Many years ago, when I met one of my wife’s eccentric uncles for the first time and told him I did stock market research for a living, he replied that I misunderstood what my career was. I wasn’t a professional researcher, I was a professional gambler.
I eventually realized that he was more right than wrong about me at that time, and that he was completely correct when I became a full-time portfolio manager a couple of years later. This means that I look a most situations as bets, usually with four elements: the potential payoff, the chance of success, the amount at risk and how a given wager fits in with other bets I may already hold. A fifth element might be the length of time I’m committed to the bet, but in a world of cheap online trading and highly liquid markets, this is typically not an issue.
As a bet, climate change seems to me to be a no-brainer. To simplify the question, it’s whether burning fossil fuel ends up steadily and irreversibly warming the planet, to the point where lots of economic activity can no longer be carried out where it is now–like coastal cities flooding, crops no longer growing… Avoiding this is the potential payoff, which is likely enormous.
I find the chance of success hard to figure out, so my first approach is to see if there’s a way to make this not matter.
This brings me to the amount at risk–which I regard as the path to neutralizing the success question. Replace fossil fuels, to the extent possible, with renewables. This process is already well underway with solar panels, wind farms and electric cars. Deciding to combat climate change is bad news for Russia, for Saudi Arabia and the rest of OPEC, and for US-based oils (European oils are well under way in transforming themselves into energy (i.e., renewables) companies. In other words, any extra costs to accelerate development are probably small. The bigger issue is the politically powerful energy status quo.
Regarded simply as a bet, I can’t see there’s any percentage in acting on the idea that the climate change is a horrible mistake on the part of the world’s scientific community. That’s except for any oils and autos who think they don’t have the ability to evolve and that their best strategy is to use political clout to obstruct the shift to renewables for as long as possible.