Could we have catastrophic risk insurance?
Mati Roy once suggested, in this shortform, that we could have “nuclear war insurance,” a mutual guarantee to cover losses due to nukes, to deter nations from a first strike; I dismissed the idea because, in this case, it’d not be an effective deterrent (if you have power and reasons enough to nuke someone, insurance costs won’t be among your relevant concerns).
However, I wonder if this could be extrapolated to other C-risks, such as climate change—something insurance and financial markets are already trying to price. Particularly for C-risks that are not equally distributed (eg., climate change will probably be worse for poor tropical countries) and that are subject to great uncertainty…
I mean, of course I don’t expect countries would willingly cover losses in case of something akin to societal collapse, but, given the level of uncertainty, this could still foster more cooperation, as it’d internalize and dillute future costs through all participant countries… on the other hand, ofc, any form insurance implies moral hazard, etc. But even this has a bright side, as it’d provide a legit case for having some kind of governance/supervision /enforcement on the subject… I guess I might be asking: Why don’t we have a “climate Bretton Woods?”
(I guess you could apply the argument for FHI’s Windfall Clause here—it’s just that they’re concerned with benefits and companies, I’m worried about risks and countries)
Even if that’s not workable for climate change, would it work with other risks? E.g., epidemics?
(I think I should have done a better research on this… I guess either I am underestimating moral hazards and the problem of making countries cooperate, or there’s a huge flaw in my reasoning here)
I no longer endorse this comment because, since then, I found out that there’s a lot of research on internalising climate change externalities—and that Weitzman (2012) and others present mitigation as akin to insurance. I still wonder how much of this line of reasoning could extrapolate to other GCR.
It turns out that I changed my mind again. I don’t see why we couldn’t establish pigouvian taxes for (some?) c-risks. For instance, taxing nuclear weapons (or their inputs, such as nuclear fuel) according to some tentative guesstimate of the “social cost of nukes” would provide funding for peace efforts and possibly even be in the best interest of (most of?) current nuclear powers, as it would help slow down nuclear proliferation. This is similar to Barratt et al.’s paper on making gian of function researchers buy insurance.
Could we have catastrophic risk insurance? Mati Roy once suggested, in this shortform, that we could have “nuclear war insurance,” a mutual guarantee to cover losses due to nukes, to deter nations from a first strike; I dismissed the idea because, in this case, it’d not be an effective deterrent (if you have power and reasons enough to nuke someone, insurance costs won’t be among your relevant concerns). However, I wonder if this could be extrapolated to other C-risks, such as climate change—something insurance and financial markets are already trying to price. Particularly for C-risks that are not equally distributed (eg., climate change will probably be worse for poor tropical countries) and that are subject to great uncertainty… I mean, of course I don’t expect countries would willingly cover losses in case of something akin to societal collapse, but, given the level of uncertainty, this could still foster more cooperation, as it’d internalize and dillute future costs through all participant countries… on the other hand, ofc, any form insurance implies moral hazard, etc. But even this has a bright side, as it’d provide a legit case for having some kind of governance/supervision /enforcement on the subject… I guess I might be asking: Why don’t we have a “climate Bretton Woods?” (I guess you could apply the argument for FHI’s Windfall Clause here—it’s just that they’re concerned with benefits and companies, I’m worried about risks and countries) Even if that’s not workable for climate change, would it work with other risks? E.g., epidemics? (I think I should have done a better research on this… I guess either I am underestimating moral hazards and the problem of making countries cooperate, or there’s a huge flaw in my reasoning here)
I no longer endorse this comment because, since then, I found out that there’s a lot of research on internalising climate change externalities—and that Weitzman (2012) and others present mitigation as akin to insurance. I still wonder how much of this line of reasoning could extrapolate to other GCR.
It turns out that I changed my mind again. I don’t see why we couldn’t establish pigouvian taxes for (some?) c-risks. For instance, taxing nuclear weapons (or their inputs, such as nuclear fuel) according to some tentative guesstimate of the “social cost of nukes” would provide funding for peace efforts and possibly even be in the best interest of (most of?) current nuclear powers, as it would help slow down nuclear proliferation. This is similar to Barratt et al.’s paper on making gian of function researchers buy insurance.