Cities adapt to wacky weather
Optimists of the world unite. This article talks about cities making capital investments in "winter weather equipment, which will help better prepare the roads for travel when the weather hits. Dallas, Atlanta and Chicago have all readied themselves for the upcoming season by purchasing new snow plows and other equipment. "
Doesn't this sound like learning from experience and investment under uncertainty? This is the "small ball" of adaptation. Now, will London's airports buy some snow plows? I believe that the answer is "yes". Capitalism offers many products for adapting to new weather patterns. Where there is demand, supply will follow.
Economic theory predicts that we do not make the same mistake twice. We learn from past mistakes and change our behavior to protect ourselves from scenarios such as wacky weather that become more likely because of climate change. When we know "that we do not know" what extreme weather will be, we purchase certain types of "insurance" such as having extra plowing equipment in case an extreme snow storm takes place. Be prepared! While adaptation is not costless, this forward looking approach (armed with the financial resources to finance the equipment purchases) helps to protect us.
Doom and gloomers are implicitly adherents of behavioral economics. If we are myopic and we do not update our prior probability assessments then we can certainly be blindsided by climate change but as this Wacky Weather example highlights, investment patterns are changing in anticipation of the "new normal". Again, this is the logic of Climatopolis!
