Understanding Climate Risk

Science, policy and decision-making

The Clean Energy Package risk perception paradox

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This post concentrates on the paradox between the perception of climate change as a risk and opposition to carbon taxes. How the clean energy package is framed and communicated is just as important as the policy initiatives it contains.

The Clean Energy Package does not communicate to Australians the full benefits of reducing their emissions. It uses the standard method of saying the CAP will mitigate serious climate impacts:

This plan has been devised in response to clear scientific advice that the world is warming, that carbon pollution from human activity creates significant risks and that we can avoid the worst potential impacts by reducing carbon pollution.

Taking action on climate change is in our national interest. Australia faces acute risks from climate change. Faced with the serious  negative consequences for our natural systems (including national icons like the Great Barrier Reef and Kakadu), our economy and our way of life, it would be irresponsible not to play our part in international action on climate change. Taking action sooner rather than later means that the transition to a clean energy future can be more gradual, manageable and affordable. Treasury  modelling shows that, for economies like Australia, deferring action will only lead to higher long-term costs.

This is pretty abstract. However, the research needed to communicate the benefits of avoided damages is difficult to address, requiring a comprehensive assessment of damages ranging from market impacts to intangibles such cultural and spiritual values. The benefits of avoided damages, inclusive of adaptation and  mitigation, need to be outlined. These findings also need to be communicated at the personal level. How people perceive climate risks is critical as to whether they  are willing to bear the cost of climate action.

The framing of climate change within visions of the future is an important aspect of risk perception. The economic modelling of climate policy still treats the future economic baseline as a world without climate change. According to the best available scientific information, this is incorrect. The future does not follow a pre-climate change baseline  projection of economic growth – it is a world where climate is already changing,  those changes are not smooth, and the climate extremes that accompany climate shifts deliver the biggest social and economic hits. So the future  under climate change sits squarely on the loss side of the ledger. The cost of  climate action through mitigation is therefore deferred gain rather than net  loss.

So to suggest, as the Treasury modelling does, that the  economy grows almost as fast as it otherwise would have to 2050 – reducing by 0.1%  Gross National Income per person to 2050 is correct in model world but does not  reflect a real world baseline because it does not account for the impacts of  climate change (They do discuss this, but it’s not way the discussion is framed). Recent climate shocks have knocked up to 1% off annual Gross National Product. These shocks have originated in climate variability (e.g., La  Niña, El Niño, heat waves) but have been made more severe by climate change. The non-linear damage response to extreme events means that a significant proportion of the damage bill will be due to climate change and it very likely exceeds the net cost of a carbon pricing scheme estimated by the Treasury models.

Most of our personal and public narratives are rooted in the same past as the Treasury models. Most people born before 1980–1990 grew up with their hopes and dreams – but climate change was not part of it. People with a political vision may focus on politics and the economy, perhaps globalisation and growth – but the climate does not change. Those concerned about the over-use of resources and ecological breakdown readily accept the risks of climate change. Those who strongly identify with historical social, economic and political structures and their future evolution may be greatly conflicted. Particular challenges arise when the governance of climate change policy clashes with personal identity and world view.

Those born after 1990 were born into climate change . Students learn about climate change in junior school, but when the focus shifts to jobs and careers, the same conflicts arise. Climate change is largely separate from mainstream narratives and is largely seen as negative – who wants to grow up in a world that may be torn apart by water wars or where natural systems are breaking down? People like to feel in control and if it becomes a choice between IPhones and climate breakdown …

Arising from these issues are two questions to be asked of the package:

  1. Does it increase peoples’ control of their future under climate change?
  2. Does is it deliver in terms of effectiveness, equity and efficiency?

Many experts (also here) and commentators  have responded to the second question. Given the current political situation, the package is comprehensive  and well crafted. The relationship between price and rates of emission reduction is unclear. However, a capped system would fix the amount of reduction but be less certain on price. This relationship will be better known by the time the price is floated from 2015. All in all, the package does the three Es (effectiveness, equity and efficiency) pretty well. Its major weakness is in the public perception of risk.

To address the first question we need to understand a little more about the perception of risks surrounding climate change. In the journal Climatic Change, Anthony Lieserowitz (2006) outlined the analytical and emotional links to thinking about risk. Cultural theory positions how analytical and emotional thought processes relate to the rationales used in personal assessments of risk. For example, egalitarians will look for what they perceive as a fair and equitable solution whereas individualists will seek alternatives that maximise personal freedom. Surveying Americans, Lieserowitz found that the majority considered climate change a moderate risk that required policy interventions. However, the majority was also opposed to potential tax measures to manage that risk. These results are consistent with attitudes in Australia. He found that support for tax depended strongly on the following factors:

The resulting research model predicted 27% of the variance in support for higher taxes. Egalitarianism was the single most powerful predictor (19%, p < .001) of support. The second-most powerful predictor was political ideology (−16%, p < .01), followed by holistic negative affect (15%, p < .001). Naysayers, individualism, hierarchism, education, and whites remained significant, though weaker predictors in the full model. Thus, values and affect were stronger predictors of support for tax  policies than the socio-demographic variables, with the exception of political ideology.

Lieserowitz found affect (a person’s good or bad, positive or negative feelings about specific objects, ideas or images) a particularly strong driver of attitude. The increased politicisation of climate change science has accentuated the divide between different views on climate change both in the US and Australia, resulting in very strong opposition to a carbon price, especially labelled as a tax, along political lines. (Note that another study Carson et al. (2009)) found strong support for climate policy, but the questions were less direct regarding the personal cost of such policy. Climate policy in Australia since that study has also become more politicised and now more strongly mirrors that in the US.)

The result is a paradox where the majority of people may identify climate change as a risk but can also oppose measures that directly affect them as individuals. This is partly because climate change is seen to affect someone else, and is remote in time and place. Whereas the perceived effect of a tax on income, or on job security, is now. It is also much more visible in the mainstream media.

People are more likely to embrace measures such as a tax, levy or traded price if they can see how the issue affects them personally; they are in control of at least part of the transaction and can see a benefit from it. The household compensation side of the package combined with tax reform does provide a level of control and self-determination. Jobs packages and specific investment for exposed industries and transitional programs will provide more security. The entry of carbon offset programs into primary industry provide another potential income stream for that sector.

Is there a sound scientific case for communicating to people that they are already being affected by climate change? Is possible to communicate that information in a supportive manner that gives individuals better control over their future?

I believe the answer to that question to both  questions is yes. The recent fires in SE Australia, the heat waves, the severity of floods in Queensland and Victoria and the prolonged drought in southern Australia all have a significant anthropogenic fingerprint which is affecting people, the environment and the economy. Climate-sensitive occupations such as farming have been severely affected in some regions, both positive and negative. Peak power usage, a combination of lifestyle factors, poorly designed buildings and extreme heat are driving utility prices up faster than carbon pricing is likely to do. However people ‘see’ the effect of carbon prices in their electricity bills and respond to it negatively whereas the cost of peak power, energy system security and gaming of the regulator for profit is much less visible but much more costly. This emphasises a key need for climate policy – to ensure that people have more control over their individual circumstances.

The Australian economy is currently experiencing two separate costs from climate change: impacts and mitigation. Without mitigation, the only direction is worse off than the pre-climate change baseline – that’s the new business as usual. Mitigation in both Australia and globally economy that has occurred over the past five years will deliver net benefits by 2030; the benefits of the carbon energy package will be felt by 2040. The good news is that Australia is not acting alone, so these benefits will be shared.

The net loss that will be experienced over the next two to three decades requires adaptation efforts to reduce the costs of impacts already being experienced. Joint adaptation-mitigation efforts provide a double dividend; for example bio-sequestration with ecological benefits, energy management in the built environment that jointly reduces emissions and peak demand, and joint water and carbon management. The biodiversity fund in the package is welcome, but could be expanded rapidly in size after its L plates are taken off. Furthermore, the best way to take advantage of Australia’s rich endowment of natural resource commodities is to develop them so that the life cycle emissions of the products and services they supply are minimised.

Characterising the contribution of politics to risk percption so far, the Liberal Party has been 100% emotional, going after psychological affect to emphasise the cost of a tax and solidify its opposition. The lack of an analytical approach hasn’t mattered too much in the camp of public opinion. The Labor Party’s approach has been rational and wonkish. It’s tried to reassure people at an abstract level but has not so directly addressed the politics of the personal. The Greens appeal to the environmental and social framing of climate change that appeals to egalitarians but is rejected by many individualists and hierarchists. Science has concentrated on the information gap model of science communication, driven by the assumption that better science leads to better decision-making. The psychology of risk shows this ain’t necessarily so. The narratives that people draw on to imagine the future are out of date. It’s time to get personal.


Leiserowitz A (2006) Climate change risk perception and policy preferences: The role of affect, imagery, and values. Climatic Change 77 (1):45-72. doi:10.1007/s10584-006-9059-9

Carson RT, Louviere JJ, Wei E Alternative australian climate change plans: The public’s views. Energy Policy 38 (2):902-911


Written by Roger Jones

July 12, 2011 at 12:36 pm

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