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Climate change and insurance: a growing fustercluck
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Climate change and insurance: a growing fustercluck

A conversation with Kate Gordon of California Forward.

In this episode, I talk with Kate Gordon, CEO of California Forward, about how climate change is breaking the insurance industry. We discuss why insurers are fleeing high-risk states, the limitations of government backstops, and the looming political and financial crisis as communities face hard choices about where people can safely live.

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Text transcript:

David Roberts

Okay, all right. Hello everyone. This is Volts for December 4, 2024, "Climate change and insurance: a growing fustercluck." I'm your host, David Roberts. For years, climate types have been saying that the insurance industry is going to be a leading indicator. Unlike many other industries and institutions, the insurance industry cannot simply pretend that climate change doesn't exist. Its entire business model is to price risk. If it gets risk wrong, it loses money.

And now, as predicted, the industry is sending up warning flares one after another. In climate-stressed states like Florida, Texas, and California, home insurance rates are skyrocketing. In some cases, insurance companies are pulling out of whole states entirely. More and more of the burden of insuring homeowners at risk — an unwieldy mix of low-income communities and wealthy suburbanites — is falling on state budgets.

Kate Gordon
Kate Gordon

Most discussion around this issue has focused on how to solve the immediate problem, i.e., getting insurance for at-risk homeowners. But beyond that looms the larger question of whether people should be living in these areas at all, and if not, who's going to tell them, and who's going to help them move?

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This is all grist for a dozen podcasts, but to get started, I am talking with the great Kate Gordon, a 20-year veteran of the clean energy fight and something of a Zelig within it. She has worked at the Apollo Alliance and the Center for American Progress. She has worked in the administrations of California Governor Gavin Newsom and President Joe Biden. She founded the Risky Business Project, which helps quantify and publicize the financial risks of climate change. She's an advisor, board member, or visiting scholar for too many organizations to list.

And finally, these days, she is the CEO of the progressive nonprofit California Forward. We are going to discuss the drivers of the insurance crisis, who is affected, the policy responses to date, the vexing social problems that are being put off, and what a rational response might look like.

With no further ado, Kate Gordon, welcome to Volts. Thank you so much for coming.

Kate Gordon

Thanks. I like Zelig. I've been called Forrest Gump of climate before, but never Zelig, which I prefer actually.

David Roberts

Zelig is like a high-toned Forrest Gump, you know, more literary. Kate, I feel like we move in the same circles, we live in the same worlds and have for years and years now. But I can't remember the last time we talked. I think it might have been like Waxman-Markey era.

Kate Gordon

I think it was Risky Business, actually, last time I talked to you.

David Roberts

It's all a blur. But anyway, it's so great to catch up. And what a cheery topic for us to reunite on.

Kate Gordon

Yes.

David Roberts

All right, I want to start here with this report that came out recently from this organization, First Street, which is this sort of collection of data people and nerds who are working to sort of quantify these risks. They did a report on insurance. The kind of thrust of the report, if I could sum it up, is yes, premiums are rising, rates are rising, but neither of them are really rising enough. They are not accurately reflecting the spread of climate risk. This is what the First Street report finds: "The unrealized climate corrected valuation gap" — i.e., the amount of risk a lot of homes are under versus their sort of, on paper risk — "represents a growing climate bubble which is just starting to be recognized and quantified." So, you know, a lot of people, I think, look at this problem, they're like, "The problem is that insurance rates are going up," but if you look at it from the other end, in fact, risk is going up much faster than rates. And so this is, you know, as First Street says, creating a bubble. Part of the consequences are that people in these areas are starting to either voluntarily just not have insurance or go bankrupt or go delinquent on their mortgages.

So, maybe let's just start here. Sort of like, what is the fear here? What is the bad story of what could happen?

Kate Gordon

I think it's a great question. And First Street uses a lot of the same underlying climate data that we used at Risky Business, or actually created there. But a lot of people use the same data. It's essentially the same data the IPCC uses. So, it's pretty credible. And what they're seeing is this kind of fundamental issue, which is that the insurance sector, which is really important, it underlies investment in and development of most things in the built environment. It was created for a stable climate. The entire insurance industry was designed for a stable climate with like occasional blips from things that you then insure against.

And of course, what's actually happening now, as we know from the data, is that there is a progressive increase in risk. Because every day you and I are sitting here, we are emitting carbon and that carbon is going into the atmosphere and adding to the concentration and that is changing the ultimate risk of impacts on the system. And so, yeah.

David Roberts

I think I read at some point, and I don't know how widespread this is, but that basically, the models that insurance companies are using to determine risk only look backward, only look at history, which seems crazy.

Kate Gordon

Yes, that was true for a really long time. We saw insurance companies would say, "Oh, this is a hundred-year floodplain" based on backcasting. That's how they would model. That is changing in the last few years. I think there's been a real revolution in insurance modeling. I will say California, where I live, actually doesn't or didn't for a long time allow insurance companies to forward cast accurately.

David Roberts

No kidding.

Kate Gordon

Because there was a proposition that was passed, I can't even remember when.

David Roberts

Oh, yes, Proposition 3. I think I read about —

Kate Gordon

103. Yes, Proposition 103, which said that actually, insurance companies could not use catastrophic risk modeling. So, forward cast modeling in order to set rates.

David Roberts

What, why?

Kate Gordon

I know, I know.

David Roberts

What is, what was the stated rationale for that?

Kate Gordon

Honestly, it was kind of part of what you were just talking about, which is there's been decade after decade of people trying to keep costs down.

David Roberts

Right.

Kate Gordon

Because insurance is a really big cost for people. It's also like the precursor to being able to buy a house in a lot of cases, or to build infrastructure, or to do the thing. And so, there was a really strong feeling that these companies were essentially throwing at all these possible scenarios and raising rates beyond what people could —

David Roberts

Oh, like the companies were doing shenanigans just so they could raise rates?

Kate Gordon

Exactly. That was the concern of the consumer groups. And so, you know, this is California. There's a statewide ballot initiative passed by the people saying, "You can't do that anymore." It's now becoming increasingly obvious for the insurers. The insurers have turned around and said to California, "If we can't price according to actual risk, risk that we now know much better because we're all doing this better modeling, we're just leaving. We're leaving."

David Roberts

I tell you, California voters sure know how to screw yourselves with a proposition.

Kate Gordon

Well, we did just pass a climate resilience bond. So, on the other side of this issue, we are doing some good things. But yeah, I mean, I think it's a good example though of the same thing I just said, which is that everyone has been treating this system as if we have stability in the climate and there's just occasional, you know, storms or events. And the reality is that they are more frequent and severe, and everyone knows that, including the insurance companies. They basically have turned around and said, "Look, we are risk-based people. We need to be able to accurately model the risk." And if the risk is too high, it doesn't make any financial sense for them to be in a market. So now, the big crisis everyone is having is, how do we keep things insured? As you said in your opener, there's a whole bunch of conversation about how to keep things insured and insurance prices affordable. There is still not enough of a conversation about how to lower the risk itself.

David Roberts

What's the kind of like doom scenario here if this just continues playing out and everybody continues being as daffy and ignorant about it as they have been?

Kate Gordon

I mean, the doom scenario is actually sort of a doom scenario in general of incorporating climate risk into everything, which is that you stop investing in things that are high risk and or only very wealthy people can get those things or get insured on those things, or they just don't care because they lose a house and then they have another house. So, the doom scenario is essentially like redlining on steroids through insurance and pulling out of areas or just raising rates so much and, or, and I should say, because this is really important, the other doom scenario is the public sector comes in and tries to backstop this whole thing to the extent where everybody goes bankrupt, like all the cities go bankrupt, which is not actually crazy that that might happen.

David Roberts

This valuation gap, you know, that sort of First Street identifies, is it big enough such that if you corrected it all at once, enough people would default on their mortgages to create like a, like a macroeconomic crisis? Like, are there enough households involved here that you could be looking at kind of another mortgage-based crisis?

Kate Gordon

Great question. Possibly. I mean, I think there's several layers of things, right? Like first, people might not be able to get mortgages in the first place because it would depend on having insurance. So there's that. Second, once you have a mortgage and then you lose insurance, I don't know, that means you automatically default. I think what it just does is put people, David, in a situation which is a particularly bad situation in America where we don't have a huge safety net. Most Americans who are lucky enough to own a home, that is their only asset of real value.

So, I think what it does is put everyone in this incredibly precarious situation where the one asset you have is at risk of destruction, and then you have nothing to use to move somewhere else or to move to higher ground or whatever.

David Roberts

If you lose insurance, you don't immediately default on your mortgage. But if you lose insurance and then something happens, then you're screwed.

Kate Gordon

Exactly. And again, unless the government comes in and kind of papers over that. But that's increasingly not doable because of just finances.

David Roberts

So, some states, I think California and Texas, have these what are called "insurer of last resort" programs, which, from what I can tell, are basically state-funded insurers who will step in and insure the people that private insurance won't insure. And, you know, as you'd expect, more and more people are flooding into those programs — that can't go on. Right. Like, that can't be the final solution to this problem; it is just the states picking up the bill.

Kate Gordon

Yeah, you know, the one everybody knows I think really well is the Federal Flood Insurance Program. That's sort of the oldest, most famous one, which of course is funded by the government, which means taxpayers. So, it's not like there's a —

David Roberts

That's federal, right?

Kate Gordon

Yeah, that's federal. There's not like a magic tree of money that funds these things. It's always falling on people. But yeah, the state one in California, the FAIR Plan, is our insurer of last resort. You saw it come into a lot of use because of wildfire risk and a lot of insurers moving out of wildfire-prone areas. It is funded actually by insurance companies. So those companies that do business in the state fund the FAIR Plan, which of course means policyholders fund the FAIR Plan.

David Roberts

Right.

Kate Gordon

But the state administers it. But that doesn't mean that the state isn't on the hook. I mean, if you think about the impact of these disasters. Right. So you have Paradise, California, a very famous fire disaster. It's not just the state. Well, the county initially usually comes in and has to do the immediate cleanup and then has to be reimbursed for those costs, which can take years from the state or federal government. But then you have the state coming in with unemployment insurance. Right. With relocation support. You have a huge increase in safety net programs when that happens.

David Roberts

Right, right. It's not just the houses and the mortgages.

Kate Gordon

It's not just the individual or the houses and the mortgages. It really, you really do have this massive system of public money that essentially backs up everything we're talking about. And it's the state or the government in general is holding the bag on this entire conversation. Whether it's through creating systems of last resort and trying to increase those, whether it's through, you know, disaster response and recovery, whether it's through all the safety net stuff, it is ultimately just a huge amount of government money going to this system.

David Roberts

Yeah, and I'm wondering if those state insurer of last resort programs, like the insurance companies who are paying into those, presumably at some point are going to just decide it's a bad deal and pull out of those states. I mean, what happens if the insurance companies leave those states? What happens to the insurer of last resort?

Kate Gordon

That is a great question. I mean, I think politically, what happens is that everybody forces some kind of a public funding situation.

David Roberts

Yeah.

Kate Gordon

Which then again means that you're taking money out of other critical programs. You're actually starting to see this with these county governments. Municipal and county governments are the sort of first line on this stuff. And county governments are the first people who have to go in and do disaster response. So that's just an example. And so they have a couple of years of delays of reimbursement. Even if they get reimbursed by FEMA, which is less true than it used to be because FEMA has so many disasters now that they're paying out less. But even if they get reimbursed, it takes years.

And in that period of years where they're waiting for reimbursement, they are 100% dipping into their other discretionary funds.

David Roberts

Right.

Kate Gordon

In California, what we saw with the fires when I was in state government in 2019 is that we, I think, tripled the cost of wildfire fighting between 2015 and 2020. And we took that out of climate programs.

David Roberts

Yeah.

Kate Gordon

Like, we took that out of climate mitigation. So, these things have a serious impact.

David Roberts

Yeah, I mean, this has always been the worry about climate change proceeding, right? Basically, adaptation is going to eat more and more of the money, and you're going to have less and less for mitigation.

Kate Gordon

Well, and the challenge, David, is that political will goes totally against doing the rational thing in this situation. Because if I'm a mayor or the governor, my whole focus is going to be on keeping costs low.

David Roberts

Right.

Kate Gordon

That's everybody's stress point all the time. It's not going to be on like 10- to 20-year resilience frameworks that bring down the overall risk and fundamentally, ultimately move the risk, you know, towards something manageable. It's just like that doesn't happen in my tenure and I can't get political will behind it. So, I do think there's some, you know, there are some things that can be done here a little bit, but it's just fundamentally, I think we have to rethink the system toward one where we need to actually try to be focusing on climate stability, otherwise all these systems are going to break, basically.

David Roberts

At the root of it, climate change itself is creating negative value. And that negative value just exists. You can chop it up different ways, apportion it to different people, send it to different levels of government, but it exists. Somebody's got to pay it.

Kate Gordon

Exactly. And I think what we're seeing, at least in California, and you actually see this in Florida to an extent too, and other states. We are not the only states with this problem. I mean, hail insurance has become a huge issue in the Midwest.

David Roberts

What really?

Kate Gordon

Which is also climate-driven. So, you have Midwest insurance companies that are actually paying out these hail claims. They're starting to suffer, they're laying people off, they're having financial crises because they're paying out on these hail claims that are exponentially more than they used to.

David Roberts

Yeah, I was actually going to ask one of the questions. I threw this out on Bluesky, which I've now mostly —

Kate Gordon

I am there too, not as active as I should be, but I moved over a couple of years ago and I'm very happy that people are starting to see the light.

David Roberts

I threw it out here, and one of the questions was, "Is this going to affect people" — like, you know, people think of this as like a Texas, Florida, California problem. Like, "Is this going to affect people in other states?"

Kate Gordon

100%.

David Roberts

Is it just going to affect people in like sort of climate-battered states or is there some sense in which there are going to be national effects?

Kate Gordon

Oh, I think it's going to be everywhere. I mean, the thing about climate impacts is that there is no place that's safe. When we did the Risky Business Project in 2014, we actually thought at that time there were some places that were lower risk.

David Roberts

Climate havens. What happened to those?

Kate Gordon

In the Pacific Northwest, right? And then all the fires happened and then extreme heat. I'm from the Midwest originally, and I can just tell you that inland flooding and hail are massive there. You know, we talk a lot about fire because fire is in California, it's the big thing. But water is by far the big issue for insurers across the board. And hail is obviously like, it's a roof — roofs are very expensive to replace.

David Roberts

The upper Midwest was the climate haven, wasn't it? Like, that was the blue part on all those maps where you'd see all the other red.

Kate Gordon

It's true, it is true that things like hail, you can harden against them more rationally. So, it's a slightly different type of problem, but it's still, you know, these things are happening across the board. Insurance companies are having a very bad few years because of these increased claims plus inflation on repayment. It's been very, very bad.

David Roberts

Let's talk about floods then. So why, I mean, maybe you just answered the question, but why is it that floods uniquely have a federal insurance program as opposed to, you know, fire, hail, whatever, all the other dangers? Is that just a quirk of history? Is there some reason for that?

Kate Gordon

I actually do not know the answer to this question. I think, you know, we've had flood maps for longer than other programs. I know when I was in the federal government doing implementation of the infrastructure bill, we had to include flood resilience language in the implementation of those programs, which wasn't true for any other type of risk. So, there must be some long-standing historic reason.

David Roberts

Interesting. Yeah. So, the National Flood Insurance Program, that's 97% of national flood insurance. And there's this sort of critique, I'm sure you've run into it, that the NFIP, the National Flood Insurance Program, is in some sense subsidizing climate risk by charging sort of low rates, you know, sort of by insuring, doing flood insurance kind of slightly on the cheap is in a sense subsidizing people to move into these areas. But then of course, this gets to something I sort of alluded to in my intro, which is it's true, I think that it's in some sense subsidizing some wealthy homeowners to be able to build in floodplains where they probably shouldn't, but it's also going to some low-income communities where if you upped the rates, you would kind of screw low-income homeowners.

So like, how do you, how do you walk that line? You know, do you think it's an accurate critique that it's that the rates are too low and it's subsidizing risk in some sense?

Kate Gordon

I think we're subsidizing risk all over the place. And yes, I think it's an accurate critique. I mean, I think there are sort of three different things going on here. And just to totally oversimplify, one of them is what do we do with existing people who are in homes that have been built in places that either when they were built, we didn't realize how risky they were, or they weren't as risky because climate change is constantly progressive, as I said.

David Roberts

Right.

Kate Gordon

Or, we just kept building them, which is a big California issue. We have 11 million people in our wildland urban interface in California. That is a lot of people. A lot of those homes were built after a lot of this modeling was on the street.

David Roberts

Well, don't talk in the past tense, Kate.

Kate Gordon

We're still doing it. We're still building it.

David Roberts

One of the insane features of this discussion is that some of the most sensitive areas, the reddest areas on those maps, are some of the hottest real estate markets in the country. We are currently —

Kate Gordon

We are. You're right. We're currently —

David Roberts

shoveling people into those areas.

Kate Gordon

We're currently increasing the risk. But, like, there is a set of people who are already in place.

David Roberts

Yeah.

Kate Gordon

And I think we do have to figure out a set of policies for those people because again, most of them, put the small number of very wealthy people to the side, most of them can't afford to lose a home or move easily or whatever. So, we have to figure out solutions for them. And I think there are some interesting, innovative things going on around that. But the second thing is, we have to start having a serious conversation about not increasing the risk by building more things in these places. And that's not just risk to the homeowner.

That is, we talked about this before, that's a massive amount of financial risk to the public sector, which affects everybody. Right. We're increasing the risk to America and to individual cities by continuing to build into these places. And the third thing is, and it's the hardest thing to talk about if you're in politics, is we have to deal with the tail of the people who are in places that are just not, at this point, places that investment should or can happen and are going to have to actually move. So it's the managed retreat piece of the conversation, which is that long tail that's getting longer.

David Roberts

It's getting longer all the time. One of the things that comes up, and maybe this is a little bit of a technical thing, but one of the things that comes up is that programs like the National Flood Insurance Program or insurance generally should be aware of, cognizant of, kind of property level resilience stuff. So, like, if I as a property owner, you know, clear a certain amount of brush around my house or put in some sort of — I don't even know what all the resilience measures would be. But like, as far as I can tell, it's very difficult to get a lower insurance rate based on what you've done. Is that a big issue?

Kate Gordon

Yeah. In general, we've seen these insurers take a fairly blunt tool to the question about whether somebody should or shouldn't be insured. You hear stories all the time about people whose insurance company says, "We're gonna stop. We're not re-upping your policy because you've got a pile of brush in the backyard or whatever." They'll do drone passovers or not even that. They'll just look at a neighborhood and say sort of like, "One instrument, this is risky." So, I think there is absolutely a need for a finer kind of approach to individual property. But I'd also say — you know, and that helps more in some places than others.

Like, let me just say about individual property, if I'm in the Midwest and I have a roof that's made of roof material that's less sensitive to hail, it absolutely makes a difference to the insurer. That's a property-level thing. If I'm in an extreme heat area — which isn't actually, this is a health insurance issue, but, you know, there are property-level things you can do. With flood and fire, it's much harder to do property-level things. These are sort of community-scale issues. And you saw that with Paradise. You saw it with Santa Rosa out here, you saw it with the Maui Wildfire.

Part of what's happening with climate change is that not only do we have increased sort of dry spells that dry out the brush, and then we have these intermittent wet spells that, like, there's a ton of brush and then it dries out. So, it's very high risk. But we also have high winds as part of climate events. And so what you get is these, like, embers blowing around.

David Roberts

Yeah.

Kate Gordon

That is hitting every house. So, I can have the best house. I can have, like, totally defensible space and the best thing ever at my property. And my next-door neighbor doesn't, and I'm, you know, like, the fire hits me. So, I think what's happening increasingly that's very interesting is this question of could the insurance regulators — it is a regulated industry — could they start asking insurers to take into account community scale resilience, not just individual scale resilience. And that could make a really big difference, actually. I think it's really important.

David Roberts

I mean, it could be a big incentive, right? I mean, the community could get lower insurance rates if it does XYZ.

Kate Gordon

If it does XYZ , I mean, in California with the fires, some of that might literally be islanding off the grid. So, if you're building, if you're in a community that's super high risk because of the potential for wind blowing down power lines, which is a big part of the risk here, get on a microgrid, like, get off of the grid and don't have that risk anymore. And then you get insured or, you know, require new build to be sensitive to these things. We aren't doing this at the moment, but it's definitely a conversation that I think we should be having.

David Roberts

It's a little crazy that we're not doing it.

Kate Gordon

Well, you know, we have a — you know this well because you've talked about it a lot — very strong local control over land use culture.

David Roberts

Yes.

Kate Gordon

A set of laws in this country. That means that, you know, if I'm a city in California, my immediate interest is getting more property taxes. Right. Like, my immediate interest is avoiding people yelling at me about not having enough housing and getting more property taxes. So, I'm going to do what I can to build stuff.

David Roberts

And if it comes out, if it's revealed that the climate risk in my community is much higher than had previously been understood, and insurance rates go up, property values go down, and property taxes go down.

Kate Gordon

Exactly.

David Roberts

So, in some sense, like all the government entities that are dependent on property taxes, kind of don't want this news getting out. Right?

Kate Gordon

100% and your bond rating probably goes down too. So, there's all kinds of implications from a bond public finance perspective. But I'll tell you, David, I mean, again, this is like the fundamental challenge of climate change, which is the timescale challenge.

David Roberts

Yeah.

Kate Gordon

What I'm seeing in modeling is that there's someone at the Fed who's done some super interesting modeling around, "What are the outcomes of us just continuing on a policy to keep insurance rates low and not doing resilience?" What you actually see is a rash of municipal bankruptcies because, fundamentally, that's who's holding the bag on this stuff.

David Roberts

Yeah. Like I said, like, somebody's going to get stuck with the —

Kate Gordon

Exactly.

David Roberts

Like the negative value exists.

Kate Gordon

Right. Municipal bankruptcy is a worse outcome. It's worse than a kind of initial downscaling of property values and like a recalibration, it's worse. So, I think that's where we have to be thinking is that that is the outcome if we don't start being proactive about this.

David Roberts

Right. Well, I want to talk about what being proactive would mean. But first, one more kind of a sad topic, a sad question.

Kate Gordon

Because everything else has been so happy.

David Roberts

We're just getting sadder. The Biden administration put out an executive order on this stuff that I thought was pretty extraordinary. I mean, it basically amounted to a whole-of-government initiative to take more cognizance of climate risk, you know, in insurance and everything across the board and treasury everywhere. You know, I'd love to talk about how exciting that is and all the things that will come out of it, but maybe it's just going to go out the window. Do you — I mean, I'm sure you don't have any crystal ball that no one else has either — but like, do you have any sense of kind of how partisan coded this stuff is?

Like, is that the kind of thing that they're gonna kill the second they get in the door? Or is there some sense reason would suggest that this should be bipartisan? But what, you know, who cares what reason says these days? What's your sense?

Kate Gordon

Yeah, I love that executive order. I had played a very tiny part in it, but I love it. And this is work, as you know, that I've been sort of obsessed with since the Risky Business Project, which literally was a project to bring together former treasury secretaries and bipartisan CEOs to say, "Climate change is a serious issue for the financial grownups table." It's not just an issue for a bunch of enviros, right? Like, this is something we need to be thinking about.

David Roberts

Get the money people to pay attention.

Kate Gordon

Get the money people to pay attention. And I think, you know, there was a lot about that that was successful sort of at the individual company level. What we didn't get at Risky Business, and I spent a lot of time working on after that — including a big report that I worked on on climate risk to the state of California that does exist, that we did with Stanford — was this question of like, "What about the public side?" Because actually, the public side is at greater risk in a lot of ways. The public stuff can't be moved easily.

Like, it's very place-based. The infrastructure, cities themselves, government functions are very place-based. And also, government, as we said, is fundamentally responsible for all of the "externalities." Like, everything that falls through the cracks of this system, government has to pick up the pieces. So, I thought it was great that this happened, that it was finally this acknowledgment that like, "Yes, this is sort of a fundamental threat to our economy and we're going to try to change the systems to start to address it." And there was some super — I mean, you think this is wonky —

there was some really wonky work that the Council of Economic Advisors did on changing macroeconomic modeling policies in the federal government.

David Roberts

I was vaguely aware of that. And the Treasury Department put out, like, a really extraordinary response. Like, you know, this Executive Order asked them to look into it, and then they went and looked into it and, like, issued an incredible report on the financial risk of those impacts.

Kate Gordon

Yeah, I mean, so I think, I mean, I'll answer your question in a rational way, but with the caveat that, as you said, we, I have no idea. When we did Risky Business, we did it in a bipartisan way. And what we found in like a million conversations across the country with all kinds of people from all kinds of places and industries was that actually this is a fairly nonpartisan way into the climate conversation. People are quite aware that there are increasing impacts, that they are affecting them personally, that they are losing money because of them, that they are, like, disrupting their economies.

People, get this. It's a pretty well-understood phenomenon. And so, you would think that of all the things on the table on climate, this would be something — you know, and famously, Trump, of course, evaluated the risk of his Scotland golf course from sea level rise. Theoretically, you'd think this would be a thing that people would think about. I think, especially because the government owns and operates a lot of this infrastructure itself.

David Roberts

Yeah.

Kate Gordon

And is having to pay for it. Pensions are dramatically invested in these things. You'd think they'd care. So, I would love to say this is a bipartisan issue and it will continue. There will continue to be rational thought on it. I just don't know.

David Roberts

Yeah, I mean, we've seen, you know, we've seen the Trump response to disasters, which is basically his response to everything. His response to literally every policy area, which is, "I help my friends and screw my enemies." So, you know, I kind of wonder if that's not going to be kind of the —

Kate Gordon

I mean, I agree with you. I do think one of the things the Executive Order does that I think needs to be unwound a little. Like, there is a difference between physical risk and what people call transition risk, which is like, there's a set of things that are risky in the economy because we are trying to transition to a net-zero economy.

David Roberts

Right.

Kate Gordon

And that's like, "Should you invest tomorrow in a coal plant? Probably not." Right. Although with AI and new energy demand, I don't know. But let's just say probably not. "Should you sink a whole bunch of money into some fixed asset that probably won't be valuable in five years?" That's transition risk. Right. "What's the risk of me investing today in something that the economy's changing to net zero?"

David Roberts

Right, which you could theoretically reduce or eliminate by just stopping the transition, right?

Kate Gordon

Yeah, theoretically. But the other side of it, to me, is just clearer in a way — because that's very political, what I just said. Like, that all depends on you believing climate change is real, which I think most people do, but it also requires you believing we should have a transition, which is complicated. The other side, though, this physical risk question is really different. It's like, "What are the actual impacts from things we emitted from 100 to 50 years ago?"

David Roberts

Right.

Kate Gordon

"How are they affecting us today? What is the cost of that to my business, to my community?" That should be a lot cleaner, actually. And my experience working with companies is that it's much easier for them. They're like, "Okay, I can look at my supply chain, I can see what the risks are. I can look at this modeling from First Street and others. I can evaluate this and I can make decisions that are sort of rational decisions about what risk level I'm willing to take because I'm used to doing that."

David Roberts

Yeah, and these costs, they exist whether you believe in them or not. Like, somebody pays these costs, you know what I mean? They are not dependent on people's belief systems.

Kate Gordon

Exactly. So, I think you can't conflate those two things. I think we tend to, because we're like, "We're all climate people, we're going to conflate everything." And there's a piece of the executive order that says, I think, that it will require major suppliers in procurement to disclose greenhouse gas emissions and climate-related financial risk and set science-based targets. Those are three totally different things that have very different levels of political risk and adoptability. So, I think we just need to untangle a little bit.

David Roberts

So, let's talk a little bit about solutions or at least ameliorations of this. One of my first questions is, like, the insurance companies, it seems like they would want these areas to reduce their physical risk. Like, it seems like it would be helpful to the insurance companies if these areas did things that materially reduced their physical risks. Do insurance companies ever come out and lobby or advocate for good policy?

Kate Gordon

Yes, they've certainly advocated for catastrophic modeling in California. So, they've advocated for the ability to do forward casting modeling. They've advocated for more consistent data on the risks. So, I think they've gone on that and they've certainly advocated for insurance companies to actually spend money on things like research on more resilient roofs and more fire-resistant activities. There's a whole bunch of insurance companies that have a whole coalition around fire risk reduction. So, they do work on it, really, again, as we talked about earlier, at the property level.

David Roberts

Right.

Kate Gordon

They haven't, that I've seen, advocated for being able to take community scale resilience into account. I think they should advocate for that. They have kind of a power position right now because they have this ultimate ability to walk away, which is pretty powerful.

David Roberts

Yeah. Exit.

Kate Gordon

And yes, that means they have less business, but I mean, they are actively looking into other types of business. It's pretty interesting. Someone just told me that like renters insurance has gone way up because a bunch of insurers are switching into that. And pet insurance is a huge growth market. Right. So, like that's interesting. One thing that I've always been sort of amazed by, and I'm told by people who understand insurance companies, that like this will never happen. But I'll just say it, insurance companies are investors too. I mean, what do you think happens to all that money you pay them when there's no disaster happening?

It is being invested. So, why are they not investing in lowering their risk?

David Roberts

And they're invested in fossil fuels!

Kate Gordon

I mean, it's not even that. I mean, they're just not investing in any of this stuff. Like, they're not investing in projects that you would think would lower risk. So that's odd to me. And I think it's the classic issue that they have to get a certain return. And the investment side is totally separate from the insurance side. But that seems like surely we could figure something out where there's some impact investment fund on the investor side of these insurance companies that's actually helping with this problem.

David Roberts

Yeah, well, here's maybe this naive question, but there are supposed to be these things called markets which send price signals to which consumers respond rationally. So, insurance in these stressed areas is going up and up. And yet, like I said earlier, these are some of the hottest real estate markets in the country. What is going wrong here? What's the disconnect? Why isn't the market itself discouraging people from coming to these places?

Kate Gordon

I mean, some of it is probably psychology. People have a very hard time making decisions about potential future loss. And there's a whole academic study of this, so we know this. Some of it, I think, is what we talked about earlier, which is that some of the risk is literally being subsidized. There's not true cost accounting. So, yeah, even though maybe the insurance amount is going up, we're still, for instance, building, you know, we're requiring the utilities to serve these areas. We're building roads to these areas, we're doing water supply to these areas. Like we're doing all the infrastructure to allow for the thing to be built in the first place, which is essentially subsidizing risk.

David Roberts

And subsidizing what we basically know are going to be stranded assets within probably our lifetime, like billions of dollars that we know are going to get stranded.

Kate Gordon

Yeah, and I think that's a big part of the problem. Like, I think about this a lot, obviously in the California context, but it applies in other places where a lot of the new housing development is happening in these greenfield areas, which are theoretically more affordable because, you know, it's expensive to build on existing infrastructure. You have to do more work to do that. It's expensive. You know, infill is, as we know, notoriously hard for a bunch of reasons. And so we end up in this, like, artificial world where it's theoretically cheaper to build out in these areas.

Many of which are high risk. And I mean, we actually just had a big summit in Sacramento where we had a panel that we literally called, "Is housing affordable if it's not insurable?" I think we just have to call the question. It's not actually equitable. It's not an equitable affordable housing solution or fair housing solution to be building things that are fundamentally at this level of risk. And that's what we continue to do.

David Roberts

Well, I want to talk about land use in just a minute, but let's just start in a more sort of prosaic place, which is just the state insurance regulators. These are regulated entities. So presumably, there are things state regulators could do. Like, what is the solution set here? What kinds of things would we like to see state regulators do?

Kate Gordon

Commissioner Lara in California just did a big insurance reform very recently, which you probably saw. One thing that he is recommending, for instance, is allowing catastrophic modeling, which I think there's some amount of that you can allow even under Prop 103. But I'm no expert. He's saying you can do catastrophic modeling to show the actual risk of stuff. But in exchange for us letting you do that, we're going to make you increase your policy offerings in some underserved communities where you've just blanket rejected everybody without looking at individual home hardening or community hardening.

So, it's basically saying, "Look, do the work to expand coverage where it actually makes sense and you actually do the work to see if the hardening is happening or if this place is more resilient and in exchange, we'll let you model," which is sort of interesting, super wonky, but sort of interesting. So, he's trying to say, kind of play this game of pushing them to be a little less blunt instrument about the way that they're considering policies.

David Roberts

But, I mean, if you take this First Street report seriously, the areas that are under risked are a lot more than areas where they sort of accidentally over risked. Do you know what I mean? So, like if they really did catastrophic modeling and really did accurate modeling, it seems like net-net rates would just go up.

Kate Gordon

I mean, I would love to see insurance commissioners say, "Look, we recognize that building in existing," — I mean this is of course a pro infill argument, but building in areas that have existing infrastructure, that have a clear means of egress through a road system where you have pretty close access to fire stations at a pretty close distance. That doesn't mean big city, it can mean town, it can mean anything. But it's just a little bit more developed. I would like to see some kind of approach where we say "Look, this is lower risk. We know this from this many years of data."

We also know that infill development allows for some level of urban growth boundary which is very important to keep things like fire and flood from taking over communities because you, you need wetlands for flood mitigation, you need buffer areas for fire. So really, I mean, I know you said we talk land use later, but I think land use is part of the insurance commissioner question because we should be.

David Roberts

It's kind of all bound up.

Kate Gordon

The state does land use. It's all wound up. The state does land use and the state does insurance regulation. So let's talk about it as a whole of government solution at the state level and say —

David Roberts

Yes, that would be coherent. Well, let's talk about land use. Is there anything sort of non-obvious to say? I mean, what you want to do is encourage infill and discourage people from sprawling out to where there's fires or sprawling out to the coasts where there's erosion. But how do you take that sort of obvious insight and translate it into policy? So, what sorts of things?

Kate Gordon

It's obvious. But, I also think people aren't always thinking about all the reasons that's true. It's true because fewer places burn down or flood. But, it's also true because you need that land not to be developed because it helps mitigate.

David Roberts

Right. I do think that is an underappreciated point.

Kate Gordon

It is. Also, I think people don't appreciate why the risks are as high as they are. I mean, if I build into a greenfield community, I said this earlier, but if I build into a high-risk area, I'm a local government and decide to do like a giant housing development in a high-risk area. We have people proposing this right now. State law requires utilities to serve that. Like, they can't not serve it. And then we hold them strictly liable for serving it, which means they're incentivized to then spend an enormous amount of money to bring their risk as low as they can.

You see this right now with the PG&E $7 billion rate case to underground lines in the Sierras. That's because they have to serve housing there. And who pays that? Ratepayers. So it's not just insurance rates, it's your electricity rates are going up because of these decisions. So, I think that's all underappreciated. There's a bunch of reasons why we should not be doing this the way we're doing it. In terms of solutions, David, I mean, it's not popular and, you know, I can only say this because I'm no longer in state government, but we actually do need to start taking a regional, a more regional approach to land use.

David Roberts

As opposed to local, you mean?

Kate Gordon

As opposed to local, we cannot continue to say local governments make all the decisions and the state government is going to pick up all of the costs for those decisions.

David Roberts

Yeah, and it's even the case, I mean, some papers came out last year that the housing scarcity in these blue areas is having macroeconomic effects. So, it's not even that everybody in the state is affected. It's really national. Like, there are national effects. These are not local issues. They ultimately redound to national macroeconomic effects.

Kate Gordon

I think that's right. So, yeah, I think I would say this is a hard conversation, but one of the things I've thought a lot about in climate policy in general is just, can we start thinking about a stronger approach to regional governance? Because a lot of these impacts are regional. Statewide in a place like California, Texas, or Florida is very big. It's like, it's too much of a blunt instrument. I think we need to be thinking regionally underneath that. Like, the fire area of the Sierras is a very different kind of risk than the fire area of LA because of the type of vegetation and the type of climate impact.

So, let's just talk about this stuff regionally, but have an actual ability to then make land use decisions regionally. That would be incredibly helpful for this conversation.

David Roberts

Well, since we got here, I have political questions, political anxieties. So, a lot of the people we're talking about are Democratic voters, some of the upscale ones, especially who, you know, can afford to go out into these pristine places, suburbanites, sort of classically, like all of US politics is a fight over who gets the suburbanites. And a lot, it seems to me, of what's going to happen with climate change is that the deal we offered our suburbanites, which is you can have your big house out in the middle of nowhere, we're going to make it easy to drive everywhere.

And even though every place is going to look the same and it's going to be slightly soulless, everything's going to be very cheap. That's kind of the sprawl bargain. And I think from these people's perspective, from the perspective of a wealthy suburban homeowner who built their house out in the middle of some pristine floodplain, that's kind of what they're owed, do you know what I mean? And all of a sudden, climate change is going to come along and the people that they often vote for, or who we would like them to vote for, are going to come along and tell them, "Sorry, the deal has changed. Actually, you have to either pay much more, get much less, or move." It could be a political disaster. I mean, this is like Dems vs. NIMBYs, you know. Yeah, I don't even know what I'm asking you. What happens then, Kate?

Kate Gordon

What about that?

David Roberts

How do you deal with this worry?

Kate Gordon

I mean, I think one thing I'd say is that it's not entirely sort of wealthy suburbanites. We actually, at least out here in the west, we see a lot of people moving into unincorporated areas who just can't afford to live in more urban areas. And so, like Paradise, it was full of fixed-income people. I mean, it was not a high-income place at all. So, I think it's a little complex because of just housing dynamics that are true on the West, but I think becoming true all over the place.

David Roberts

Right.

Kate Gordon

And so, in some ways, that's even worse. Right? Because we promised affordability and now we're not, we're taking everything away.

David Roberts

This is what's maddening: the Republican Party can just pretend it's not happening, pretend it doesn't exist, pretend these people can have everything they want, and then Dems try to be responsible and come along and tell them, "Actually, no, there's this risk, blah, blah, blah," and then Dems get punished for it. How do we, you know what I mean? How do we avoid that dynamic?

Kate Gordon

This is like an existential question here.

David Roberts

No, this is not something I expect you to solve on the fly.

Kate Gordon

I mean, I guess to be — whatever, my whole career is like unusual allies and trying to figure out solutions to these very difficult problems. And the one thing I'll say is, you know, there are still a bunch of conservationist Republicans out there and I think that there's some alliance to be made. I mean, you look at like Oregon and how it got to state-level land use policy as a thing. The way it did, right, was it was an alliance between sort of smart growth people, ranchers, and farmers. Like, there's a way to think about conservation agriculture.

You know, I think carbon removal or carbon sink. There's a set of people that I think you could start to organize around, sort of a different way of doing this that is smarter going forward. It doesn't solve your problem that you just raised of like what we already did, which was a lot. But it does start to get to, could we not continue to make this a higher risk situation than it already is? I think there's some interesting things to be done there. We're starting to see people have those conversations in various states. And I think it did not feel politically possible to do that five years ago.

And now, it feels like because of the insurance crisis, it's pushing people to have that conversation.

David Roberts

It's like physical risk here. There's financial risk, but there's also just so much political risk.

Kate Gordon

You're absolutely right. And I think everyone's worried about this redlining issue. Right? Like, does this end up? And you worry about this also on the investor side, thinking about disclosure, thinking about that executive order. If we incorporate financial risk into all decisions, you know, what happens to India, a place that is a source of a massive amount of investment into physical systems that are place-based, that are multi-decadal, where probably investment should not be happening in that way because of very high risk. But the answer to that can't be disinvest in all of India.

We have to come up with some situation where we're like, "Let's also make it — " I mean, this is the biggest sticking point for everything about resilience and adaptation. Nobody pays for it right now. There's no market for it at all.

David Roberts

Yeah.

Kate Gordon

So, we have to somehow get to a place where it's valuable to invest in resilience, where people in Brazil, in the Amazon, actually get paid to not do stuff instead of getting paid to tear stuff down, where people get paid to do urban growth boundaries. I mean, there just has to be a better answer. Because right now, the market works the way it does. And if I've got a fallowed field that's suffering from drought in California and I need to sell it to someone, I'm going to sell it to a developer.

David Roberts

Yes, we somehow have to get the financial value of resilience worked into markets, reflected in markets.

Kate Gordon

Well, that's a whole other podcast, David.

David Roberts

Truly. Well, since you touched on it, let's bring up the big, kind of the elephant in the room, as it were. You know, you could say there are large swaths of India where we have good reason to believe that in 30 to 50 years they'll be uninhabitable. And that's a disturbingly large amount of India that qualifies for that assessment. So, what do you do with that? Or just to bring it home here to the US to make it slightly more tractable, although only slightly. Like, in the end, there are places and they are growing.

It's a growing amount of land area where there just shouldn't be people. There just shouldn't be houses. Right? There shouldn't be human developments. It doesn't make any sense. There's more risk. You know what I mean? Like, if you made the cost of the risk a transparent part of the market, no one would ever build there. But there are people there, lots of people there, more every day. So whatever we do to stem the flow of new people to those areas, there are a bunch of people in those areas already. And I think one thing we've seen, you see this in people's reactions when a hurricane is coming.

People will do pretty crazy, irrational things to stay in their homes. It's more than just financial value, right? It's home. So, what on earth do you do with people who could not afford to live where they live if they had to pay the full freight? But if you make them pay the full freight, you're just going to bankrupt them and force them to move. What do you do? You know, like, this gets to the managed retreat question. Like, who does this? Who tells them that? What level of government authority using what enforcement mechanisms?

Like, you know, again, I don't know why I'm asking you to solve this cosmic problem, but, like, how do you think about that? Because that's, I think, coming on us faster than we think it is.

Kate Gordon

It is a really, really hard problem. And it's not like we're not already seeing this in some places. So, it's not an esoteric question. It's a real question. You know, a couple of things. First, I feel like I just have to say, because we've been so focused on the resilience question, one thing I know that gives me hope in general, even in hard political times, is we can bend the curve on extreme heat. Like, there are ways to actually start doing things differently in the economy that actually put fewer emissions into the atmosphere and remove carbon from the atmosphere, that actually does start to bend the curve.

Like, we do have the ability to make these terrible scenarios 30 years from now look better. And it requires a bunch of things.

David Roberts

I've kind of been taking that for granted. But, thank you for calling it out. Like, obviously, we should be mitigating.

Kate Gordon

Yeah. But it's less true for some risks than others. Like, it's very hard. It's not that easy to — I can't, you know, reverse ocean acidification very easily, but we can reverse the extreme heat. So, these things are worth remembering because it still matters that we do that part.

David Roberts

Yes.

Kate Gordon

And do it more than we're doing it. On the other side, though, you know, I think about this a lot, David, because I think it actually intersects with a bunch of kind of economic policy that people have been thinking about for a long time, which is, like, there's just a lack of economic mobility in general in the US, and there's a bunch of kind of ideas around increased mobility that we probably need to start talking about in this context. So, what about universal basic assets or universal basic income? What about, like, the fact that everybody's livelihood is so tied to place right now?

It's tied to their home, it's tied to their employer, it's tied to their —

David Roberts

Most people's wealth is substantially their home. And that's exactly where you don't want to be in a situation where you need increased mobility.

Kate Gordon

Exactly. And it's tied to your point, like, people stay where they are partly because of this. I mean, it's... I see this a lot in the work that I've done on, like, coal communities. People want to stay even though the value of their house went through the floor, even though there's no jobs because they can't afford child care. And right now their mom, who lives next door, does child care. Right. Like, it really makes a difference that we have no safety net because it means nobody can move. So, I think there's a set of things around this that are like, we just have to be paying attention to economic mobility generally.

And that's — I know that's hard, but it's super important anyway. And it's probably even more important with everybody having to now have all this. Everyone having all this insecurity on where they live. And then you get into the managed retreat question, and you've already started to see a little of this. I think there's, like, a Native American village that was moved.

David Roberts

Oh, up in Alaska?

Kate Gordon

There's a little bit of it happening.

David Roberts

Yes, there were, like, 12 homes or whatever.

Kate Gordon

And there's some, you know, there are some international examples and it. And it's interesting because it brings in all of these, especially internationally, all of these, like, migration and citizenship issues. But we probably need to start having a serious conversation. It reminds me a little, David, of, like, 10 years ago. We could have been doing a podcast on geoengineering. I'm sure you did. And like everyone was like, "Oh, that's crazy. That's like no one's thinking about that. That's, like, we're not there." And now today everybody is actually talking about it. There's like governance systems being set up.

People are having conversations about it. I think we need to get there on this question of migration because that's where we are headed and we need to start talking about what the systems look like to do this in a rational way. Because you're right, it's coming and it's now like we've hit the various tipping points. It's definitely going to happen in some places.

David Roberts

I got to tell you, I'm trying to imagine a system that moves people out of their homes due to climate risk. Those people are happy or satisfied with it.

Kate Gordon

I mean, I don't think it's that — I think it's very unlikely that it's proactive. It's very hard to imagine. I think it's probably disaster-driven.

David Roberts

Right?

Kate Gordon

But that still means you have to be ready for it.

David Roberts

Yeah, you have to be ready for it. But, like, people are going to fight it.

Kate Gordon

People are going to fight all the elements of what we're talking about. The increased prices, the — I mean, all of it. Climate is a fundamental disruptor of every single thing about our existing system.

David Roberts

Yeah, and like one way of thinking about it, and I think this conversation really kind of brings this into sharp relief, is that climate change has already been creating a lot of negative value, a lot of costs, and thus far we've mostly been kind of shuffling them around and hiding them and squirreling them away where they don't look like climate costs. So, a lot of people in the American public, I feel like, are going to have to be brought from like 0 to 60 on this really quicker than people typically are comfortable with. Like people —

Kate Gordon

I think you're right. I mean, I think we, in some ways, you know, these shocks are really clarifying. You know, I've said many times, and I'll say again, I don't think that the Biden Built Back Better agenda, the kind of all the bills that we talk about all the time, I don't know that they would have passed if it hadn't been for COVID. Right. We've gotten used to a system where the economy was about supply chains and things being offshored and everything being as cheap as possible.

David Roberts

Yeah.

Kate Gordon

That all breaks down, and all of a sudden, everyone wakes up to a reality that many people have been talking about forever, which is, "We're too dependent on China, we don't have any of our own manufacturing. Like, this is a problem. We are not resilient." And then we realized we weren't resilient if we did something about it. So, I don't know. I think shocks are clarifying, but I also think they're incredibly painful. And again, with COVID, who bore the brunt of that? A lot of people who were already low income.

David Roberts

I mean, we should say that shock-led public policy is not ideal. It's really not what you'd want if you were sketching out a plan.

Kate Gordon

I mean, when we do big picture plans that are about multiple sectors of the economy, it usually is because of war or some other fundamental shock. So, it's what we tend to do. I think it's human nature to some extent, but I would love to get ahead of it.

David Roberts

And the other thing I would just say about that, if we want people to interpret climate shocks as climate shocks, like they don't advertise themselves that way, you know what I mean? They don't tell their own story. So, we have to start telling people when these little things happen here and there, you know, like to Florida, to Texas, you know, the freeze, the hail here, we have to start telling people like, "This is climate risk, this is what it looks like." And I don't know that we're really doing that very well.

Kate Gordon

Well, it's your job, David.

David Roberts

I'm trying, I'm trying. Okay, final question. You know, one thing that just looms over all this, I feel like, is the question of trust. On the one hand, disasters, chaos, and suffering tend, all things being equal, to reduce trust. People pull up their walls, they kind of bunker, they get a bunker mentality. But to do something like deliberately moving whole communities from one place to another just requires an extraordinary amount of social trust. At a time when we are so low on it, that just worries me. But I'm not going to ask that super vague question, I keep asking you to solve cosmic problems. To be slightly more granular about it, the question is, who does this modeling?

Who says, "What is the level of climate risk? Who is in charge?" Because ultimately, these models of risk are going to filter down and have enormous economic effects more and more. Who owns them, who runs them? Can we see them? Are they publicly available? What's the deal with the transparency issue on these models?

Kate Gordon

It's a really good question. Most of them, and this is my understanding from like five years ago. So, one of your listeners can say, "No, that's no longer true." But most of them start with the fundamentals of the 28 or whatever climate models that go into the IPCC reports. There's a set of climate models, they're peer-reviewed, they're science-driven, people use them. A lot of people use them for a lot of things. So, I think those are pretty known and good. It's the question of then how do you take those data and then get to the kind of granular scale that you need to be at to be able to say anything rational about maybe not property level, but at least like, you know, block level or community level.

And it's that kind of downscaling that you end up with organizations kind of taking the modeling and then playing around with it in a variety of ways. I will say, and I'm very proud of this, that when we did Risky Business where we created the Rhodium Group, we worked with them, they created what is now the basis of the Climate Impact Lab modeling. A lot of people use it, we made it open source on purpose because we felt really strongly that this was constantly changing and it couldn't be something that was, you know, hoarded.

David Roberts

Yeah, the last thing you want is for the insurance company to be sort of doing some sort of witchcraft behind the scenes, and then just pop out with a number. That's not going to fly well.

Kate Gordon

And I think that's good. Just to answer your question about what the regulators can do, I think that transparency modeling is actually really important and the public sector should use — everybody should be using fairly similar models so that there's consistency. But yeah, you're quite right. I mean, there has become a, as you know, I'm sure, a whole market, a competitive market for models and there are people who, you know, like to say that they can do everything through AI and drones. And there are people, there are just all these people out there. The thing that the models still miss to a great extent, and we already talked about it, but I'll say it again, because it's very relevant to insurance, is they miss adaptation.

Most of the models say, somewhere in the asterisk, small print, "absent adaptation." This is all the stuff that's happening and adaptation is actually happening all over the place. People, humans, are super, super adaptive because we're fundamentally about our own survival. So, I think you do need to think about adaptation and start modeling adaptation and start rewarding adaptation. And right now, it's missing from most of the models.

David Roberts

Kate, this has been fascinating, as you say. We could probably do 10 more pods on any one element of this, but I feel like is a good overview. And this is really, you know, this is like climate people have been saying for years and years and years, like, "Climate's going to come to your kitchen table eventually." And it seems like this really is where it's happening. It's unfortunate that it's going to be via disasters and then tendentious fights about who gets what money after disasters, but, like, it's coming and it's coming in a way that nobody's going to be able to avoid. I feel like, as you say, it's at least going to drive these discussions.

Kate Gordon

I think that's very true, and I'm always happy to come back and have 10 more conversations with you, David. I always love talking to you.

David Roberts

Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I'll see you next time.

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Volts is a podcast about leaving fossil fuels behind. I've been reporting on and explaining clean-energy topics for almost 20 years, and I love talking to politicians, analysts, innovators, and activists about the latest progress in the world's most important fight. (Volts is entirely subscriber-supported. Sign up!)