I posted this video on YouTube this morning:
The transcript dealing with this pretty big, and vital claim is:
UK banks are going to go bust because of climate change. Now, that's a big claim to make, but I think it's right. And let me explain.
When you borrow money from a bank, at least when you borrow a lot of money from a bank, the bank will normally want what they call security from you. In other words, they want some form of guarantee that you can repay.
Well, you don't wholly blame them, do you? But let's explain the most common form of security that they ask for. It's your house, or if you're a business, it's your business property. In fact, 85 per cent of all loans made by UK banks are for the purchase of houses or business properties, or are at the very least secured on the value of houses and properties.
So why are banks going to go bust because of climate change? Well, because as a very senior risk officer of a very large UK bank explained to me not so very long ago, the vast majority of the properties that they are using for the purposes of security could be underwater in the next 30 years.
They know, for example, that the Thames barrier is not going to protect London from flooding. It's just not tall enough.
They also know that if you live in the area of the country where I do, which is in the Fens, just south of the Wash in Norfolk, there's a real risk that you will be flooded at some time over the next 30 years. Well, unless you happen to live in the Isle of Ely, as I do, which is a hundred feet above sea level - in which case, you'll just be back on an island again.
They know that means that Cambridge will be underwater.
It means that Bedford will be underwater.
No, not all the time. But enough of the time that those properties will not only be uninsurable, but they will also be subject to such frequent damage that their value will be impaired and they will be no use as security for repaying the loans that the banks have lent out. on the basis of those properties.
Now, if the banks know that, why are they still lending? Well, they all pretend that they'll be able to shove their loan books - secured against the value of these properties which they know are going to flood, unless we take action to prevent it - onto some other bank in the next few years, and therefore they won't be on their books when it comes to the glorious day when the waters have risen and these properties are underwater.
But that doesn't work. They're all making that assumption. And of course, if they all make that assumption, they won't be able to pass on the loans to somebody else because that somebody else won't take them because they'll know that the property is at risk of flooding just as the ones already on their books are.
So we're heading for a banking crisis unless we deal with the risk of flooding in the UK.
Oh, by the way, this is also true of much of the USA as well, and large parts of Europe, and other places. But, let's just worry about the UK for now.
Unless we take action to control flooding in the UK, our banks will fail because the debts that are owing to them, secured on property, will not be worth the value that they have, because those properties cannot be sold. And, therefore, the banks will go bust. In which case, the most important thing we need to do to preserve UK banking from failing completely and utterly, in a way that will make 2008 and the Global Financial Crisis look a mere picnic, is to build flood defences.
But nobody's talking about doing it. And that is an act of gross irresponsibility. Not just by our government, but by the banks who are not demanding it, because they know they need it, just as much as you and I do, because it's our houses that could be flooded.
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And then there are all those flood plains that have been built on in the last thirty years.
From where I live the crunch point appears not to be the new developments on the flood plains, but the poor souls living downstream.
Instead of heavy rainfall being retained across upstream meadows it now falls on well drained concrete surfaces and is rapidly off-loaded into the river. As a consequence the people with houses downstream find themselves living next to a semi-permanent ever-rising lake.
True
I understand that some of the UK Insurers looked at jointly buying Cader Idris (Welsh Mountain by the source of the Severn) kicking the sheep off and planting a forest which would then reduce the risk of the Severn flooding, but it was politically a non starter
It is Pumlumon, rather than Cader.
It is a pretty degraded upland habitat with upland sheep dominating, and that hill farming community has a fair bit of political clout with their local politicians.
Ideally, the farmers would be persauded and co-opted into delivering rewooding and re-establishing sphagnum bog themselves, so they had an income and were not just displaced, which would be very disruptive socially and harmful to mid Wales rural communities.
Hill sheep farming only really survives through subsidy, and production costs are high.
I don’t know how the Welsh farming subsidy system post Brexit could facilitate using farmers to upscale this catchment management as long term custodians on a semi-permanent basis, alongside much reduced sheep farming and rewilding/rebogging, but it would certainly benefit the entire Severn Valley which already has long term flood management problems.
‘the vast majority of the properties that they are using for the purposes of security could be underwater in the next 30 years.’
The word ‘could’ appears to be doing an awful lot of heaving lifting in that sentence.
I am pretty sure that the stochastic modelling carried out by insurance companies on exactly this issue suggests that such a risk is well into the tail of the loss distribution.
No, they’re all sitting scared witless hoping they can dump their portfolios before the crisis happens. That’s because they’re run by human beings with short term goals.
Two questions.
1. How high would sea levels need to rise for most UK properties to be underwater? (Perhaps easier to answer for residential properties rather than all properties, and I’d settle for more than half of the 30 million or so dwellings, rather than the vast majority – whatever that may be: 75%? 90%?).
2. How likely is that to happen? (One of the more likely environmental disasters is a sudden collapse of an Antarctic ice sheet suddenly raising sea levels by several metres perhaps even tens of metres which might well do it. Perhaps that sort of shock is exactly what we need for people to realise quite how serious this is.)
For example, much of Cambridge is less than 10 metres above sea level, and lots of Oxford is 10m or less above the river (but more than 50m above sea level). My commuter town in south east England lies between about 70m to 120m above sea level. The lower lying areas around the river are liable to flooding in extreme years but that is where the parks and allotments are. Most houses are in the higher areas on either side of the river.
https://coastal.climatecentral.org/map/7/-2.6008/52.9815/?theme=sea_level_rise&map_type=year&basemap=roadmap&contiguous=true&elevation_model=best_available&forecast_year=2050&pathway=ssp3rcp70&percentile=p50&refresh=true&return_level=return_level_1&rl_model=gtsr&slr_model=ipcc_2021_med
It’s not pretty
And it is some of the highest value properties at risk
I wouldn’t use insurance companies as a goto for advice or analysis on applied hydrology.
It is perfectly possible for 100 year floods to occur in consecutive years anyway.
The periodicity of flooding is changing quite rapidly, as the frequency of high precipitation events of short duration increases, and river regime is thus altered, as is flood risk.
In England the EA has seen cuts of 70% under austerity.
Apart from devastating its regulatory functions it has also hollowed out the ability of this dedicated government agency to monitor and plan for the impacts of climate change, managing floods being just one. Recovery from this low base will take some time.
Meanwhile, almost 25% of existing flood management infrastructure is below acceptable maintenance standards.
The absence of an integrated upper catchment management programme on English and Welsh river basins, aiming to slow flow peaks, is a national disgrace, as the prescriptions are known and relatively cheap to implement, with rewooding and re-establishing sphagnum bog being the most obvious. But the ownership pattern of upland estates militates against the Tories doing anything much about that, and the SNP have fudged the same issue here.
Of course the costs of climate change – both insurance and equity losses for banks and insurance companies will be socialised, just as they were in the GFC.
Ignoring the externalities in their business models is typical of these financial institutions.
Even when I studied Applied Hydrology in the 70s there were ‘Fight Rising Damp” stickers in 4th floor windows of medium rise blocks at Thamesmead, and Harlow had no proper flood drainage system. Yet it seems little has improved since then with short termism dominating, and the sectional interests in satisfying the property developer caucus in the Tory party prevailing.
The Thames Barrier is already operating well beyond its expected operational frequency at 50 times in 2014. The barrier was closed four times in the 1980s, 35 times in the 1990s, 75 times in the 2000s and 74 times in the 2010s.
The continuation of flood plain building, especially in the south, and the short termism of Reeves wishing to reduce planning controls for new builds under a potential Labour government is a particular triumph of stupidity. SNAFU
Thanks
A cost benefit analysis is needed surely.
Sea level rising at 3-4mm a year, call it 5 if there’s an acceleration and assume buildings last 200 years, then every 200 years or so, when a building is demolished it gets replaced by another one a metre higher above sea-level.
Or you can spend on flood defences and keep building at the same elevations as now when a building is replaced.
The option that is least expensive should be taken.
This is, very politely, crass.
You assume all the costs of society can have monetary value attributed to them. Have you learned nothing from decades of such obvious failure resulting from this and similar beliefs?
There isn’t a 200 year timescale available. Given this is a world-wide issue, it is going to get awfully crowded on that ever-reducing higher ground!
It is not just the banks and the buildings. What about the agricultural areas which are already becoming unuseable? I live within a mile (as the crow flies) of the rivers Tyne and Derwent, however as we are around 130m above sea level, flooding is not an issue. Access to food may well become so.
According to your “sustainable cost accounting” methodology 99.99% of all Companies are bust. With this in mind might I suggest that your logic is flawed?
First, that is not true
But all the majhor carcon producers are and have to change their business methods or we as a race are at very real risk
Second, being in denial of this, as you are, really will not help anyone. Do you ave chgildren? If so, you are failing them.
Another footballer, Richard! Well, a football manager, but he used to be a footballer.
This particular troll doesn’t seem to be very creative.
Tedious, isn’t it?
Steve Keen with Phil Dobbie discussing on the Debunking Economics podcast , “An end to capitalism?”
20th century neoliberalism / neoclassical economics are heading us for a major / existential fail.
https://shows.acast.com/debunkingeconomics/episodes/an-end-to-capitalism
Folks, whether it be “George” or even Richard, can I point out that no man is an island, and an false confidence that things are ok if one’s house is elevated above the water line is false optimism.
If London becomes flooded, and Cambridge flooded …. Then most world cities impacted…. What about trade? Most peoples normality or ability to live, earn a living, produce food ….. It really isn’t about one’s house being higher than the neighbours!
A building does not need to be flooded all the time – just often enough to mean it becomes irreparably damaged
That is the real problem
And those feeling smug be warned: my hosue is 100 feet or thereabouts abive sea level. The trouble is I will need a ferry to get anywhere ….
This is a problem.
However, for an individual bank to act means early bankruptcy; inaction means bankruptcy later (not on my watch).
If a bank pulls out of lending against property collateral it will lose all its business to competitors…. and go out of business.
So, this is a classic case where rational action at the micro level is disaster at the macro…. and (another) example of why banks need tight regulation.
So, government action is needed
Frim Rachel Reeves? I don’t think so
Absolutely, Government MUST act.
Interestingly, it might be the BoE that takes the lead as it is a matter of financial stability. Mark Carney started moving along this path but I fear the current crowd are not up to the job.
If banks refuse to finance or put very conservative values on vulnerable areas we might see the sort of outrage that is needed to mitigate effects of climate change and even bring in tougher emissions laws.
Rachel Reeves is a Capitulator. So stupid she believes the right-wing nonsense the government has no money creation powers of its own! Don’t knock on her door for answers to the country’s major problems nor by extension her crony Keir Starmer!
Sunak has confessed he may not win the election. He has read the NEVS analysis, and is taking refuge in the hung parliament scenario. The new spin is – democracy is a disaster: “Keir Starmer propped up in Downing Street by the SNP, Liberal Democrats and the Greens would be a disaster for Britain. The country doesn’t need more political horse-trading, but action. We are the only party that has a plan to deliver on the priorities of the people.”
Propped up? At least it was an election. Sunak, the man who designed “eat out to help out the virus”; the man who couldn’t even serve the right table in the ‘Eat out…’ Photo Op; and seems to have filled up someone else’s Fiat Punto to make a ‘PM is ordinary man’ Photo Op. …. this charlatan has a “plan”. Fourteen years or economic catastrophe, from Austerity, Brexit, the BoE mess and the LDI blunder; the Building cladding scandal the Blood Scandal, the Covid Inquiry and Government failure, including PPE and gross contractual mismanagement; the Defence failures which had the Government arguing the Army could be cut because conventional warfare was effectively redundant – just before the Ukraine war began (see Johnson before the Defence Select Committee); the energy security and supply disaster that has everyone paying world prices for our own Green energy; the English leasehold nightmare, the Mortgage rises, the Post Office shambles – owned by Government, which has failed to take responsibility in over 20 years, or even ask the tough questions, and allowed innocent people to be sent to prison; the failure to address the Russia problem since the Litvinenko assassination and the oligarch fuelled Londongrad disaster; the Rwanda mess; the Waspi women. This list is not comprehensive, it is a mere short list. The problem is far bigger.
That is what a Sunak Plan promises. This is what a Conservative “Plan” always turns out to be. The Conservatives rely on FPTP so they can run an elective dictatorship even with a substantial Parliamentary majority with under 24% support of the total electorate. And argue that democracy and having to negotiate with non-Conservatives is a definition of “disaster”.
Much to ageree with
Anybody believing that projection is very follish – but Sunak will
Depressingly correct John. The disaster that is FPTP is what enables the Tories to do this. And the morons in labour go along with them. Just how stupid is the labour party?
Further to my your comment John re the drivel Sunak comes up with. Is there ever any point in listening to this absurd little man?
It’s not just sea level rise: as the temperature of the air column rises, it can hold more moisture, so we are likely to have periods of heavier rainfall, which will add to the risk of flooding. The prediction is that the total volume of precipitation is likely to increase by 1-2% per degree of warming.
[…] UK banks will go bust because of climate change Funding the Future […]
The lenders are starting to pay attention to this. Nationwide was in the news recently for backing out of funding floodable homes. I expect similar policies to start cropping up at other lenders, and soon it will go beyond homes at risk of flooding. Near the coast at risk of coastal erosion? Near the countryside at risk of wildfire? And there’s probably many risks of climate change that we are not yet even aware of.
https://www.theguardian.com/business/2024/apr/30/nationwide-stops-lending-on-some-flood-risk-properties
Sea levels are rising about 3mm a year.
The lowest levels of elevation in the UK are about 1m above sea level apart from some inland fens.
Which means that there are about 300 years before even low level areas are at sea level.
Bank mortgages typically aren’t longer than 25 years.
I suppose this panic is because one of the low level areas is Downham Market and your house value has gone down because of flood risk.
The banks will be ok though. Can’t see them being too worried about something 300+ years in the future, especially if houses on the remaining land will go up in price.
Oh dear, another idiot comes along who does so much research that they think I live in Downham Market which has nit bern true for nearly a decade.
And if you think 3mm is not. Problem and sea levels are always smooth, I suggested going to look at the North Sea in a storm. The problem is irreparable damage from occasional flooding. That’s enough.
Large areas of the fens are only land because of constant pumping, and the situation is far from stable. The bread and veg basket of England is pretty important for UK food production.
Absolute rise in UK sea levels was estimated at 1-2mm per 100 years in the 1990s.
Current revisions are to 3-5mm, a mere 20 years later.
There are some scenarios with predictions of over a metre rise by 2100 which are also credible.
These sea level rise predictions are mostly due to increases in thermal expansion of the oceans plus the rate of ice sheet melt.
Temperature rises and especially buffering ocean temperatures are already higher than the levels modelled a decade ago, with the highest global average sea temperature being experienced currently.
The other main contributor to global sea level rise is Greenland and Antarctic ice sheet melt.
Both are also accelerating – just check out the Thwaite Glacier over the last 20 years.
I’d suggest we are very close to ice sheet tipping points, where the impacts will be substantially higher, yet are still unpredictable, as modelling feedback loops is tricky in their early stages.
Add in that the south and east of the UK is still sinking at 2-4mm due to isostatic readjustment and the 3mm annual figure looks even more ridiculous.
Nor is it the average rate of HWM rise that is the key issue.
We have weather systems that create surge tides (as in 1953) several metres higher than the usual HWM of mean tides. All low pressure systems lift the levels of high tides.
Spring and equinoctial tides are often 1-2 m higher than HWM of mean tides.
To this, we need factor in the increasing wave heights in storms, and frequency and magnitude of river flooding as caused by extreme precipitation events and overall rises in rainfall totals.
It would be very foolhardy indeed for anyone to be so complacent as to assume that 3mm is the going rate for sea level rise for the next few hundred years, and that is the only relevant statistic needed.
Agreed
Turn the pumps off and the fens flood in two weeks
Perhaps this explains the ongoing looting being performed by various govt departments. They are aware we’re at the end of this particular Rome and are behaving accordingly.
On the subject of social collapse, the following; I travel regularly by bus. Some people, mostly but not specifically youths, are refusing to either pay or get off. The drivers, so far, after making an initial stand, cave and let them ride for free. I would imagine this is company policy. So far only isolated instances but I’m seeing it more lately. How long, I wonder, before exasperated passengers who normally wouldn’t dream of paying, start to refuse to pay in numbers on the basis that if some can ride for free, why shouldn’t they ride for free too? Collapse begins in small ways, perhaps, but it most definitely begins.
Seems as though the companies concerned are operating in “fingers crossed” mode. I have a book with old maps of the Netherlands dating from 12th century onwards. There were colossal floods which rubbed out vast amounts of land circa 1300. In the 1950s – massive floods in NL and UK – the former building dykes the latter .. much less so. The problem is storm surges plus heavy rain – if (when?) the two come together Thames Barrier will have a problem – on both sides. Germany, apocalyptic floods in 2021 – plenty of floods in the UK, more will happen – warm air holds more water. But after a short period of time, people forget and assume “system normal” & assume that those that should know what they are doing – do. They often don’t.
Agreed
Over the February Half Term I took my Middle Son to Bristol to see the Titanic Exhibition at The paint Works.
We walked under the Western End of Temple Meads Station and along the River Avon. It was about high tide and with a lot of ‘fresh’ coming down as well as a very high high tide the path and the road was flooded in places.
Now 3mm may not sound a lot but a very small rise in sea level, and bear in mind its cumulative, 3mm a year/decade/whatever adds up.
Also of course its constantly eroding your margin of safety and its not just the absolute sea level. there is that slightly higher water table, more water running down the rivers, more ‘energy’ in the weather systems so more rain, and of course wind which can push the tide higher.
https://en.wikipedia.org/wiki/North_Sea_flood_of_1953
Someone I worked with was a Fleet Air Arm Observer who was part of a UK Relief Effort sent to The Netherlands and described flying for miles over water that was marked as land on the maps, we dont want that again.
The rise in sea level may reverse, but for an even more depressing reason. Unlike inexorable global warming, a nuclear holocaust is unlikely in any given year, but may be almost inevitable over a longer period. Consider the number of current and recent psychopaths with control of nuclear weapons – Putin, Xi, Modi, Netanyahu, maybe Trump again. The chance of a nuclear war at any time is small, but in the longer term it becomes an inevitability. Major volcanic eruptions have had a significant effect on climate (wikipedia.org/wiki/Volcanic_winter), nuclear could be far worse. Just in case you aren’t depressed enough already.
There’s no evidence on what a nuclear holocaust might do except MAD, but there’s plenty of research on the impact of volcanic dust in the atmosphere.
It is a tiny influence by comparision with carbon emissions. The Mt St Helens eruption’s ash and dust temporary contribution to global cooling was equivalent to about a week’s global carbon emissions.
In 2010 global volcanic emissions contributed a counter influence of between of 0.4% and 1.2% of carbon emissions. (USGS data)
Until the flooding of major capital cities around the globe happens on a regular basis (ie at least annually) then nothing will happen.
Thanks for the at risk map, Richard. Had we stayed in our former house in Southport, we would have had the sea at the bottom of our garden.
We seem to be on course for joining the rest of Doggerland, beneath the waves. Treating the ground beneath our feet as if it’s permanent has always been folly. Houses in flood plains should have been built on pontoons together with their connecting roads, utilities being supplied to them by flexible piping. Thus the local infrastructure can rise and fall with the tides. The model for this exists in Holland and I believe there’s somewhere in the UK this idea has been put into practice to good effect… can’t recall where though. It’s wildly irresponsible of supposed authorities to allow house-building on flood plains without insisting special precautions aren’t built in.
Marc Robinson looked at the costs of managing global warming/climate change in his book “bigger Government” and came to the conclusion that investing in defenses and other measures is inevitable, desirable and affordable.
The only problem is a democracy producing parties who believe that priority is given to small government, reducing public expenditure and hoping for the best.
The Thames barrier will probably break and not go up any more before it is over topped. I don’t believe the banks recognise climate change. They are all like the HSBC’s Stuart Kirk. The economics says climate change will only reduce GDP by a few percent over the next century so it’s business as usual for ever for them. They’re never entertain the idea that actually their stupidity borders on insanity.
The Thames Barrier is due for a major upgrade between 2040 and 2100 to account for climate change sea level rise. In fact, the final scheme may require another barrier downstream of Woolwich. Any scheme will require upgrading the existing upstream flood protection and the downstream flood walls. There’s a good description of the options being considered at:
https://www.gov.uk/guidance/managing-future-flood-risk-and-thames-barrier-thames-estuary-2100
Of course, any changes to the Thames Flood Protection will do nothing for anywhere outside the Thames Estuary.
This map in the Hull Daily Mail shows the towns that could be flooded and hence inhabitable by 2050. I live in a slightly higher area – but like Richard would only be able to get out by boat!
https://www.hulldailymail.co.uk/news/hull-east-yorkshire-news/east-yorkshire-towns-villages-disappear-5522141
In 2002, I wanted to insure a house near Goole. Two companies said they no longer insured houses in the DN postal area. Which stretches from Doncaster to the East coast… That was 22 years ago…
Good.
“When you borrow money from a bank, at least when you borrow a lot of money from a bank, the bank will normally want what they call security from you. In other words, they want some form of guarantee that you can repay.”
How much of the loan is #newmoney from the BoE, which then disappears when the loan is completed?
Does the ‘security’ the property, thus belong to ‘the People’ and not the private bank?
Regards.
Banks create bank money when they lend.
They do not lend BoE money.
See section 16.5 of the Taxing Wealth Report (full version)
A whole load of quotes from Central Banks that private banks create money when they make a loan :
https://www.taxresearch.org.uk/Blog/2024/01/06/central-bankers-on-the-ability-of-banks-to-create-money-out-of-thin-air/
🙂
https://www.theguardian.com/environment/article/2024/may/08/world-scientists-climate-failure-survey-global-temperature
That is grim reading