When Corporate Interests Conflict on Global Warming

One of the first things attorneys learn about cross-examination is to look for the witness’s motives. Its not that most people are outright liars — though too many are — its that people are often unaware how much their own biases and self interest color their views. In the marketplace of ideas (including litigation), the goal is for the best, most logical ideas to win out.

That’s why its so interesting when in the corporate world, a debate breaks out over a scientific concept. The motivations of all parties are to preserve their business model, income stream and profitibility. However, out of this debate, we may potentially develop resolution on a disputed theory or notion.

For quite some time now, the debate over Global Warming has primarily been asymmetrical: The bulk of scientists on one side, versus Carbon producers (Oil companies, Auto manufacturers, Energy producers) on the other.

Which leads us to today’s issue:
Which corporate interest might be on the other side of the debate from the Global Warming deniers ? That question is indirectly explored in the Sunday Times: The Real Riddle of Changing Weather: How Safe Is My Home?

Here’s an excerpt:

"The bigger threat to property is the possibility of more frequent and increasingly vicious storms that could propel already encroaching waters onto the shore, could dump larger amounts of precipitation, and could lash glassy skyscrapers and crumbling tenements.

And even before that happens, real estate values in low-lying areas could erode as heightened awareness of global warming draws attention not only to long-term exposure to storms but also to near-term damage from severe storms that could happen regardless of any long-term warming trend — like the major hurricane that experts say is overdue in New York City.

One Manhattan real estate agent said the fear was already weighing on some clients’ minds. “After Katrina, they saw how ineffective the U.S. is at holding back water compared to some other places, and it has made some people concerned,” said the agent, Tom Hemann of Brown Harris Stevens, who sells downtown. He said last month’s gloomy report on global warming prompted four former clients who had bought downtown to voice concern about living in low-lying neighborhoods.

Several interest come to mind right away: Properrty owners such as REITs are one; Home builders with substantial land holdings are another. Architects and city planners are also weighing in; Real Estate agencies, too. As previously noted, however, the National Association of Realtors (NAR) has been too busy spinning the housing market. They have yet to look into how this issue might impact its membership.

But the biggest potential corporate interest is without a doubt, the Insurance companies:

"Among insurers, all of whom factor climate change into their risk assessments, some like Allstate are already refusing to renew homeowners’ policies in the eight downstate counties (including metropolitan New York) most vulnerable to hurricanes and other major storms that could proliferate in a warming climate. (Allstate continues to insure individual co-op and condo units.)

“When you have trillion-dollar exposure, it doesn’t take much bad weather to cause extensive damage,” said L. James Valverde Jr., the vice president for economics and risk management at the Insurance Information Institute, a trade group based in Manhattan. “That’s really on the mind of the industry. When you’ve got this kind of concentration of people and property in a very important sector of the country, the potential for economic and insured loss really is great.”

So far, the debate on Climate Change has been between two very different sets of participants.  However, the debate on Global Warming is now entering a new phase: Corporate versus Coprorate. Should  get interesting, to say the least.

Hurricanelg

Map courtesy of NYTimes

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Source:
The Real Riddle of Changing Weather: How Safe Is My Home?
TERI KARUSH ROGERS
NYT, March 11, 2007
http://www.nytimes.com/2007/03/11/realestate/11cov.html

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