Breaking the tragedy of the horizon – climate change and financial stability - speech by Mark Carney | Bank of England

Breaking the tragedy of the horizon – climate change and financial stability - speech by Mark Carney | Bank of England:

"Since the 1980s the number of registered weather-related loss events has tripled; and
 
Inflation-adjusted insurance losses from these events have increased from an annual average of around $10bn in the 1980s to around $50bn over the past decade. 7
 
The challenges currently posed by climate change pale in significance compared with what might come.  The far-sighted amongst you are anticipating broader global impacts on property, migration and political stability, as well as food and water security. 8
 
So why isn’t more being done to address it?
 
A classic problem in environmental economics is the tragedy of the commons.  The solution to it lies in property rights and supply management.
 
Climate change is the Tragedy of the Horizon.
 
We don’t need an army of actuaries to tell us that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors – imposing a cost on future generations that the current generation has no direct incentive to fix.
 
That means beyond:
 
the business cycle; 9
the political cycle; and
the horizon of technocratic authorities, like central banks, who are bound by their mandates."



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