Each week, we’re compiling the most relevant news stories from diverse sources online, connecting the latest environmental and energy economics research to global current events, real-time public discourse, and policy decisions. Here are some questions we’re asking and addressing with our research chops this week:
What are the public health risks of Australia’s wildfires?
Australia’s bushfires have had devastating effects: at least 25 people have been killed, more than 12 million acres have burned, and as many as one billion animals have perished. Because these immediate consequences have been unusually severe, many climate activists have heralded this season’s fires as a climate change “wake-up call.” Coupled with other recent natural disasters, like the New Year’s Day floods in Indonesia that killed 60 people, or similarly destructive fires that ravaged the Amazon last year, the long-term risks of extreme weather events are more relevant than ever. And while the destruction of Australia’s wildlife is an especially visible consequence of the fires, unseen damage from smoke poses its own threat, too. Already, millions of Australians have been exposed to unhealthy, smoke-clouded air, and smoke from the fires is drifting as far as South America.
Matthew Wibbenmeyer, an RFF fellow and expert on forest resources and wildfires, stresses the dangerous consequences of wildfire smoke in a recent Resources article. “During these devastating events, news stories typically focus on the tangible destruction caused directly by wildfires,” he writes. “But during these fires and in their aftermath, smoke emissions are responsible for a significant amount of the damages. In fact, recent evidence suggests that perhaps the largest damages from wildfires are due to the health consequences from smoke emissions.” In part because air pollutants found in smoke can do critical long-term damage to human health, it’s no wonder that medical officials have deemed the air quality in Australia to be a “public health emergency.” As Wibbenmeyer’s research suggests, policymakers and forest managers have reason to consider the long-term effects of unmanaged smoke as they develop best practices for preventing and containing future fires.
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Credit: Bart Sadowski/Shutterstock
Are financial institutions prepared for the risks posed by climate change?
Climate change could have massive implications for financial markets—and Federal Reserve officials are taking note. The president of the Federal Reserve Bank of San Francisco has emphasized that “higher sea levels, heavier rainfalls, dryer conditions, and the associated fallout can cause catastrophic losses to property and casualty insurers.” Last week, the head of the bank’s Dallas division echoed that sentiment, arguing that extreme weather is “starting to affect economic outcomes.” These statements, while unlikely to portend any changes in US monetary policy, are significant, given the Federal Reserve’s long-running reluctance to consider climate change. This conversation has gone global among high-level financial officials: the Bank of England’s governor recently argued that many companies’ assets would be worthless in the event of a climate catastrophe. All these comments point to a burgeoning discussion in financial circles related to how financial institutions can establish protocols to mitigate the consequences of climate change.
Robert Litterman, an RFF board member and founding partner at Kepos Capital, discussed these same issues of risk management and climate change on the Resources Radio podcast. Litterman recently began a new role in this emerging field as chair of the Commodity Futures Trading Commission’s Climate-Related Market Risk Subcommittee, which is investigating the potential implications of climate change for financial markets. Emphasizing how imperative it is for the financial community to start rigorously considering climate change, Litterman says that, “as a risk manager, one of the things that I focus on is the fact that we're not pricing the risk. This is the key mistake that we're making.” Listen to the podcast to learn more about how climate change is becoming increasingly salient to investors, risk managers, and policymakers alike.
Related research and commentary:
Credit: Christopher Boswell/Shutterstock
How far should new federal regulations go to reduce nitrogen oxide pollution?
This week, the Environmental Protection Agency (EPA) announced plans to issue a rule that would set stringent limits on nitrogen oxide pollution from highway trucks. Vehicles with “heavy-duty” engines are the largest mobile source of nitrogen oxides, which have been linked to respiratory problems, heart disease, and the formation of dangerous smog. Public health experts noted that the policy shift would improve upon current standards, which have reportedly “contributed to a 40 percent drop in nitrogen dioxide emissions” but have not been updated for nearly two decades. It remains unclear how strict the new rules will be, especially given the administration’s many regulatory rollbacks. Ever since California began considering regulations to cut nitrogen oxide emissions by 90 percent, the trucking industry had been lobbying for new national standards, which would impose new limits on trucks but would also override any especially stringent state restrictions.
As the current administration recommends further changes to more long-standing environmental regulations, RFF is assessing the historical impact of these rules and their potential value today. Just this week, RFF released "Looking Back at Fifty Years of the Clean Air Act," a working paper that finds significant, underreported benefits of the nation’s most far-reaching environmental law. The Clean Air Act (CAA) has long provided an effective legal framework for environmental regulators; the Trump administration’s press release that touts the CTI refers to the government’s obligations under the CAA. Without curbing economic growth, the CAA has improved public health and has led to significant emissions reductions, including a dramatic decrease in nitrogen oxide pollution. RFF’s new retrospective research makes essential contributions by illuminating the significant but often invisible benefits of strict pollution controls.
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