- Investigates the causes of economic imbalances.
- Investigates the effect of the global financial system and/or the monetary system in fostering a sustainable economy.
- Investigates causes tending to destroy or impair the free-market system.
- Explores and develops market-based solutions.
The Genuine Progress Project, a project of the Institute for Policy Studies, was working to shift the economic system’s defining ethos from externalizing costs to embracing responsibility. Due to a changing political landscape, we are redirecting our efforts to develop Climate Risk Bonds, an innovative financing mechanism for natural disaster response and adaptation investments.
Over the past year, we had begun to work with Maryland and Oregon in popularizing and operationalizing the "Genuine Progress Indicator" (GPI). Due to a changing political landscape in both Oregon and Maryland, we determined it was best to put the Genuine Progress Project work on hold and pursue other objectives until a better opening appeared on the horizon.
In the fall of 2014, after John Talberth and Daphne Wysham jointly prepared and submitted a report to the Cook Inlet-Keeper, outlining a concept we called “climate risk bonds,” a report funded by the Walker Foundation and The Cook Inletkeeper. We determined it would be best to shift our focus to following up on the concepts we outlined in that report. Consequently, we have asked the Foundation for approval to redirect funds to further develop climate risk bonds.
We have begun working with a team of law students and legal volunteers in researching state and local bonding programs, the authorities behind them, and what can be built off of these authorities. Once we have determined legal options in moving forward, we hope to test the concept out in various communities across the U.S.
Lord Richard Stern has called climate change the largest market failure the world has ever known. The fossil fuel industru continues to enjoy record profits while the rest of us are paying the price, in the form of higher insurance premiums, higher taxes, or other hidden costs.
Although surveys indicate the public places a low priority on addressing climate change, the insurance industry has been hit by increasing climate-related costs reflected in rising premiums charged to rate payers.
The concept of climate risk bonds is simple, and extends earlier work on assurance bonds for environmental damages in general. But the mechanics of operationalizing them will take much more research to refine. But here are the basics: Before issuing new permits to authorize extraction of oil, gas, or coal, relevant federal, state or local governments would require companies to post a climate risk bond to help offset economic damages expected from climate change disasters and to help fund adaptation measures such as moving infrastructure out of floodplains. The bond amount could be based on the social cost of carbon dioxide multiplied by the tons of carbon dioxide expected to be released over the lifetime of a coal mine, gas or oil well inclusive of emission and methane leakage during production and transport. Or it could be based on the amount of money governments need to have in reserve to deal with the expected costs of climate change as they unfold over the next several decades. As climate related disasters occur, or if communities decide they need to implement adaptation measures to protect themselves, claims against these bonds would be made either directly or through an entity with appropriate expertise and capacity.
Our proposal is currently focused on several regions in the U.S. where communities are either a) challenging fossil fuel infrastructure development or b) challenging fossil fuel extraction. Climate scientists have warned that climate impacts will become more widespread as reflected, for example, in the damages from Superstorm Sandy, and in Florida from rising sea level and dying reefs. We believe that climate bonds have the potential to internalize costs through the marketplace and fund climate adaptation throughout the United States.
We will get our findings out through various strong existing media relationships we already have, including good contacts with print reporters, TV and radio, and columns in the Huffington Post, among others.
Project Link www.seen.org
(Check sent: 7/10/2014)