Tag: Extreme Weather

Navigating the Storm: How Climate Change Influences Mortgage Defaults in Florida

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Flooding caused by Hurricane Florence. Public domain image by the National Guard of the United States.
Flooding caused by Hurricane Florence. Public domain image by the National Guard of the United States.

In an era where climate change is increasingly influencing financial stability, a new study sheds light on how extreme weather events like heavy rains and tropical cyclones affect mortgage defaults and prepayments. This topic, first brought into focus by Mark Carney, former Governor of the Bank of England, has been a growing concern among financial regulators worldwide.

Weather Extremes and Mortgage Risks

The study, conducted in Florida, involved analyzing a massive dataset of 69,046 loans, amounting to over 3.7 million loan-month observations. Florida, known for its vulnerability to hurricanes and floods, serves as an ideal case for this study. The researchers used an innovative Cox proportional hazard model, incorporating spatiotemporal characteristics and weather variables, to examine the influence of weather extremes on mortgage risks.

Key Findings

  • Impact of Tropical Cyclones: The study reveals a significant, non-linear relationship between the intensity of tropical cyclones and mortgage defaults. The risk of default escalates notably with the increase in hurricane categories, especially moving from category two to three.
  • Heavy Rains and Flood Risks: Heavy rainfall in flood-prone areas also shows a substantial impact on default risks. Interestingly, such conditions discourage prepayment of mortgages, as borrowers may prefer to retain the option to default if insurance fails to cover disaster damages.
  • Climate Change Projections: By employing the First Street flood model projections for 2050, the study anticipates a systematic increase in mortgage risks due to climate change. This increase varies based on different scenarios of extreme weather events.

The findings of this study underscore the importance of integrating climate-related risks into mortgage risk assessment. As the world grapples with the impacts of climate change, this research provides valuable insights for risk managers and financial institutions to better prepare for and mitigate these emerging risks. The study not only confirms previous beliefs about the impact of weather extremes on mortgages but also offers precise quantification of these effects, emphasizing the need for climate-adjusted credit risk assessment in the face of changing environmental conditions.

Exploring Key Historical Climate Change Milestones

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With Davos starting up next week and COP28 wrapping up last month, we were curious to learn about significant climate change milestones, how our planet’s climate has evolved, and the lessons we can learn from this data.

Onset of Industrialization and its Impact

The Industrial Revolution marked a significant shift in climate change history. During the late 18th century, the widespread adoption of fossil fuels led to a notable increase in carbon dioxide (CO2) emissions, a key contributor to global warming. This period laid the foundation for the anthropogenic effects on climate that we witness today.

Discovery of the Greenhouse Effect

In the 19th century, scientists like John Tyndall and Svante Arrhenius began to unravel the role of greenhouse gases in regulating Earth’s temperature. This early research was pivotal in understanding how human activities could influence the climate through the emission of gases like CO2 and methane.

The Keeling Curve: A Turning Point

The Keeling Curve, a scientific project started by Charles David Keeling in 1958, provided the first clear evidence of rapidly increasing CO2 levels in the Earth’s atmosphere. It is a daily record of global atmospheric carbon dioxide concentration maintained by Scripps Institution of Oceanography at UC San Diego.

Intergovernmental Panel on Climate Change (IPCC)

Established in 1988 by the World Meteorological Organization (WMO) and the United Nations Environment Programme (UNEP), the IPCC plays a crucial role in assessing the science related to climate change. The panel provides scientific reports, key resources for governments and policymakers worldwide to help them understand climate change’s impacts and potential future risks, as well as strategies for adaptation and mitigation.

The inception of UN Climate Conferences (COP)

A landmark event in the history of global climate change initiatives was the inception of the United Nations Climate Change Conferences, commonly known as the Conference of the Parties (COP). The first COP meeting took place in 1995 in Berlin, Germany. The conference was convened in response to growing international concern over the alarming evidence of climate change and its potentially catastrophic impacts on the environment and human societies. The objective of these conferences was to review the implementation of the United Nations Framework Convention on Climate Change (UNFCCC), a treaty signed in 1992 by 154 nations at the Earth Summit in Rio de Janeiro. It aimed to combat dangerous human interference with the climate system. COP meetings have since become a central forum for nations to negotiate and assess progress in dealing with climate change.

World Economic Forum’s Engagement with Climate Change

The World Economic Forum (WEF) has played a pivotal role in bringing climate change to the forefront of global economic discussions. Initially focused on economic and business issues since its inception in 1971, the WEF began integrating environmental concerns, including climate change, into its agenda in the early 2000s. This integration marked a significant shift, recognizing the interdependence of economic development and environmental sustainability. The annual WEF meetings in Davos have since evolved to include a focus on climate change, sustainability, and green economic policies, bringing together leaders from various sectors to discuss and develop strategies to address these issues.

Global Climate Agreements and Policies

In response to growing evidence of climate change, international treaties like the Kyoto Protocol (1997) and the Paris Agreement (2015) were established. These agreements represent significant global efforts to reduce greenhouse gas emissions and mitigate climate change effects.

Grassroots Movements and Public Awareness

The rise of grassroots movements in the 21st century has been pivotal in driving public awareness and action on climate change. Notable examples include the “Fridays for Future” movement, inspired by activist Greta Thunberg, which mobilized millions of young people globally to demand climate action. These movements have been instrumental in pushing for urgent policy changes and raising awareness about the climate crisis at the community and global levels.

The Role of the Private Sector and Green Technology

The private sector’s shift towards sustainability and green technology represents a significant movement in addressing climate change. Companies around the world are increasingly adopting sustainable practices, investing in renewable energy, and innovating in green technology. This shift is not only a response to regulatory demands and environmental concerns but also a recognition of the economic opportunities in a low-carbon future.

Recent Trends and Extreme Weather Events

Last year, 2023, was confirmed to be warmest years on record, as confirmed by NASA and NOAA. Alongside rising temperatures, an increase in extreme weather events – such as hurricanes, droughts, and wildfires – has been observed, further indicating a changing climate.

2030 Agenda for Sustainable Development

Adopted by all United Nations Member States in 2015, the 2030 Agenda for Sustainable Development provides a shared blueprint for peace and prosperity for people and the planet. It includes 17 Sustainable Development Goals (SDGs), including climate action (Goal 13), afforable and clean energy (Goal 7), and responsible consumption and production (Goal 12). This agenda highlights the interconnected nature of social, economic, and environmental sustainability.

Historical climate change data is a window into the Earth’s climatic past and a guide for our future actions. It underscores the urgent need for informed policy decisions and collective action in addressing the challenges posed by climate change. Understanding and learning from our climate history remain an urgent priority in our journey towards a sustainable future.

Millions March Around the World to Demand End to Fossil Fuels

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Map showing global marches between On September 15-17, 2023 demanding an immediate, equitable end to fossil fuelsOn September 15-17, millions marched around the world demanding an immediate, equitable end to fossil fuels.

On September 15-17, millions marched around the world demanding an immediate, equitable end to fossil fuels. This global movement peaked with the March to #EndFossilFuels in New York City on September 17, which preludes the first United Nations Climate Ambition Summit on September 20. U.N. Secretary-General António Guterres pressed global leaders to commit to phasing out fossil fuels.

The backdrop for these mobilizations is the intensifying climate crisis, evidenced by recent extreme heatwaves, floods, and severe weather events. As the climate threat grows, so does the worldwide movement for climate justice. These initiatives oppose the fossil fuel industry and its proponents, calling for swift transitions to greener alternatives. They called for a just transition to a renewable energy future that generates millions of jobs while supporting workers’ and community rights, job security, and employment equity.

Over 20,000 demonstrators took to the streets in Manhattan, including a 50-member delegation from New Mexico comprising Indigenous, environmental, youth, and frontline advocates. New Mexico, the second-largest oil producer in the U.S., has witnessed the country’s most significant oil production growth in the past three years. Bernal, Pueblo Action Alliance’s executive director, highlighted the collaboration of New Mexican grassroots movements with global initiatives. Their shared objective is to spotlight the financial exploitation and commodification of natural and cultural assets, demanding that leaders pursue genuine climate action, void of the damaging extraction that has marred their ancestral lands for centuries.

New Mexican representatives also presented a grassroots climate justice declaration to global, national, and state leaders. Supported by over 20 Indigenous and environmental entities, it lists imperative actions that are needed now to ensure a sustainable future. The demands encompass an end to new fossil fuel initiatives, immediate fossil fuel phase-outs, rejecting unproven solutions, emphasizing Indigenous ecological wisdom, and declaring a climate emergency to facilitate a fair transition.

Fridays for Future NYC, a youth-led climate activist group, mobilized high school students for the event. Despite juggling school, SATs, and college applications, these young activists dedicated their summer to organizing, recruiting hub captains from various schools, and expanding youth turnout. Even with the vast coalition for the march, Fridays for Future NYC focused on its community-based approach, ensuring young voices were heard.

The NYC March was supported by 500 organizations, including the NAACP, Sierra Club, the Sunrise Movement, the Center for Biological Diversity, Center for Popular Democracy, Climate Organizing Hub, Food & Water Watch, Fridays For Future USA & NYC, Earthworks, Greenfaith, Indigenous Environmental Network, New York Communities for Change, Oil Change International, and Oil & Gas Action Network.

The climate crisis is urgent, and we cannot afford to wait any longer. We must take action now to end fossil fuels and build a just and sustainable future. Join the movement for climate justice, and let your voice be heard.