Trillions of dollars at risk because central banks’ climate models not up to scratch

theguardian.com:

Trillions of dollars may be misallocated to deal with the wrong climate threats around the world because the models used by central banks and regulators aren’t fit for purpose, a leading Australian climate researcher says. Prof Andy Pitman, director of the Australian Research Council’s Centre of Excellence for Climate Extremes, said regulators are relying on models that are good at forecasting how average climates will change as the planet warms, but are less likely to be of use for predicting how extreme weather will imperil individual localities such as cities, however.

The concerns, detailed in a recent report in the journal Environmental Research: Climate, were underscored by the Australian Prudential Regulation Authority’s release on Monday of its corporate plan 2022-23. Apra plans to “continue to ensure regulated institutions are well-prepared for the risks and opportunities presented by climate change”.

However, Pitman said regulators are still ill-equipped to assess the risks and to regulate the ability of banks and other institutions to cope with them.

“Without a shadow of a doubt, we’re overestimating the cost of climate change in some areas and grossly underestimating it in others,” Pitman said. “We need to take this issue seriously – not just access information flying around and think we can package it to do proper economic assessments.”

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“If you’re going to throw billions or trillions of dollars around, you need to ensure that you’re getting the right scientific advice on how to interpret the climate information,” he said. “I think that’s a no-brainer but [regulators] are not doing that.”

Pitman’s paper, and a separate one he