It is clear that the general public is quick to recognize extreme climate events and their impacts. There is often untold difficulty in attributing the occurrence of such events to anthropogenic climate change, but such attributions are common. Acute events are usually localized but can easily lead to damages that approach the magnitude of a locality's wealth. The success of disaster relief is a measure of how neighboring regions and the global community are relatively unaffected by the acute event. Much as insurance works, the small premia of the many pay to compensate the losses of the few.
Climate policy is a form of insurance payment.
We see the devastation of hurricane Mitch or the floods of China and decide that we need a tighter reign on GHG emissions and feared climate change. However, the occurrence of an acute event in one locality is unlikely to lead to a global movement to strengthen climate mitigation efforts. I am using the stochastic regional impact generators in ICAM to explore this question and estimate the probability of spontaneous tightening of climate abatement regulations. Imagine a future in which carbon taxes have been in place for some time, they are felt to be reducing average welfare, and acute events occur causing significant additional losses. I am using the literature on tax rebellions and international regulations to understand the conditions when a region may drop out of the global accord to limit climate change.