Money where your mouth is

The claim global warming has ended has been du jour recently - particularly because of the recent cold winter. Never mind that the the temperature trend is still up.

As finance blogger Barry Ritzholz comments, "If the above long term chart was a stock, would you short it?". (Graph from here.)

Anyway, a recent Nature article by a German research group makes the projection that global warming will take a pause for the next few years - that the periods 2000-2010 and 2005-2015 will be slightly cooler than the 2004-2014.

In response, the guys at RealClimate have said are willing to put up money against these predictions:

If the average temperature 2000-2010 (their first forecast) really turns out to be lower or equal to the average temperature 1994-2004 (*), we will pay them € 2500. If it turns out to be warmer, they pay us € 2500. This bet will be decided by the end of 2010.

We offer the same for their second forecast: If 2005-2015 (*) turns out to be colder or equal compared to 1994-2004 (*), we will pay them € 2500 – if it turns out to be warmer, they pay us the same. The basis for the temperature comparison will be the HadCRUT3 global mean surface temperature data set used by the authors in their paper.

William Connolley has already offered a bet that the Germans won't take it. Blogger Tamino points out one reason:

They’d be suckers to take your bet, especially the first part. The Nov.1994 - Oct.2004 average for HadCRUT3v is 0.3594, the average from Nov.2000 to the present is 0.4246. This means that for them to win the 2000-2010 part, the average temperature from now to Oct.2010 would have to drop to 0.1722. ‘Tain’t likely.

Let's see if the second part goes through...

Comments

[Miles]

Glad to see the explosion in events-based gambling hasn't spared the climate science community:
(see http://www.businessweek.com/ap/financialnews/D90D0HPG1.htm)

I wonder how much cash needs to be wagered on the outcome in order to incentivise serious investment in countering (or accelerating!) climate change. Hmm...

i) If enough money is invested in hedging against consequences of climate change (especially if only a few very large companies invest in the other side of the deal), could the counterparties start investing in mitigation and adaptation purely in order to avoid paying out?
ii) or if Realclimate had sufficient financial interest might they start downplaying the risks of temperature rise in order induce 'temperature complacency' and claim their winnings?