> Create futures of earth not warming more than 2°C in the next 3 decades, let all the climate skeptics put money where their mouth is and buy these futures.
What's the motivation for them to do so?
What's the motivation for them to do so?
>"All the people who are working on solving climate change can short these futures and have an incentive to work on these problems."
But I think they either misunderstand or misstate how the futures would be created. Someone needs to actually issue the futures, and I'm not sure who would do it; these 'futures' contracts seem more like straight bets than actual futures.
In any case, you'd need some credible issuer to create them, either an intermediary or the climate 'workers'. The problem is that you'd need the holder of the long position to be able to pay out in case they lost; so they need to either insure against the possibility of loss (which would be prohibitively expensive), or have some other source of money to pay off a loss. Given these conditions, it seems like the only 'people' who could actually benefit from being long on this instrument would be large corporations, who have easier ways of generating the capital.
The simplest way to generate the funding the author wants to convey to 'workers' is to create a joint-stock corporation and issue shares on the open market... But that's already possible and not novel (though regulation has made this very very expensive).
You're right I didn't mention specifics of on who would create these. A naive answer would have been "why not anyone?", but you bring up an interesting point on who would actually hold the bet for a long duration of time and be guaranteed for pay-offs.
I disagree with the problem of enforceability of the paying out in case someone looses a long position, since it's also a current problem with the standard futures for stocks/commodities, where the brokerage firm would be liable for paying up in case of defaulting on a margin call, so similar structure might be imagined for these cases.
With regards who might create these futures, the government seems like a good candidate, but really if we do have a solid clearinghouse with similar structure for handling margin calls etc. I don't see why not anyone can create these.
The regulatory concerns for implementing these is very valid, but I was primarily just interested in exploring the idea.
If they really believe that climate change is not real, then they would benefit from owning the futures which pay off when if the climate really doesn't warm more than 2°C in the next 3 decades.