World Ocean Weekly

Climate Insurance in a Changing World

How might we protect against the far-reaching impacts of extreme weather, changing temperatures, sea level rise, and other phenomena that affect everyone, even when no single cause can be identified?

Tulen Travel, Budva Municipality, Montenegro | Unsplash

Insurance. It is an element prevalent in every aspect of our lives – in our homes, our cars, our health – a massive global industry exists to protect us against risk, against accident, against personal circumstance, against almost every manifestation of human endeavor where there is an opportunity to use an insurance scheme to protect us financially against loss.

In some cases, such as car ownership or business liability, insurance is required by law.  There is fire insurance, property and theft insurance, unemployment insurance, mortgage insurance, bankruptcy insurance, crop insurance, flood insurance, marine insurance, and many more such specific coverage types that are financed by premiums paid by individuals and corporations into a collective pool from which claims, as they arise, can be paid. In the meantime, the insurance companies use the aggregated monies for investments, marketing, and dividends to their shareholders. It is a lucrative business, and is often “re-insured,” that is—the  companies claims covered by yet another company that protects for another premium, against corporate loss.

As we consider the threats we face in our changing world, insurance might be a hopeful tool or discipline to protect and compensate for events not covered, but potentially devastating to us all – the impact of which extends beyond that of specific events and massive financial and social disruption.

The effects of climate change are being felt everywhere on earth, and nowhere more destructively as in the most vulnerable communities where development and poverty are at the highest. So what about climate insurance?  How might we protect against the far-reaching impacts of extreme weather, changing temperatures, sea level rise, and other phenomena that affect everyone even when no single cause can be identified, no accountability possible? If these are defined as acts of God then insurance does not apply. But if these are defined as the result of collective actions, by many entities in many places, how is it possible to insure against the predictable economic consequences and critical social detriment?

NASA

The Munich Climate Insurance Initiative (MCII) is a response to the growing realization that insurance-related solutions can play a role in adaptation to climate change, as advocated in the Framework Convention and the Kyoto Protocol. The initiative provides a forum for insurance-related expertise on climate change impacts. The Initiative also brings together insurers, experts on climate change and adaptation, NGOs and researchers intent on finding effective and fair solutions to the risks posed by climate change, as well as sustainable approaches that create incentive structures for risk and poverty reduction. The Munich Initiative is hosted by the United Nations University Institute for Environment and Human Security and issued its first report in October 2016.

As with all insurance policies, the language is complicated, but the report is based on seven principles that represent a clear bias toward the needs of the poor and a real intent to address comprehensive needs-based solutions, reliable coverage, affordability, accessibility and participation through practical programs and associations, transparency and accountability, sustainability over the longer term, and enabling the environment through capacity, literacy, regulation, partnerships, and technology. 

The possible role of insurance represents a positive and optimistic step forward through the adaptation of a conventional tool for risk management to serve those most vulnerable. It is an alternative to the sequential, one-time disaster financing we have seen in the aftermath of tsunami or typhoon or other sudden and new examples of climate-related destructive events. Will insurance find a new and useful form and application? Will it be financed adequately and responsibly to provide the amounts and continuity of funds surely to be required? Will it be supported by other government programs or private financing schemes that will address the root causes of poverty in the context of rapidly changing environmental circumstance? Will it lead us to adapt and mitigate climate change otherwise by new values, systems, and behaviors?

These are big questions; how do insure they are answered?

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PETER NEILL is founder and director of the W2O and is author of The Once and Future Ocean: Notes Toward a New Hydraulic Society. He is also the host of World Ocean Radio upon which this blog is inspired.

 

 

 

Deep Sea Mining Update, part two

 

Last week I wrote about the financial difficulties of the Nautilus deep-sea mining venture off Papua New Guinea, a project that had generated enough local opposition and shareholder doubt that its major financing had been lost and devolved to short-term, high-interest loans from companies controlled by Russian oligarchs. The project, like other similar extraction ventures in the ocean, was proving financially impractical, controversial, and threatened by complication, possible fraud, and collapse. But, as I questioned at the end of that post, what's next?

The next challenge may well be recovery of what are called battery metals: cobalt, nickel, and lithium - the stuff of alternative energy solutions for electrical storage, electric vehicles, and longer, stronger battery life for the myriad devices and processes that will need a constant reliable source to power burgeoning new functionality independent of fossil fuels. Today, demand for available supply and prices for these metals are high, and futures unsure, thus extraction profiteers are drawn to a new opportunity.

In an article published June 5, 2018 by Krypton Ocean, one suggestion for what's next was presented: yes, seabed mining, in particular mining technology that would use "the oceans to recreate seabed minerals to compensate our extraction activity" on land. The article reviews historical mineral assessments and research, zones high in probable deposits, improved extraction feasibility, and market requirements in support of a new "metal-dependent electric-driven economy," and argues for such enterprise in a context of "regeneration," a surprising justification that suggests that these metals are "renewable" as they have accreted over time (thousands of years, it must be said) and can do so again. The paradox of short-term consumption versus long-term "regeneration vision" is astonishing.

The rationale is based on the fact of a vast area of the ocean floor, with hundreds of millions of tons of rare earth metals scattered in the form of sediments, ridges, crusts, nodules, metal-containing mud, and volcano-genic sulphide deposits in trenches and mountains - all available to extract in support of a lifestyle ever-dependent on storage technology and indifferent to environmental consequence. Scale enables localization of damage, the very same argument that has been used to justify extractive damage on land worldwide.

Mitigation is offered in the form of pace and new methods for recovery: schedule, restricted areas, and deep-water vehicles that collect nodules as if harvesting crops. "The strategy should imply a partial extraction of nodules from some spots of a deposit (selected in a checkered manner, for instance) giving benthic creatures an opportunity to repopulate as well as maintaining a natural balance between all components of the environmental media of the developed area." Sludge, affect in the water column, the value of destroyed habitat, mitigation cost, ecosystem loss - all of these are acknowledged but dissolved in strategies of best intention. The argument focuses on the ocean as "a global biochemical laboratory" and then imposes a regime that is geological and mineralogical, not biological or chemical at all.

There is a discussion of governance. The International Seabed Authority exists as possible apparatus for adjudication, but permitting is mostly local, enforcement is as problematic for mining offshore as it is for oil and gas drilling, regulation is subject to varied jurisdictions and limited monitoring, plans for mitigation and redress of eco-damage is left for later, insurance for cleanup and consequence is left unaddressed. Krypton Ocean concludes, "Nothing prevents us from making seabed mining the most eco-friendly extractive activity in history since a well-developed innovative technology of the autonomous seabed harvesters is available. Now all that's left is to put the technology into practice. Who's first?"

Isn't it ironic? The answer to what's next? is, who's first? This is a vicious, revolving circle of old reasoning linked to a new technology adapted to the destruction of the ocean, the last bio-reserve on earth that must thrive to serve us beyond electric-driven dependency to insure the full spectrum of energy for living.

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Part one of this series is available here.

PETER NEILL is founder and director of the W2O and is author of The Once and Future Ocean: Notes Toward a New Hydraulic Society. He is also the host of World Ocean Radio, a weekly podcast addressing ocean issues, upon which this blog is inspired.

Deep Sea Mining Update, part one

 
One of the most disconcerting proposals for exploitation of ocean resources in the deep sea mining — access through extraction technology to material underwater and heretofore beyond the grasp of the world’s mining industry. One part of public opposition to the possibility is the demonstrated outcome on mining on land — the vast pits, the scarified landscape, the decapitated mountain-tops, the residual consequence, corrupted watershed, and chemical deposits that often make such sites designated “wastelands,” sometimes qualifying for clean-up by legislated “super-funds” which may or may not be adequate to the problem, may or may not be even available. It does not take much imagination to visualize such destruction underwater, off-shore where surely additional similar deposits abound.

For me, one the most surprising targets for ocean mining is sand, something one may assume to be ubiquitous on land. Consider beaches for example, as an intervening supply. But one can also understand the prohibitive outcry should large earth moving equipment suddenly one day arrive to scoop up the recreational potential of our coastal beaches.

Far better to find a place far, far away from an inquiring public — Papua New Guinea for example — where mining the sea floor can be undertaken at scale with no important impact of protesting society — the local, poor, dependent villagers of that remote place without significance or power. This is, of course, the strategy of Nautilus Minerals, the sponsors of Solwara 1, a deep ocean mining experiment located at a 1600 meter depth in the Bismarck Sea, approximately 25 km from the coastline of New Ireland Province, 35 km from Duke of York Islands and 60 km from Kokopo township in East New Britain, all within the territorial waters of, you guessed it, Papua New Guinea.

The project has attracted enormous international interest. The principal, Nautilus, a Canadian company, sought numerous investors to include Anglo-American, a global extraction corporation, with successful enterprise in the recovery of diamonds, copper, platinum, coal, iron, manganese, and nickel. Other investors include Metalloinvest Holding, a Russian mining company, and MB Holdings from Oman, providing bridge loans that, according to a recent press report, as of May 15, 2018, amount to $11.25 billion at 8% interest payable bi-annually, one year maturity, plus 48,324,740 share purchase warrants issued as further partial consideration. According to a press account on June 25, 2018, “USM Holdings, the ultimate parent holding company of Metalloinvest Holding, registered in Cyprus, is controlled by Russian billionaires Alisher Usmanov (49%) and Vladimir Skoch (30%). In the April 6, 2018 sanctions imposed by the United States, Vladimir Skoch’s son was one of the seven Russian tycoons sanctioned,…” (learn more about the 7 Russians sanctioned) Also, in the past month, Anglo-American divested its ownership share. Not information conducive to public confidence.

At the outset, the project met, of course, with immediate growing opposition from national and international environmental groups such as Mining Watch Canada, the Mining Justice Alliance, and the Deep Sea Mining Campaign, as well as determined internal New Guinean testimony at hearings and legal actions through the New-Ireland community-based Solwara Warriors. Andy Whitmore of the Deep Sea Mining Campaign stressed, “Anglo’s decision to divest, on top of Nautilus’s myriad problems, proves the company is running out of both credit and credibility. It is not just the company that is sinking, but the project — and the concept of deep sea mining itself — that is going down with it.”

If that is the case, the defeat is both spectacular and welcome.

Let’s ask some questions about this situation:

First, why is such a project necessary at all? Why would government support economic development that is so destructive to other aspects of the local and national economy? Given any meaningful due diligence, how could government permit such risk in partnership with such risky investors? Second, what is the financial rationale for such investment? Serious shareholder value was placed as a long odds bet on hypothetical success? Russian oligarchs may not care, but presumably Canadian investors and financial oversight and government agencies do. The situation is rife with potential for fraud. Third, what will we learn from this fiasco? Will it be similar to Shell Oil’s multi-billion dollar lost in drilling for Arctic oil — just another inconsequential footnote on the great global balance sheet where profit and loss by natural resource exploitation is calculated and accounted for as a meaningless number? Finally, what happens next? Another profound, and unanswered challenge for the sustainable ocean.

W2O first reported on the Papua New Guinea Solwara 1 project back in July of 2017. That episode of World Ocean Radio is available here.

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PETER NEILL is founder and director of the World Ocean Observatory and is author of “The Once and Future Ocean: Notes Toward a New Hydraulic Society.” He is also the host of World Ocean Radio upon which this blog is inspired.

Offset Your Carbon Footprint When You Shop Online


Announcing a new W2O carbon offset initiative in partnership with South Pole and UCapture that supports progressive action toward a carbon-diminished future
 

Remember some years back as we first realized the impact of emissions and carbon consumption on all aspects of our lives? There was a move to create systems to offset personal use associated especially with airline travel. Whatever happened to that initiative? It disappeared essentially as a function of scale — the amount of offsets purchased never amounted to a critical number, and the inefficiency of reaching and tracking individuals further aggravated the problem.

Larger carbon markets took the place in the public mind, exchanges that catered to big companies and big volumes, but they too failed or were compromised by market forces, tax policies, and the lack of any coherent cohesive pressure to reward companies for purchase.

But there is real prospect here.

LEARN MORE about how to offset your carbon footprint

World Ocean Observatory is announcing its engagement with two partner organizations — South Pole, a London-based company that manages large corporate offset purchases and invests funds in projects that are certified legitimate by an extensive list of performance criteria and project evaluation; and UCapture, a New York-based company that has contracted over 4,500 large and small online retailers and travel sites to allocate a percent of every sale toward company offset commitment. As a buyer, your purchase combines the power of every other buyer to guarantee offset purchase at no increased cost to you.

Here’s how it works: you create a user profile and enroll with UCapture; you agree to add an extension to your web browser; then when you visit online retailers you’ll be given the option to offset via your purchase. Your transaction continues with no fee or increase while your purchase generates support for sustainability and offset projects around the world. Our first affiliate project is a reforestation and watershed protection initiative in the Andes of South America, identified and certified by SouthPole.

What do the retailers get? Each seller commits to an offset strategy using this system, allocating the percentage of each sale to a collective fund that then purchases large offset volume at a scale that matters — both to the retailers and to the success of offsets as a strategy designed to meet the challenge of climate impacts and environmental consequences. Additionally, retailers can incorporate the collective value into its accounting AND advertise that as making a substantive contribution to climate mitigation.

This is not a perfect solution. It does not address the point-source problem of carbon consumption that requires yet unrealized commitments from the fossil fuel industry and all its correlative dependents. It does reduce their consumption level in part, enables their participation in a system previously ignored, provides a means by which customers can make an effective contribution toward conservation, and enables a scale of transaction large enough to work for everyone involved.

It may be easy to dismiss this idea as regressive or irrelevant. But it is a system that revives and enables the social response, rewards the small organizations worldwide on whom we must rely to counter consequences in the field, and builds a system of financial rewards that supports responsible conservation and sustainable practices. In some part, everyone wins something: the corporations are engaged, the public is encouraged, the organizations are identified and supported to far greater extent, local workers are employed and their communities financially enhanced, and the collective response of individuals and companies by the thousands begins to support some serious progressive action toward a carbon-diminished future.

Full disclosure: any participant in the program that enters through a World Ocean Observatory introduction generates an increment of the offset value on our behalf. We offer all of our educational services at no cost, and we too must seek financial support — from foundations and individuals dedicated to the future of the sustainable ocean. This carbon offset initiative uses the power of good to make good better. If you want to learn more or to sign up, visit the carbon offset link on our homepage: world ocean observatory dot org. In just one step you will be enrolled and contributing through everything you purchase online. I did it: a bought a new jacket and airline tickets last week. It went well, felt right, and suggested a new way that each of us can make a difference through everyday action in support of the future of the sustainable ocean. Why not give it a try?”

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PETER NEILL is founder and director of the World Ocean Observatory and is author of “The Once and Future Ocean: Notes Toward a New Hydraulic Society.” He is also the host of World Ocean Radio, a weekly podcast addressing ocean issues, upon which this blog is inspired.

HOW IT WORKS
UCapture funds verified carbon offsets projects such as our featured project, a reforestation and watershed protection initiative in the Andes, at no cost to you when you shop with more than 4,000 online affiliates. UCapture’s partner websites donate a portion of your spending to support carbon offset initiatives, at no extra cost to consumers. UCapture dedicates a portion of the funds it receives to World Ocean Observatory, for our help in growing their green-tech platform.

This simple initiative will instantly make your consumer activity more environmentally friendly while helping to support the long-term objectives of our ocean clean-up sustainability initiatives.

WHY JOIN UCAPTURE?
• Become a more sustainable consumer
• Reduce the environmental impact of your purchases
• Support W2O ocean clean-up sustainability programs
• Support Watershed Protection in the Andes
 (read more about our featured carbon offset project)

If you’re already shopping online, for clothing, travel, electronics or anything else, why not offset some carbon too? It’s fun, it’s easy, and it’s free!

HOW DO I GET STARTED?
• Create a free account here: www.ucapture.com/W2O
• Install the UCapture Extension on your Chrome browser
• Shop with any of 4,000+ partners (the Extension will activate automatically: it’s super simple)

Arctic Futures: Fresh Conversations and New Ideas


arcticfuturesinstitute.org

Recently, the World Ocean Observatory, in partnership with the University of Maine Law School and the University of Maine Climate Change Institute, created a new collaborative entity — the Arctic Futures Institute — to integrate policy and law, science and research, and communications and public engagement into a program focused on the emerging interrelationship between the northeastern United States and the eastern Arctic, particularly Greenland. The idea was to move beyond the conventional approaches to Arctic development, policy, and governance and to create a process that combined exclusive perspectives into the development of fresh ideas and specific outcomes to advance all Arctic interests in the region.

The situation has emerged from three existing, accelerating events: 1) the impact of rapidly changing ice and access conditions in the Arctic resulting from climate change; 2) the resultant intensity of traditional private and national interests in the exploitation of Arctic resources; and 3) the evermore obvious implication of this change on the interests of Arctic inhabitants, especially indigenous peoples.

If you have attended the meetings of the direct and indirect Arctic parties, you will have noticed a two-tiered conversation. First, there is the high-minded aspirational agenda that speaks to cooperative and consensus agreement, acknowledgement of the precautionary principle — do no irreparable harm — and commitment to conservation values, transparent discussions and negotiations, inclusive participation, and the assertion of native/indigenous rights as co-equal in the discussion.

What disturbs me at these meetings is a second tier, not necessarily part of the dialogue, an enduring whisper that suggests that the old agenda of nationalist interest and resource exploitation is alive and well, that in the end those conventional claims will assert themselves, especially as the ice melts and access becomes much more possible and practical, and that the perceived value of suddenly available, voluminous oil and gas, fisheries, minerals, and tourism increases exponentially, and the high-minded principles and declarations melt away as fast as the ice.

Is this just a cynic’s point of view? Well, maybe not. If you examine the various preemptive claims and declarations of the Russian government over the past few years, and if you look at the looming availability of Chinese capital as a force for development and influence, you might easily perceive a return to the destructive ways that have brought our own environments and economies to crisis in the name of short-term profit. If this analysis is even partially true, then the need for alternative ideas and conversation is that much greater as a means to counter or substitute positive alternative action against this force.

The Arctic Futures Institute mission is to advance that conversation. Last week, we convened a five-day Summer Workshop in Portland, Maine, to bring together law students, climate scientists, interested individuals, and experts on policy, the Law of the Sea, and the capacity to model future climate conditions and consequences through innovative analysis of existing historical data.

In addition to these presentations, we engaged in a process of investigation from a definition of goals, trends and factors to application of predictions and innovations, with teams comprising disciplines and interests addressing the process in the context of specific challenging issues. It was an intense and constructive exercise and gave proof of the concept that a small, concentrated, interdisciplinary group of thinkers, representing all constituencies, can create a liberating exploration of “plausible scenarios” in search of an inventive, viable, alternative future.

The New North does not have to be an iteration of the old northern behaviors. The New North can be more than a theoretical conversation if we can free ourselves to an open forum and place an outcome into the hands of those for whom it matters most. The next step for the Arctic Futures Institute is to facilitate further this beginning in 2019, to meet in unexpected places, to imagine unexpected ideas, and to suggest unexpected outcomes. In the Epilogue of his wonderful book, Arctic Dreams, Barry Lopez writes:

“The continuous work of the imagination, I thought, to bring what is actual together with what is dreamed is an expression of human evolution… Whatever world that is, it lies far ahead. But its outline, its adumbration, is clear in the landscape, and upon this one can actually hope we will find our way.”

PETER NEILL is founder and director of the W2O and is author of “The Once and Future Ocean: Notes Toward a New Hydraulic Society.” He is also the host of World Ocean Radio upon which this blog is inspired.

LEARN MORE
< Arctic Futures Institute
< Climate Change Institute
< Maine School of Law
< Law of the Sea
< Arctic Summer Institute 2018 Program
< World Ocean Radio