Banking, Business, Insurance and Intellectual Property

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Summary of Discussion

  1. What existing laws will climate change affect?
  2. What pressure points operate in these existing laws?
  3. Can we change via administrative discretion (using principles)?
  4. Can we change via statutory reform (using principles)?
  5. What impacts will these legal changes have?

Our group looked at climate change and its potential impacts on banking law, insurance law, intellectual property and business. Many areas of the law will be affected in relation to these, such as the equitable principles surrounding banking law, intellectual property, surrounding agriculture and energy technologies, patents and technology transfers. In addition, taxes will be impacted by climate change, as well federalism principles.

Pressure points that operate in this realm include political pressure, concerns of environmental justice, and economic realities and pressures such as tax incentives. For example, increasing tax incentives will result in less money in coffers which will result in having to re-prioritize what will be done with this money.

We really looked at the role of unregulated markets and climate change and in particular the benefits of this approach. In particular, the insurance industry should be left alone. Insurers have left markets that are too risky, specifically in coastal and windy areas. The States are picking these up at a loss, basically subsidizing insurance, which is problematic in many ways. Subsidizing results in funding a type of development that puts people in harms way, and additionally state systems are so under-funded that when damage occurs they drag down state funding with them. Additionally, it is hard to place costs on entire nation, because insurance is done state by state. Finally some states, fund their systems by passing costs on to other insurance areas, such as cars and farm insurance.

To solve the insurance problem this has caused we need to do several things. We need to increase the rates and premiums that customers must pay for state insurance policies, and provide incentivizing discounts on rates and premiums for those that invest in secure building. We also need to give tax breaks on hurricane resiliency accounts, which can be used to pay deductibles or put on safe building measures. Finally, we may consider subsidizing people who are simply too poor to pay rates. One barrier that may present itself is the politics of the real estate lobby that does not want to discourage building at the coast.

Our idea to foster a healthy relationship between the private and public sector is with the use of signals. Complex system theory says that small incremental changes may exponentially grow to mass incentives. These signals need to be done in a calibrated way so that markets don't crash and can instead absorb these new ideas and models. For example, we do not want the signals to leave the coast to be so strong that the housing market completely crashes there. We also need to be aware of the unintended consequences we may create by incentivizing. Interest groups will try to get incentives for their projects by relating them to climate change.

  • Tax Signals- used to signal to markets the type of activity they can engage in to help climate change adaptation or mitigation
  • Positive Regulatory Signals- Ex: Reduce capital charge on "green loans"
  • Trademark Aspect- create trademark that recognizes offsets-Plus: offsets have additional benefits of fostering good climate change policy; market to capture benefits in label- ADAPTO, Label communities, government logo plan idea, best of what government can do to reinforce and allow the market to do its job too; LEED label, Organics label
  • Removing Negative Regulatory Signals- Ex. Insurance law- rid of bad incentives, replace with good incentives to get people to stop living at coast. Incentivize behavior instead of trying to control behavior.
  • Government Use- government changes create a market for technology and products that are "green"; available to them and individuals, changing norms and attitudes
  • Voluntary Markets- Ex. Banks disclosing that they will not fund loans that will be used for buildings that contribute to problems or do not help solve; "Greenbank" or green initiatives (free from government regulation)

We last focused on how the government can signal and lead the private sector and public opinion into changing their attitudes and norms towards climate change issues. The private sector has important role to play in developing new ideas and standards, but eventually government may need step in and regulate. Lessons we learned show us there is a need for ADAPTO, and built-in flexibility and comprehensive planning. This calls for periodic reevaluations of the government requirements and review as data and knowledge builds. We can learn a lot from our past economic and environmental crises in planning for the future. Climate change will continue to impact coastal development and business, insurance, and real estate markets and we need to begin implementing sustainable and adaptive policies that account for this imminent climate change.

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