My article about Climate Stability Bonds in Wellington’s newspaper prompted one correspondent to suspect that my sole intention is to sink the Kyoto agreement. What is disappointing is that climate change and how we should respond have become so politicised that everybody is suspected of having a hidden agenda. So let me be clear: my intention is not solely to sink Kyoto. It’s to get something going that will most effectively deal with the concerns of the many scientists who think climate change is happening at an alarming rate and those who either don’t think climate change is happening or who believe that we can’t do anything about it if it is happening.
With such a vast range of views, and so much at stake, it’s no wonder climate change has polarised opinion. But, as my article suggests, climate change is one potential catastrophe that should not be delegated to the usual suspects. Unfortunately Kyoto and the reaction to it are typical of what happens when policy is subordinated to the agendas of existing institutions and governments. We get an effort that manages to be wildly expensive and ineffectual and so unpopular that it alienates vast sections of the public from its premises, let alone its supposed solution.
Climate Stability Bonds might not be perfect, but I think they are far better than Kyoto in achieving what we actually want to achieve: a stable climate. Climate Stability Bonds would not bear interest: they would be issued by a consortium of interested bodies for whatever price they would fetch when auctioned. They would be redeemable for a fixed sum only when the climate had stabilised. Stability could be defined in terms of an index of measures of the climate, its variability, and the effects of the climate on human, animal and plant life. If world opinion thinks climate change is not happening, the issuers would receive a high price for the bonds when they are floated. If the bonds fetch a low price, bondholders would gain a lot by doing whatever they can to bring about the issuers’ targeted goal of climate stability. They could sell their bonds at any time, to those who think they can do better at further stabilising the climate and who could therefore bid more for the bonds. Bondholders have direct incentives to achieve the climate stability goal.
Climate Stability Bonds would reward those who help achieve a stable climate, however they go about it. The issuers would set the goal, the market for the bonds would allocate society’s scarce resources not in proportion to bondholders’ efforts, but to their success in achieving that goal.
Click here to read a published article which goes into more detail about Climate Stability Bonds. Details of how to order my book on Climate Stability Bonds can be found here.