Thirteenth International Conference on Climate Change: Impacts & Responses

Abstract

In this paper I examine the question of adaptation to climate change in relation to some of the key dilemmas associated with global financial markets. I argue that the question of climate change adaptation is both deeply shaped by the ways in which risk is managed in global financial markets and, in turn, an increasingly important factor in how those very markets operate. I suggest that global financial markets are conditioned by a tension–on one hand, key global financial markets, and insurers in particular, are increasingly sensitive to the long-run financial risks associated with climate change and ‘stranded assets’ whose value will disappear in the context of climate pressure or policy responses. On the other hand, many key financial agents continue to make short-term speculative gains on investments with immense climate risks. This suggests that there is immense financial risk, but also lingering financial value, in how financial institutions calculate and capitalize on climate risk. Using emerging debates within the insurance sector relating to the risk of stranded assets as a key empirical case, I argue in this paper that this fundamental tension regarding the financialization of climate change risk can only be resolved if ‘adaptation’ encompasses local measures aimed at ‘de-financialization’; measures designed to address risk in ways outside of and beyond financial modes of calculation.