Senator Bob Smith
Environment & Public Works Committee
Climate Change
Hearing March 13, 2002
Good Morning. Today we are here to talk about the economic and
environmental risks associated with climate change.
I want to welcome all of our witnesses, and a special welcome to Adam
Markham who has come down from New Hampshire. Mr. Markham will be discussing a
recent report coordinated by the University of New Hampshire that describes
much of the potential environmental and economic impact of climate change in
New England--impact on industries such as skiing and sugar maple.
This study underscores concerns I have shared with members of this
committee. Small, family-owned businesses are at risk. These are just a few of
risks that New Hampshire would face --associated with the potential change in
climate.
There are many more aspects to the question of risks posed by climate
change than we could list today. When we talk about risk, I think it is worth
looking to those whose entire business is based on putting a price on risk --
translating environmental risk into economic terms -- the insurance industry.
Insurance companies are motivated to seek the clearest risk information
available on subject of climate change.
This motivation is not clouded by politics or agendas, but focused
squarely on the bottom line where accuracy is not a luxury. It is a necessity.
If they do not estimate risks accurately, they will soon go bankrupt.
I would like reference a document that can be found on the web site of
one of largest reinsurance companies in the world -- Swiss Re. I would ask
unanimous consent that this document be part of the record. The document bears
the title “Climate Research Does Not
Remove the Uncertainty: Coping With The Risks of Climate Change.” The
title pretty well sums up our hearing topic today.
The primary point of this paper is that climate change is happening and
it poses financial risks. We still are unclear on how much of that change is
natural and how much is human-induced. But for the insurance industry and their
customers, CAUSES are of secondary importance in the face of weather-related
losses.
As we examine the risk question, and as we consider the entirety of the
climate change debate, we should focus more attention on economic risk posed by
any climate change -- natural or human induced. The study points out that our “vulnerability
to extreme weather conditions is increasing.” This is because in a global
economy, local weather can have international consequences.
An example Swiss Re points to is the flooding of a Far East computer
chip factory, causing supply bottlenecks for the entire technology sector.
The paper points out that climate change is not needed for that example
to occur. But, evidence shows that human interference in the climate system
exacerbates the problem already caused by natural climate change. The
difference between natural variation in the climate, and natural variation
coupled with human influences may be small. We don't know yet -- the scientists
will continue to try to answer that question.
There are small differences between forces that can cause either
negligible damage or catastrophic loss. These are the intelligent thoughts of
experienced businessmen and women - people not driven by any political agenda.
Their jobs are to ACCURATELY assess the economic risks posed by climate
conditions - and they provide an excellent perspective for us to consider. I
would like to share one last quote from the paper,
“The climate problem cannot be ignored, nor will it be solved merely by
calls for optimum climate protection. We need to find ways of implementing the
necessary climate protection measures in a manner which is both socially and
economically acceptable.”
I believe that is reasonable counsel and even though I doubt the
authors ever intended it for this committee, I would urge that we heed their
advice.
Given the potential risks, we must begin to
explore reasonable ways of mitigating the potential economic damages -
regardless of the causes of the climate change. I have strongly advocated a system
based on incentives for innovative measures to reduce greenhouse gases.
I believe that capitalizing on innovation and
the free market will meet whatever challenges are presented -- we should think “out
of the box.”
I don't believe that it is necessary to
regulate -- through command-and-control -- carbon at power plants to cut
atmospheric levels of greenhouse gases.
We don't have to create economic damage as means to avoid economic and
environmental risks. There are other ways.
And we shouldn't be in the business of
choosing winners and losers.
Regardless of whatever the policy answer is - one thing is for certain:
absent a bipartisan approach, we will achieve nothing. We cannot allow politics
to trump reason and success.
Fortunately, this committee has a long tradition of bipartisanship. I
can assure you this -- if a partisan approach is followed on this Committee
with this, or any other issue, the only thing that will be achieved is failure
-- what a terrible legacy that would be.
There is tremendous diversity of opinion in this room on how to address
these issues -- That diversity is both valuable and a challenge.
But, this isn't the first time this committee has been faced with such
a challenge.
When people put
political agendas aside and are willing to work toward a constructive solution,
we ultimately find common ground. I have done my best to work on all
environmental legislation applying the principles of cooperation, partnership,
and bipartisanship.
It is my hope, Mr. Chairman, that we will continue
to work together and find a good solution.
Thank you.