Prediction Markets in the Climate Web

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August 3, 2017

Yes, the Climate Web continues to expand – it’s actually a bit frightening that we have about 1,300 items newly added in the last seven weeks waiting to be fully “Climate Webbed” and then released from the “New Adds” list. Tons of fascinating stuff there, but that’s not my focus today.

Today, I will talk about Climate Prediction Markets, something I’ve known about for a long time, but which we had not yet really developed in the Climate Web. Climate prediction markets (somewhat analogous to the PredictIt political betting website with which you may be familiar) would involve betting on future climate change outcomes. For example, here’s the exact wording of a real-live bet currently pending between climate scientists Phil Mote and Radley Horton regarding how much Arctic sea ice there will be between 2020 and 2040 (as tracked daily by the National Snow and Ice Data Center):

  • If at any time before the end of 2020, the quantity falls below 1 million sq km, Phil pays Radley $300 (on December 31, 2030) and the remaining bets are void.
  • If at any point between 2021 and the end of 2030 it falls below 1 million sq km (for the first time), Phil pays Radley $150 (on December 31, 2030) and the remaining bets are void.
  • If it doesn’t fall below 1 million sq. km at any time before December 31, 2030, Radley pays Phil $150 (on December 31, 2030) but the remaining bet is not necessarily void, because:
  • If by end of 2040 it still has never fallen below 1 million sq km, Radley pays Phil an additional $150 (adjusted for inflation).

There are several potential benefits to setting up a market in which thousands of people could join Phil and Radley in this bet, or many others. The key argument for prediction markets is that the odds associated with a specific bet, while based on climate science, would in effect depoliticize the discussion of that science. Things get real when you’re forced to put your money where your mouth is, and the odds associated with a given bet would help policy-makers interpret the state of the science based on a “wisdom of the crowds” kind of approach. Many experts think that climate prediction markets could be a pivotal step forward toward breaking down barriers to climate change action and policy, which makes it all the more notable that you may never have heard the term before.

My goal today is not to expound on climate prediction markets. Rather, it’s to expound on how easily you can now learn about climate prediction markets in the Climate Web, based on materials added over the last few days. For example:

To some extent, we’ve only scratched the surface of prediction markets with what we have so far in the Climate Web. But we have organized more than 60 documents, blogs, videos, and PPTs, and we have extracted more than 100 ideas and graphics from a subset of those sources. There’s a lot more we could do to expand and customize the presentation of that information, but I suspect that even what’s there now could help bring a lot of people up to speed on an important topic very quickly.

Just as important, someone interested in climate prediction markets can go elsewhere in the Climate Web to explore all kinds of issues directly relevant to making climate bets, including climate modeling, changing probabilities of extreme events, the economic impacts of climate change, and much more. It occurred to me this morning that (among other things) the Climate Web can be thought of as a Bettor’s Guide to Climate Predictions. Almost everything a person would want to know for betting in a climate predictions market can be found in the Climate Web.

A climate prediction market actually existed several years ago, but disappeared when InTrade shut down. Right now, the most serious development of a climate prediction market is happening in the UK.

Last for today, what else should we be doing with a key topic like this? Would you attend a webinar? Purchase a short course to come up to speed? Support us in expanding the Prediction Markets section of the Climate Web?

Feedback and suggestions welcome as always.

About the author 

Mark Trexler

Mark has more than 30 years of regulatory and energy policy experience. He has advised clients around the world on climate change risk and risk management. He is widely published on business risk management topics surrounding climate change, including in the design and deployment of carbon markets. Mark has served as a lead author for the IPCC and holds advanced degrees from the University of California at Berkeley.

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