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Risk
We use risk thinking in everyday life to inform our decisions. If we apply this skill to climate change, can we increase the likelihood of good outcomes?

While we may not realize it, each of us assesses risk every time we make a decision, from small, transient decisions that are unlikely to matter the following day to big, enduring ones that can impact other people, communities, institutions, animals, plants, and whole systems long into the future.

Risk comes from uncertainty about the consequences of a decision and how those consequences might affect something we value, such as our health, well-being, wealth, property, or the environment. Because every decision we make involves a preference and at least some uncertainty, it also has some amount of risk.

Distributions, ranges, and expectations

To say that the future is uncertain is very different from saying it is a complete mystery. In most cases, we have expectations about the consequences of an action. We are nearly certain what will happen for some phenomena, so the range of expected outcomes is narrow. For others, there may be a set of potential outcomes, each of which has a well-defined probability. And for others still, we may have difficulty knowing the range of possible outcomes, let alone their probabilities. We can describe uncertainty about outcomes with distributions.

A phenomenon for which we have limited experience and insight has an unknown distribution. When facing the unknown, we tend to act tentatively and pay close attention to what happens, hoping to identify repeating patterns. As babies, we are intensely curious to discover what will happen when we open a door, tip over a bowl of soup, or splash in a puddle.

Gradually, our experience with a phenomenon informs our expectations. For example, doors, bowls, and puddles respond to our actions in consistent, increasingly familiar ways. We begin to recognize that they follow a stable or stationary distribution. A phenomenon with a stable or stationary distribution exhibits consistent behavior over time.

In a shifting distribution, past experience is valuable because the future will likely have some of the properties of the past, but the ranges and likelihoods will change gradually. Each of us experiences shifts in our bodies as we age. There are small numbers of outliers and exceptions, but most people move through familiar transitions. First, we grow quickly; then we mature in other ways; and then there is a period when our bodies tend to behave consistently before they gradually lose resilience and vitality.

The most challenging phenomena reveal no consistent pattern. In an unstable distribution, experience doesn’t help anticipate the future: We learn over time that we can’t know what will happen. Unstable distributions are usually the result of complexity, as alterations to one part of a connected system are likely to lead to myriad indirect impacts. For example, in the late 19th and early 20th centuries, farmers and forest rangers believed the forest would be healthier and safer if wolves were exterminated from Yellowstone Park. The results were wide-ranging. With no predator, elks multiplied and ate more and more young trees. Without those trees, riverbanks eroded, and beavers could not make new dams. Without beaver dams and shade from trees, rivers warmed, and cold-water fish declined.

While we may not realize it, each of us assesses risk every time we make a decision, from small, transient decisions that are unlikely to matter the following day to big, enduring ones that can impact other people, communities, institutions, animals, plants, and whole systems long into the future.

Risk comes from uncertainty about the consequences of a decision and how those consequences might affect something we value, such as our health, well-being, wealth, property, or the environment. Because every decision we make involves a preference and at least some uncertainty, it also has some amount of risk.

Distributions, ranges, and expectations

To say that the future is uncertain is very different from saying it is a complete mystery. In most cases, we have expectations about the consequences of an action. We are nearly certain what will happen for some phenomena, so the range of expected outcomes is narrow. For others, there may be a set of potential outcomes, each of which has a well-defined probability. And for others still, we may have difficulty knowing the range of possible outcomes, let alone their probabilities. We can describe uncertainty about outcomes with distributions.

A phenomenon for which we have limited experience and insight has an unknown distribution. When facing the unknown, we tend to act tentatively and pay close attention to what happens, hoping to identify repeating patterns. As babies, we are intensely curious to discover what will happen when we open a door, tip over a bowl of soup, or splash in a puddle.

Gradually, our experience with a phenomenon informs our expectations. For example, doors, bowls, and puddles respond to our actions in consistent, increasingly familiar ways. We begin to recognize that they follow a stable or stationary distribution. A phenomenon with a stable or stationary distribution exhibits consistent behavior over time.

In a shifting distribution, past experience is valuable because the future will likely have some of the properties of the past, but the ranges and likelihoods will change gradually. Each of us experiences shifts in our bodies as we age. There are small numbers of outliers and exceptions, but most people move through familiar transitions. First, we grow quickly; then we mature in other ways; and then there is a period when our bodies tend to behave consistently before they gradually lose resilience and vitality.

The most challenging phenomena reveal no consistent pattern. In an unstable distribution, experience doesn’t help anticipate the future: We learn over time that we can’t know what will happen. Unstable distributions are usually the result of complexity, as alterations to one part of a connected system are likely to lead to myriad indirect impacts. For example, in the late 19th and early 20th centuries, farmers and forest rangers believed the forest would be healthier and safer if wolves were exterminated from Yellowstone Park. The results were wide-ranging. With no predator, elks multiplied and ate more and more young trees. Without those trees, riverbanks eroded, and beavers could not make new dams. Without beaver dams and shade from trees, rivers warmed, and cold-water fish declined.

Consequential decisions

There is no assurance that potential outcomes—or their consequences—can be known in advance. For example, imagine an individual who wants to buy their first home. This purchase will be one of the biggest decisions they will make in their life. It is a significant financial investment and will affect many things they value, including physical security, comfort, and relationships with family, friends, and neighbors. They consider many options.

On one end of the spectrum is a simple house on a hillside, built 50 years ago out of sturdy materials. Its location makes it less vulnerable to the higher temperatures and more intense rainfall caused by a warming climate. A buyer can anticipate a narrow, stable distribution of outcomes for the physical structure.

On the other end is a larger, brand-new house situated near a river and built from inexpensive materials. Its newness may be attractive, but it also means there is no evidence of how this house was affected by past weather. Its distribution is thus unknown. People who live nearby share their experiences, however, which informs the homebuyer’s expectations. They learn that neighboring houses flooded for the first time not long ago. The likelihood and potential severity of future flooding is a concern, especially as warmer temperatures make heavy rainfall increasingly likely. The range of potential outcomes for this house thus includes many possibilities, ranging from occasional, minor flooding to having to abandon the property.

Types of risk

The risks this prospective homebuyer faces fall into several types that apply to nearly all decisions we make. Homeowners face at least two financial risks: They may have to spend a lot of money to maintain and repair the home, and other people might find the house less attractive in the future, causing its potential resale value to fall. For most homeowners, the house they live in is their largest single asset. Homebuyers who seek out information to better understand potential outcomes are better prepared, and those who practice conscientious, consistent maintenance reduce the probability of costly repairs. Many risks, however, are beyond any individual’s control.

Every house faces the possibility of an event that severely damages or destroys it. Such a catastrophic risk can be caused by disasters such as violent storms and fires. Society learned to mitigate low-probability catastrophic risk by creating insurance. An insurance contract would not protect the homebuyer from physical risk, namely the risk that they might be hurt or killed or that their house might suffer physical damage. Still, it would compensate them for having to repair or rebuild the house in the event of a catastrophe, thereby reducing their financial risk. Insurance is only available for risks that insurance companies anticipate to be very low, typically a less than 1% chance per year. As violent storms or fires grow more likely or unpredictable, the house’s market value may suffer because living in the house might become more stressful, and insurance companies might stop covering its potential catastrophic risks.

While the homebuyer will be able to control some risks and insure against others, every home they are considering shares physical systems, including water, sewer, electricity, transport, emergency services, and waste disposal with a community. They are also connected to social systems, from the formal (local, regional, and national governments) to the semi-formal (neighborhoods, community groups) to the informal (friends, community, and the local, regional, national, and global economy). These networks are very likely to affect the homebuyer’s well-being—perhaps even more than the house itself. Being a member of society offers tremendous benefits and exposes all of us to systemic risks.

The homebuyer would be wise to investigate and consider the assumptions, preparedness, and maintenance of the systems that support each house: Is the area prone to fires or floods? Is the water supply clean and reliable? Are the sewers adequate and well maintained? Is the electrical grid in good condition? Are these systems likely to become significantly more expensive to maintain as the climate changes? Do neighbors share information and help each other out? Does the local government have plans for dealing with disasters, and do representatives and officials seek input from experts and respond to constituents? Does the local economy depend on a few factors, like a particular industry or specific weather? The homebuyer cannot directly control these risks but can assess them. People can help reduce systemic risks by strengthening the systems around them.

There is always some level of existential risk in life. Could flood, drought, fire, or bad economic luck cause people to move away from the town? Might the country’s government or financial system collapse? Is there a possibility of conflict? Such outcomes would affect all houses in the town and likely cause the systems they rely on to deteriorate.

It is impossible to anticipate the full effects of such events, as even previously stable patterns tend to break in crisis. In the face of existential risk, people tend to stop making long-term plans. If the homebuyer comes to the conclusion that they face a meaningful existential risk, whether local, regional, national, or global, they might make a different choice. Instead of buying a home, they could sign a short-term lease, keep their money safe, and be prepared to move.

Our shared home

Climate stability, which humans enjoyed for nearly 12,000 years, limited our uncertainty to known, stable distributions. In the last few decades, however, people have added so many greenhouse gases to the atmosphere and altered natural systems so severely that the stability on which civilization relies has been broken. The climate is shifting, and we are at risk of making it unstable.

Fortunately, climate science illuminates critical risks and can help us change our expectations. We can start incorporating climate awareness into our decisions. The following pages explain how the earth’s water systems function and how a warming climate affects them—the maps of precipitation show how local distributions are likely to change. You will see that we need to prepare our individual homes, communities, cities, farms, sewer systems, and other institutions for the strains of changing precipitation patterns.

Living well in a changing climate will require more than good science, though. Even small decisions are more consequential in a fragile climate, and big ones can be critical. Bringing risk awareness to our decision-making can help limit suffering and increase the likelihood of good outcomes for us and future generations.

Consequential decisions

There is no assurance that potential outcomes—or their consequences—can be known in advance. For example, imagine an individual who wants to buy their first home. This purchase will be one of the biggest decisions they will make in their life. It is a significant financial investment and will affect many things they value, including physical security, comfort, and relationships with family, friends, and neighbors. They consider many options.

On one end of the spectrum is a simple house on a hillside, built 50 years ago out of sturdy materials. Its location makes it less vulnerable to the higher temperatures and more intense rainfall caused by a warming climate. A buyer can anticipate a narrow, stable distribution of outcomes for the physical structure.

On the other end is a larger, brand-new house situated near a river and built from inexpensive materials. Its newness may be attractive, but it also means there is no evidence of how this house was affected by past weather. Its distribution is thus unknown. People who live nearby share their experiences, however, which informs the homebuyer’s expectations. They learn that neighboring houses flooded for the first time not long ago. The likelihood and potential severity of future flooding is a concern, especially as warmer temperatures make heavy rainfall increasingly likely. The range of potential outcomes for this house thus includes many possibilities, ranging from occasional, minor flooding to having to abandon the property.

Types of risk

The risks this prospective homebuyer faces fall into several types that apply to nearly all decisions we make. Homeowners face at least two financial risks: They may have to spend a lot of money to maintain and repair the home, and other people might find the house less attractive in the future, causing its potential resale value to fall. For most homeowners, the house they live in is their largest single asset. Homebuyers who seek out information to better understand potential outcomes are better prepared, and those who practice conscientious, consistent maintenance reduce the probability of costly repairs. Many risks, however, are beyond any individual’s control.

Every house faces the possibility of an event that severely damages or destroys it. Such a catastrophic risk can be caused by disasters such as violent storms and fires. Society learned to mitigate low-probability catastrophic risk by creating insurance. An insurance contract would not protect the homebuyer from physical risk, namely the risk that they might be hurt or killed or that their house might suffer physical damage. Still, it would compensate them for having to repair or rebuild the house in the event of a catastrophe, thereby reducing their financial risk. Insurance is only available for risks that insurance companies anticipate to be very low, typically a less than 1% chance per year. As violent storms or fires grow more likely or unpredictable, the house’s market value may suffer because living in the house might become more stressful, and insurance companies might stop covering its potential catastrophic risks.

While the homebuyer will be able to control some risks and insure against others, every home they are considering shares physical systems, including water, sewer, electricity, transport, emergency services, and waste disposal with a community. They are also connected to social systems, from the formal (local, regional, and national governments) to the semi-formal (neighborhoods, community groups) to the informal (friends, community, and the local, regional, national, and global economy). These networks are very likely to affect the homebuyer’s well-being—perhaps even more than the house itself. Being a member of society offers tremendous benefits and exposes all of us to systemic risks.

The homebuyer would be wise to investigate and consider the assumptions, preparedness, and maintenance of the systems that support each house: Is the area prone to fires or floods? Is the water supply clean and reliable? Are the sewers adequate and well maintained? Is the electrical grid in good condition? Are these systems likely to become significantly more expensive to maintain as the climate changes? Do neighbors share information and help each other out? Does the local government have plans for dealing with disasters, and do representatives and officials seek input from experts and respond to constituents? Does the local economy depend on a few factors, like a particular industry or specific weather? The homebuyer cannot directly control these risks but can assess them. People can help reduce systemic risks by strengthening the systems around them.

There is always some level of existential risk in life. Could flood, drought, fire, or bad economic luck cause people to move away from the town? Might the country’s government or financial system collapse? Is there a possibility of conflict? Such outcomes would affect all houses in the town and likely cause the systems they rely on to deteriorate.

It is impossible to anticipate the full effects of such events, as even previously stable patterns tend to break in crisis. In the face of existential risk, people tend to stop making long-term plans. If the homebuyer comes to the conclusion that they face a meaningful existential risk, whether local, regional, national, or global, they might make a different choice. Instead of buying a home, they could sign a short-term lease, keep their money safe, and be prepared to move.

Our shared home

Climate stability, which humans enjoyed for nearly 12,000 years, limited our uncertainty to known, stable distributions. In the last few decades, however, people have added so many greenhouse gases to the atmosphere and altered natural systems so severely that the stability on which civilization relies has been broken. The climate is shifting, and we are at risk of making it unstable.

Fortunately, climate science illuminates critical risks and can help us change our expectations. We can start incorporating climate awareness into our decisions. The following pages explain how the earth’s water systems function and how a warming climate affects them—the maps of precipitation show how local distributions are likely to change. You will see that we need to prepare our individual homes, communities, cities, farms, sewer systems, and other institutions for the strains of changing precipitation patterns.

Living well in a changing climate will require more than good science, though. Even small decisions are more consequential in a fragile climate, and big ones can be critical. Bringing risk awareness to our decision-making can help limit suffering and increase the likelihood of good outcomes for us and future generations.