All hands on deck: polycentric governance for climate change insurance

Abstract

In this essay, we argue that it is possible to significantly complement and improve our collective response to climate change by harnessing the combined capacities of key actors across the public and private sector. We apply the concepts of liability, market mechanisms, preferential market access, and polycentric governance toward a new type of climate change insurance for CO2. The quest to apply insurance principles to climate change dates back multiple decades. But ideas for employing the industry’s ability to help avoid or minimize and, if necessary, compensate for uncertain costs in the future at scale, across national boundaries, and as part of a broader regime, seem to be lacking. We propose an approach that complements and combines ongoing efforts within a polycentric governance structure to reduce CO2 emissions, increase resilience to and compensate damages from climate change on a global scale.