Exploring the Business Case

Creating the frame for making choices

Tim O’Reilly observes that Pascal’s wager is a significant and early expression of decision theory when faced with a choice of what to believe when reason or science fails to provide a definitive answer is a simple and effective way to reason about contemporary problems like climate change.

We don’t need to be 100 per cent sure that the worst fears of climate scientists are correct in order to act. All we need to think about are the consequences of being wrong.

Let’s assume for a moment that there is no human-caused climate change, or that the consequences are not dire, and we’ve made big investments to divert it. What’s the worst that happens? In order to deal with climate change:

1. We’ve made major investments in renewable energy. This is an urgent issue even in the absence of global warming, as the International Energy Agency has now revised the date of “peak oil” to 2020, only eight years from now.

2. We’ve invested in a potent new source of jobs.

3. We’ve improved our national security by reducing our dependence on oil from hostile or unstable regions.

4. We’ve mitigated the enormous off-the-books economic losses from pollution. China recently estimated these losses at 10 per cent of GDP. We currently subsidize fossil fuels in dozens of ways, by allowing power companies, auto companies, and others to keep environmental costs off the books, by funding the infrastructure for autos at public expense while demanding the railroads build their own infrastructure, and so on.

5. We’ve renewed our industrial base, investing in new industries rather than propping up old ones. Climate skeptics like Bjorn Lomberg like to cite the cost of dealing with global warming. But these costs are similar to the “costs” by record companies in the switch to digital-music distribution, or the cost to newspapers implicit in the rise of the Web. That is they are costs to existing industries, but they ignore the opportunities for new industries that exploit the new technology. I have yet to see a convincing case made that the costs of dealing with climate change aren’t principally the costs of protecting old industries.

By contrast, let’s assume the climate skeptics are wrong. We face the displacement of millions of people, droughts, floods, and other extreme weather, species loss, and economic harm that make us long for the good old days of the current financial-industry meltdown.

Climate change is really a modern version of Pascal’s wager. On one side, the worst outcome is that we’ve built a more robust economy. On the other, the worst outcome really is Hell. In short, we do better if we believe in climate change and act on that belief even if we turn out to be wrong.

But I digress. The illustration has become the entire argument. Pascal’s wager is not just for mathematicians, nor the religiously inclined. It is a useful tool for any thinking person.

Tim O’Reilly, O’Reilly Media
Pascal’s Wager from This Explains Everything
Edited by John Brockman, Founder of edge.org


Make up your own Mind

I don’t tell people what to think. I am only saying what I think. I would like people to make up their own minds.
Neil Young – Canadian musician

Everybody is entitled to their opinion. It’s equally true, however, that everyone is not entitled to their own facts.

More oil sands facts, less rock star rhetoric
Dave Collier, – President, Canadian Association of Petroleum Producers

The Athabasca River is part of the third largest watershed in the world. Processing one barrel of bitumen requires approximately three barrels of water. The toxic water is then pumped into giant tailings ponds alongside the shore. Enough natural gas is burned to heat 4 million homes daily, while local upgraders emit 300 tonnes of sulphur. Per day, tar sands operations release as much carbon dioxide as all the cars in Canada. No comprehensive assessment of the megaproject’s environmental, economic, or social impact has been done.

Peter Mettler
Petropolis – Aerial Perspectives on the Alberta Oil Sands – Film

There is stronger scientific consensus than ever that climate change is real, and more and more evidence that fighting climate change has positive side effects or co-benefits. The United Nations acknowledged in a 2016 brief on sustainable development that the co-benefits of initiatives to reduce greenhouse gas emissions aren’t always well documented which underestimates their positive impact. The UN report found:

  • In some forest projects to mitigate climate change, co-benefits represent between 53 to 92 per cent of total benefits.
  • Co-benefits typically represent more than 50 per cent of direct benefits from investments in energy efficiency and renewable energy.
  • Reducing fossil fuel dependence in the U.S. decreases the danger of disruptions in the energy supply and economic losses due to price volatility, worth about $5 US per tonne of CO2.

Fighting climate change may be cheaper and more beneficial than we think
Emily Chung, CBC News, 2019.07.10

The best way way to predict the future is to create it.
Peter Drucker

Peter Ferdinand Drucker was an Austrian-born American management consultant, educator, and author, whose writings contributed to the philosophical and practical foundations of the modern business corporation. He was also a leader in the development of management education, and he invented the concept known as management by objectives.

Creative Connections

Restoring Our Environment – our resources for our future
Restoring Our Atmosphere – our essential resource for our future
Restoring Our Oceans – our food resource for our future
Restoring Our Climate – for our future
Creating Our Energy Systems – our future is clean renewable energy
Creating Our Learning Systems – our ability to create our future
Creating Our Recovery Systems – preparing for massive change
Creating Our Systems – designing for our future
Creating Our Water Systems – our keystone resource for our future
Quantum Ideas – exploring possibilities for our future
Quantum Enterprise Forum – creating the quantum story
Quantum Enterprise Forum – creating the quantum story
Exploring the Quantum Idea – the quantum mechanics
Quantum World Foundation – investing in the future of our world
Exploring the Business Case – the economic argument