170227-environment

When most people think about climate adaptation, they think of sea walls, levees, dams, and other massive infrastructure projects that reduce our physical exposure to extreme weather. By focusing on reducing physical exposure, we often overlook another means by which we can adapt: using markets to manage our financial exposure. Financial instruments have long been used to manage uncertainty in economic conditions. So why not look to financial markets to manage risks related to a changing climate? The answer, according to Foster is that, to some extent, we already are. This presentation will discuss the roles of physical and financial adaptation strategies for managing risks related to extreme weather events, particularly when those events are uncertain. Foster will detail how corn and barge markets dealt with drought on the Mississippi River in 2012 and draw lessons from that context.