Nobody expected that a tsunami would affect Japan's nuclear plants. And climate change will raise the possibility of such awful, unlikely happenings around the world.
Carlos Barria / Reuters
We know that there is always a "silver lining" of disasters. At a minimum, new government jobs are created as the public demands "action" and somebody must co-ordinate the rebuilding efforts. Whether the shock is the Moscow Heat Wave of 2010, 2005 Katrina or 2011 Northern Japan, how much do we update our prior beliefs in response to a very salient shock? Permit me to offer some quotes from this article.
"We can only work on precedent, and there was no precedent,” said Tsuneo Futami, a former Tokyo Electric nuclear engineer who was the director of Fukushima Daiichi in the late 1990s. “When I headed the plant, the thought of a tsunami never crossed my mind.”
This is a fascinating quote. Mr. Daiichi is implicitly saying that based on his sampling of history that the probability of a Tsunami affecting his power plant was 0%. This sounds a little like Wall Street in 2008. In that case, what was the probability that all U.S local housing markets declined in value at the same time? It had never happened before so it couldn't happen.
For those who care about adapting to climate change, this is fascinating stuff. Climate change is likely to raise the probability of very unlikely nasty events. If these events used to be a 1 in ten million chance of taking place and now they are a 1 in 100,000 chance of taking place, then there will be protective investments that will pass a "cost/benefit" test that could be invested in.