Climate Risk

This week we talk about floods, wildfires, and reinsurance companies.

We also discuss the COP meetings, government capture, and air pollution.

Recommended Book: If Anyone Builds It, Everyone Dies by Eliezer Yudkowsky and Nate Soares

Transcript

The urban area that contains India’s capital city, New Delhi, called the National Capital Territory of Delhi, has a population of around 34.7 million people. That makes it the most populous city in the country, and one of the most populous cities in the world.

Despite the many leaps India has made over the past few decades, in terms of economic growth and overall quality of life for residents, New Delhi continues to have absolutely abysmal air quality—experts at India’s top research hospital have called New Delhi’s air “severe and life-threatening,” and the level of toxic pollutants in the air, from cars and factories and from the crop-waste burning conducted by nearby farmers, can reach 20-times the recommended level for safe breathing.

In mid-November 2025, the problem became so bad that the government told half its workers to work from home, because of the dangers represented by the air, and in the hope that doing so would remove some of the cars on the road and, thus, some of the pollution being generated in the area.

Trucks spraying mist, using what are called anti-smog guns, along busy roads and pedestrian centers help—the mist keeping some of the pollution from cars from billowing into the air and becoming part of the regional problem, rather than an ultra-localized one, and pushing the pollutants that would otherwise get into people’s lungs down to the ground—though the use of these mist-sprayers has been controversial, as there are accusations that they’re primarily deployed near air-quality monitoring stations, and that those in charge put them there to make it seem like the overall air-quality is lower than it is, manipulating the stats so that their failure to improve practical air-quality isn’t as evident.

And in other regional news, just southeast across the Bay of Bengal, the Indonesian government, as of the day I’m recording this, is searching for the hundreds of people who are still missing following a period of unusually heavy rains. These rains have sparked floods and triggered mudslides that have blocked roads, damaged bridges, and forced the evacuation of entire villages. More than 300,000 people have been evacuated as of last weekend, and more rain is forecast for the coming days.

The death toll of this round of heavy rainfall—the heaviest in the region in years—has already surpassed 440 people in Indonesia, with another 160 and 90 in Thailand and Vietnam, respectively, being reported by those countries’ governments, from the same weather system.

In Thailand, more than two million people were displaced by flooding, and the government had to deploy military assets, including helicopters launched from an aircraft carrier, to help rescue people from the roofs of buildings across nine provinces.

In neighboring Malaysia, tens of thousands of people were forced into shelters as the same storm system barreled through, and Sri Lanka was hit with a cyclone that left at least 193 dead and more than 200 missing, marking one of the country’s worst weather disasters in recent years.

What I’d like to talk about today is the climatic moment we’re at, as weather patterns change and in many cases, amplify, and how these sorts of extreme disasters are also causing untold, less reported upon but perhaps even more vital, for future policy shifts, at least, economic impacts.

—

The UN Conference of the Parties, or COP meetings, are high-level climate change conferences that have typically been attended by representatives from most governments each year, and where these representatives angle for various climate-related rules and policies, while also bragging about individual nations’ climate-related accomplishments.

In recent years, such policies have been less ambitious than in previous ones, in part because the initial surge of interest in preventing a 1.5 degrees C increase in average global temperatures is almost certainly no longer an option; climate models were somewhat accurate, but as with many things climate-related, seem to have actually been a little too optimistic—things got worse faster than anticipated, and now the general consensus is that we’ll continue to shoot past 1.5 degrees C over the baseline level semi-regularly, and within a few years or a decade, that’ll become our new normal.

The ambition of the 2015 Paris Agreement is thus no longer an option. We don’t yet have a new, generally acceptable—by all those governments and their respective interests—rallying cry, and one of the world’s biggest emitters, the United States, is more or less absent at new climate-related meetings, except to periodically show up and lobby for lower renewables goals and an increase in subsidies for and policies that favor the fossil fuel industry.

The increase in both number and potency of climate-influenced natural disasters is partly the result of this failure to act, and act forcefully and rapidly enough, by governments and by all the emitting industries they’re meant to regulate.

The cost of such disasters is skyrocketing—there are expected to be around $145 billion in insured losses, alone, in 2025, which is 6% higher than in 2024—and their human impact is booming as well, including deaths and injuries, but also the number of people being displaced, in some cases permanently, by these disasters.

But none of that seems to move the needle much in some areas, in the face of entrenched interests, like the aforementioned fossil fuel industry, and the seeming inability of politicians in some nations to think and act beyond the needs of their next election cycle.

That said, progress is still being made on many of these issues; it’s just slower than it needs to be to reach previously set goals, like that now-defunct 1.5 degrees C ceiling.

Most nations, beyond petro-states like Russia and those with fossil fuel industry-captured governments like the current US administration, have been deploying renewables, especially solar panels, at extraordinary rates. This is primarily the result of China’s breakneck deployment of solar, which has offset a lot of energy growth that would have otherwise come from dirty sources like coal in the country, and which has led to a booming overproduction of panels that’s allowed them to sell said panels cheap, overseas.

Consequently, many nations, like Pakistan and a growing number of countries across Sub-Saharan African, have been buying as many cheap panels as they can afford and bypassing otherwise dirty and unreliable energy grids, creating arrays of microgrids, instead.

Despite those notable absences, then, solar energy infrastructure installations have been increasing at staggering rates, and the first half of 2025 has seen the highest rate of capacity additions, yet—though China is still installing twice as much solar as the rest of the world, combined, at this point. Which is still valuable, as they still have a lot of dirty energy generation to offset as their energy needs increase, but more widely disseminated growth is generally seen to be better in the long-term—so the expansion into other parts of the world is arguably the bigger win, here.

The economics of renewables may, at some point, convince even the skeptics and those who are politically opposed to the concept of renewables, rather than practically opposed to them, that it’s time to change teams. Already, conservative parts of the US, like Texas, are becoming renewables boom-towns, quietly deploying wind and solar because they’re often the best, cheapest, most resilient options, even as their politicians rail against them in public and vote for more fossil fuel subsidies.

And it may be economics that eventually serve as the next nudge, or forceful shove on this movement toward renewables, as we’re reaching a point at which real estate and the global construction industry, not to mention the larger financial system that underpins them and pretty much all other large-scale economic activities, are being not just impacted, but rattled at their roots, by climate change.

In early November 2025, real estate listing company Zillow, the biggest such company in the US, stopped showing extreme weather risks for more than a million home sale listings on its site.

It started showing these risk ratings in 2024, using data from a risk-modeling company called First Street, and the idea was to give potential buyers a sense of how at-risk a property they were considering buying might be when it comes to wildfires, floods, poor air quality, and other climate and pollution-related issues.

Real estate agents hated these ratings, though, in part because there was no way to protest and change them, but also because, well, they might have an expensive coastal property listed that now showed potential buyers it was flood prone, if not today, in a couple of years. It might also show a beautiful mountain property that’s uninsurable because of the risk of wildfire damage.

A good heuristic for understanding the impact of global climate change is not to think in terms of warming, though that’s often part of it, but rather thinking in terms of more radical temperature and weather swings.

That means areas that were previously at little or no risk of flooding might suddenly be very at risk of absolutely devastating floods. And the same is true of storms, wildfires, and heat so intense people die just from being outside for an hour, and in which components of one’s house might fry or melt.

This move by Zillow, the appearance and removal of these risk scores, happened at the same time global insurers are warning that they may have to pull out of more areas, because it’s simply no longer possible for them to do business in places where these sorts devastating weather events are happening so regularly, but often unpredictably, and with such intensity—and where the landscapes, ecologies, and homes are not made to withstand such things; all that stuff came of age or was built in another climate reality, so many such assets are simply not made for what’s happening now, and what’s coming.

This is of course an issue for those who already own such assets—homes in newly flood-prone areas, for instance—because it means if there’s a flood and a home owner loses their home, they may not be able to rebuild or get a payout that allows them to buy another home elsewhere. That leaves some of these assets stranded, and it leaves a lot of people with a huge chunk of their total resources permanently at risk, unable to move them, or unable to recoup most of their investment, shifting that money elsewhere. It also means entires industries could be at risk, especially banks and other financial institutions that provide loans for those who have purchased homes and other assets in such regions.

An inability to get private insurance also means governments will be increasingly on the hook for issuing insurance of last resort to customers, which often costs more, but also, as we’ve seen with flood insurance in the US, means the government tends to lose a lot of money when increasingly common, major disasters occur on their soil.

This isn’t just a US thing, though; far from it. Global reinsurers, companies that provide insurance for insurance companies, and whose presence and participation in the market allow the insurance world to function, Swiss Re and Munich Re, recently said that uninsurable areas are growing around the world right now, and lacking some kind of fundamental change to address the climate paradigm shift, we could see a period of devastation in which rebuilding is unlikely or impossible, and a resultant period in which there’s little or no new construction because no one wants to own a home or factory or other asset that cannot be insured—it’s just not a smart investment.

This isn’t just a threat to individual home owners, then, it’s potentially a threat to the whole of the global financial system, and every person and business attached to it, which in turn is a threat to global governance and the way property and economics work.

There’s a chance the worst-possible outcomes here can still be avoided, but with each new increase in global average temperature, the impacts become worse and less predictable, and the economics of simply making, protecting, and owning things become less and less favorable.

Show Notes

https://www.nytimes.com/2025/11/30/climate/zillow-climate-risk-scores-homes.html

https://www.nytimes.com/2025/11/30/climate/climate-change-disinformation.html

https://www.nytimes.com/2025/11/30/world/asia/india-delhi-pollution.html

https://www.nytimes.com/2025/11/30/world/asia/flooding-indonesia-thailand-southeast-asia.html

https://www.bbc.com/news/articles/c5y9ejley9do

https://www.theguardian.com/environment/2025/nov/22/cop30-deal-inches-closer-to-end-of-fossil-fuel-era-after-bitter-standoff

https://theconversation.com/the-world-lost-the-climate-gamble-now-it-faces-a-dangerous-new-reality-270392

https://theconversation.com/earth-is-already-shooting-through-the-1-5-c-global-warming-limit-two-major-studies-show-249133

https://www.404media.co/americas-polarization-has-become-the-worlds-side-hustle/

https://www.cnbc.com/2025/08/08/climate-insurers-are-worried-the-world-could-soon-become-uninsurable-.html

https://www.imd.org/ibyimd/sustainability/climate-change-the-emergence-of-uninsurable-areas-businesses-must-act-now-or-pay-later/

https://www.jec.senate.gov/public/index.cfm/democrats/2024/12/climate-risks-present-a-significant-threat-to-the-u-s-insurance-and-housing-markets

https://www.weforum.org/stories/2025/04/financial-system-warning-climate-nature-stories-this-week/

https://www.weforum.org/stories/2025/05/costs-climate-disasters-145-billion-nature-climate-news/

https://arstechnica.com/science/2025/11/solars-growth-in-us-almost-enough-to-offset-rising-energy-use/

https://ember-energy.org/latest-updates/global-solar-installations-surge-64-in-first-half-of-2025/

This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit letsknowthings.substack.com/subscribe