It falls from the box: to hit the target, the first thing is to center the shot well. It may sound like a platitude statement, but when we talk about environmental policy, managing well-defined analyzes can make the difference between proper use of resources or wasting them badly. There are huge investments at stake. And, what is really important, act in time and effectively to mitigate one of the great challenges we face in the medium term: the effects of climate change.
Critics arise in the scientific community that question the relevance of at least part of the models used by institutions to combat climate change. Andy Pitman, director of the Australian Research Council’s Center of Excellence for Climate Extremes, has just hit the nail on the head by stating that studies run by regulatory authorities and central banks could not be as good as they think. At least for the purposes for which they are used.
Pitman does not so much question the validity of analyzes in general, as the use we are giving them and the benefit we intend to get out of them. In an article published in Environmental Research Climatethe Australian expert points out the “inherent problems” when using global climate scenarios to explore risks at other scales, such as the local one.
Objective: center the shot well
“Here we focus on demonstrating the problems inherent in applying ‘top-down’ global climate scenarios to explore financial risks at geographic scales relevant to financial institutions (for example, at the city scale),” the report states.
“The average global temperature provides little information about how the risks that are likely to be important for the financial sector at the city level will change,” says the study, which ends up recommending the review of approaches that move from global to local scenarios.
His main caveat is that we could be using valid models to estimate how the average climate will change over the decades, but useless when it comes to detecting localized extreme risks, which, in turn, would lead to poor estimates.
“Without question, we are overestimating the cost of climate change in some areas and grossly underestimating it in others. Need take this matter seriouslynot just access the information that circulates and think that we can package it to make adequate economic evaluations”, explains Pitman to Guardian. The risk, it abounds, is to end up allocating huge sums of money and efforts to confront badly focused climate threats.
“If you are going to invest billions or trillions of dollars, you have to make sure that you have the right scientific advice on how to interpret climate information,” emphasizes the expert: “I think it is obvious, but the regulators do not They are doing”.
Pitman’s analysis focuses on models such as those used by the Network for Greening the Financial System (NGFS), in turn in charge of advising a hundred central banks and different regulators, global studies that only handle 100×100 km regions.
In its 2022-2023 corporate plan, the APRA (Australian Prudential Regulation Authority) itself identifies managing a “weak or poorly designed” framework as a “key risk”.
Cover image Misbahul Aulia (Unsplash)