “we may need to rethink our risk management strategies.”
Shale Gas Liability
A Texas family was recently awarded $2.9 million in a lawsuit against Aruba Petroleum, in “one of the first successful US lawsuits alleging that toxic air emissions from oil and gas production have sickened people living nearby.” One of Aruba’s arguments in the case was that the family could not prove that the emissions were coming from Aruba wells.
RFF’s Nathan Richardson argues that liability rules should be revised for shale gas development issues to not only protect the public, but to help specify when companies are responsible and “whether they could be sued.” In new research by Richardson and RFF Visiting Scholar Sheila Olmstead of the University of Texas at Austin, the authors write that while most discussions of shale risk mitigation focus on regulatory measures, the existing legal liability system “could be adapted to address many of the potential risks of shale development.”
Climate Crash
In a New York Times op-ed, former Secretary of the Treasury Henry Paulson, Jr. paralleled the current issues with climate change to the 2008 financial market crash: “We’re staring down a climate bubble that poses enormous risks to both our environment and economy. The warning signs are clear and growing more urgent as the risks go unchecked.” (He also discussed this topic at RFF previously.) Paulson is not the only one taking this approach. In a special lecture at RFF earlier this year, Nobel Laureate Robert Engle explained how financial models can be used to evaluate environmental risk, noting: “I think the fact that environmental stocks, on average, are viewed as underperforming stocks is kind of an important observation because that means people are willing to pay more for them . . . they’re hedging this environmental long-run risk.”
