General · 26th September 2013
“A moral hazard exists,” Bryne Purchase writes, “whenever decision makers in risky situations reap the rewards from their decisions without bearing all the costs.” (Mortal Hazard: Why catastrophic events like the sub-prime mortgage crisis and climate change are inevitable, The Walrus, April, 2013). This transfer of costs elsewhere, he argues, encourages risk taking — a risk that is either transferred to society or to nature.
Society, of course, essentially condones risk, actively welcoming it because of the huge wealth and opportunities it brings. Nature, in contrast, is a passive recipient of risk. The only possible resistance it has is the inherent obstacles it presents to the technology of the initiatives employed to exploit it. But nature is rarely improved by the risk imposed on it. Indeed, the mounting cost of that risk is proving to be catastrophic, even counter to our own interests. Such effects are adding an illuminating new dimension to the subject of moral hazard.
Nature, we are learning, must be protected from risk. Almost all risk is a trespass on its intrinsic right to be itself. Our recognition of this right is demonstrated in the commendable acts of creating parks and protecting wilderness, of preserving species and rehabilitating those that are endangered by the cost of risk. Such a caring behaviour indicates a magnanimity in the human character, a wise generosity and a commendable compassion that is an indication of our deepening consciousness. Sometimes this honouring of nature even seems to be selfless, a glimpse of humanity at its best.
This gesture of a commendable caring is, however, inadequate. The beneficial effects of such small measures of generosity are usually overwhelmed by the ambitious momentum of culturally sanctioned risk. While profit is important, making it without regard for consequences is destructive and ultimately self-defeating. A compulsion that raises risk to the possibility of disastrous cost is reckless and pathological. Global warming, for example, is now evidence of this pathology manifest at a planetary scale. But it is repeated in uncountable little instances almost everywhere by habitat loss, ecological degradation and pollution. This piecemeal unravelling of nature is now threatening the stability of Earth's entire biosphere.
The conflict between those who are taking risk and those who are assessing it can be framed within the concept of moral hazard and their two different calculations of risk and cost. Regardless of the calculation, however, the empirical evidence now suggests that the amount of risk transferred to nature has increased to such proportions, and the precariousness of major ecosystems has become so tenuous, that any more transfer of risk must be deemed foolishly reckless, pathologically selfish and destructively counter to our general well-being.
Unfortunately, the examples are ubiquitous. They include the obsessive quest for fossil fuels, the massive pillaging of ocean fish stocks, the mining of minerals in increasingly remote and sensitive ecologies, the levelling of forests and jungles to feed industrial agriculture, the wholesale obliteration of species, and the incessant emitting of copious quantities of carbon dioxide into the thin shell of precious atmosphere enshrouding a fragile planet that is reaching the end of its ecological resilience.
A more specific example of this disproportionate transfer of risk is net-pen salmon farming. The cost is still being measured but it is known to include wildlife displacement, benthic pollution and sea lice infestations. The potential for exotic viral epidemics emanating from net-pens to wild salmon stocks could be devastating to entire structure of marine ecologies. In the transfer of risk, the weight of environmental costs against the economic benefits is still unfolding. But in Purchase's ominous understanding of the dynamics of moral hazard, “tipping points” can have “viral effects”, so that “by the time a potential problem becomes recognized as a clear and present danger, no action may be sufficient to prevent [catastrophe]” (Ibid.).
Catastrophe is now entering the vernacular as a common measure of cost. Meanwhile, just when the growing precariousness of ecologies is making every cost more expensive, the magnitude of risk is escalating in proportion to the rising power of technology. This suite of factors combines to make all risk more threatening than ever before.
In a time before the present age, the cost of risk was limited and mostly absorbed by the resilience of nature. Civilizations rose and fell but the environmental damage they did was typically local rather than structural. This is no longer the case. Two centuries of hyper industrial and technological growth has combined with a soaring human population to radically raise the cost of risk. Meanwhile, the incredible material rewards accruing to society from its economic culture have joined with human psychology to separate risk from cost.
This separation has created an extremely dangerous situation. Even though a growing number of people now anticipate the terrible consequences of ongoing environmental damage, the temptation to delay a crucial rebalancing of risk and cost seems to be overwhelming. This is why Bryne Purchase, by altering a single letter, has changed “moral hazard” to “mortal hazard”.