Asset value will shape the existential politics of climate change - by Carlos Alvarenga - Thematikshttps://www.thematiks.com/p/asset-value-will-shape-the-existentialthe authors propose a new framework based on the idea that in every developed nation one finds holders of climate-forcing assets (CFAs) (e.g., example, oil fields, beef farms) and holders of climate-vulnerable assets (CVAs) (e.g., coastal property, fisheries). From the 1980s to mid-1990s, the authors note, CFA holders were content to cast doubt on the certainty of climate science to prevent CVA holders from realizing the threat that they faced and thus mobilizing against CFA-friendly policies. However, starting in the late 1990s, CFA holders became more aware of the economic threats to their assets and began to mobilize, as specific sectors and communities (e.g., coal miners, flood-prone areas) began to feel the real costs imposed by a shifting climate.
Since that time, many nations and companies have begun to act unilaterally, often in line with the degree of the perceived economic vulnerability of held assets. This shift comes about from a greater awareness of the potential financial impact of climate change as well as the growing number of entities that it affects. In other words, whereas CFA holders were previously generally restricted to fossil fuel companies, the authors note that “it is now clear that vast swaths of the economy will have to decarbonize relatively soon.” Indeed, sectors such as shipping, aviation, and industrial and chemical production can now be considered CFAs. Decarbonization and climate change, note the authors, “are not only deepening the concentration of interests among CFA and CVA holders, they are also ‘broadening’ the dispersion of those interests.”
The broadening of the present and future CVA ecosystem is leading to new legal and policy initiatives in response to the increasing economic threat that climate change poses. In the legal realm, for example, “there are an increasing number of lawsuits in which future generations and other affected groups are compelling states to increase their climate policies.”
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Climate change and decarbonization policies raise the prospect of extinction for CVAs and CFAs, respectively. It contrasts with other kinds of distributional politics, which involve adjustments on the margins (for example, falling wages) or through which a substitutable good is lost (for example, high trade tariffs making avocados prohibitively expensive, leading to consumers buying something else).
Existential politics often means that there is a contest over whose way of life gets to survive. Should we have Miami Beach and the Marshall Islands, or should we have coal miners, ExxonMobil, and Chevron? This extreme form of distributional politics exists in other areas of international political economy (for example, a trade agreement or technological change can wipe out an uncompetitive industry), but we suggest that the scale of climate change will make existential politics the increasingly dominant lens through which to understand climate politics.