2007: What does Buffett think about global warming?
AUDIENCE MEMBER: Good morning. I’m Glen Strong (PH) from Canton, Ohio.
Please tell us where you stand on the global warming debate or where your managers at General Re stand.
In particular, perhaps you can give us your thoughts on the science of global warming and how serious you believe it is, and whether warming is actually more harmful than helpful. Thank you.
WARREN BUFFETT: Yep. Well, I believe the odds are good that it is serious. I’m not enough of a — I can’t say that with 100 percent certainty or 90 percent certainty, but I think that there’s enough evidence that it would be very foolish to say that it’s 100 percent certain or 90 percent certain that it isn’t a problem.
And since it’s — if it is a problem, it’s a problem that once it manifests itself to a very significant degree, it’s a little too late to do something about it.
In other words, you really have to build the ark before the rains come, in this case. I think if you make a mistake, in terms of a social decision, you should, what I call err, on the side of the planet.
In other words, you should build a margin of safety into your thinking about the future of the only planet we’ve got a hundred years from now.
So I think — I take it seriously. In terms of our own businesses, you mentioned General Re. Gen Re writes less — way less business — that would be subject to the annual increments in global warming that would have an effect on their results than the reinsurance division of National Indemnity, where we write far more of the catastrophe business.
It’s not going to affect, you know, in any measurable degree at all, you know, excess casualty insurance, property insurance. You’re thinking much more of whether it’s going to produce atmospheric changes that change materially the probabilities of really — of catastrophes, both their frequency and their intensity.
In my own mind, and in the minds of the people that run National Indemnity’s reinsurance division, we crank — we think the exposure goes up every year because of what’s going on in the atmosphere, even though we don’t understand very well what goes on in the atmosphere.
And the relationship between damage caused and the causal factors is not linear at all. I mean, it can be explosive.
So if temperatures in the waters of the Atlantic or something change by relatively small amounts, or what seem like small amounts, it could increase the expectable losses from a given hurricane season by a factor of two, three, four or five.
So we’re plenty cautious about it. It’s not something that keeps me up, in terms of our financial prospects, at all at Berkshire. But it’s something that I think every citizen ought to be very cognizant of and make a decision on.
CHARLIE MUNGER: Well, of course carbon dioxide is what plants eat. And so — and generally speaking, I think it’s a little more comfortable to have it a little warmer instead of a little colder. (Laughter)
WARREN BUFFETT: I hope you don’t get a chance to test that after death, Charlie. (Laughs)
CHARLIE MUNGER: It isn’t as though there’s a vast flood of people trying to move to North Dakota from southern California.
And so you’re talking about dislocation. It’s not at all clear to me that, net, it would be worse for mankind in general to have the planet a little hotter.
But the dislocations would cause agonies for a great many places, particularly those that would soon find themselves underwater.
WARREN BUFFETT: Yeah. I was going to ask you. How do you feel about the sea level being 15 or 20 feet higher? (Laughs)
CHARLIE MUNGER: Well, that’s very unfortunate, but — (Laughter)
Holland lives with what, 25 percent of the nation below sea level? With enough time and enough capital, why, these things can be adjusted, too.
I don’t think it’s an utter calamity for man that threatens the whole human race or anything like that. You know, you’d have to be a pot-smoking journalism student or something to — (Applause)
CHARLIE MUNGER: — believe that.
WARREN BUFFETT: We’re finally unleashing him, folks. (Laughter)
Well, we’ll continue to have people in charge of insurance who are plenty worried about global warming, I promise you.
But it — we don’t know — we do know that 2004 and 2005, there was a frequency, and more particularly, there was an intensity of hurricanes that would not be expected at all by looking at the previous century.
And we were spared — even though we had Katrina — we were spared what could have been a far worse case by a couple of Category Fives that didn’t hit the mainland.
So I do not regard Katrina as being anywhere near a worst-case scenario.
And, like I say, I don’t know whether — how much of — I don’t know whether the water is a half a degree or 1 degree Fahrenheit warmer than 30 years ago, but I don’t know — and I don’t know all the factors that go into hurricanes.
I mean, I know that, obviously, the water temperature, you know, contributes to energy and all that sort. But there could be 50 variables.
All I know is, on balance, I think they’re probably getting more negative for us and I know we ought to be very careful about it. And I know that it would be crazy to write insurance in 2007 at the same rates that it was being written a few years ago, in relation to catastrophes.
And since we’re in the catastrophe business, that is something I think about, and the people that actually write the policies think about it as well. So it’s a factor with us.