I basically agree with Chris and leaving aside transaction costs and risks
I'd trade at 60 cents or perhaps a tiny bit higher.
From an NCAR CCSM mailing list I'm on:
==>
Marika Holland, Cecilia Bitz, and Bruno Tremblay's 2006 AGU paper
titled "Future Abrupt Reductions in the Summer Arctic Sea Ice" has been
getting quite a bit of attention in the media. This study use the
future climate scenario runs of the CCSM3 to predict changes in Arctic
sea ice.
The full paper is available here:
http://www.agu.org/journals/gl/gl0623/2006GL028024/
A short video highlight from Marika's presentation is available here:
http://zdnet.com.com/1606-2-6142733.html
A BBC News Article is available here:
http://news.bbc.co.uk/2/hi/science/nature/6171053.stm
<==
I recommend the zdnet clip. Dr Holland's presentation is interesting in that
the vocal tone in her presentation expresses a certain surprise and
astonishment that the model can show such behavior. This in turn surprises
me. (warning: the clip is interspersed with, as far as I can tell,
ludicrously off-topic graphics. Pay no attention to the video feed when it's
not on Holland's face.)
As any Montrealer (or anyone who has lived in a cold and snowy climate) can
attest, seasonal ice certainly behaves that way. As spring approaches the
snowpack begins to soften up and melt around the edges, but most of the
energy goes into warming the interior of the pack. Once the whole mass has
reached a temperature near enough to freezing, all it takes is a mild spell
to abruptly remove the bulk of the frozen water.
Paleoclimatic evidence also shows that ice is an amplifier of temperature
trends.
As a modeler I would be alarmed if it behaved otherwise. The ice warms up
gradually and vanishes suddenly. That is what real ice does, so I would
expect that would be what modeled ice does.
James will be interested/irritated at Holland's use of the expression
"tipping point" in her presentation. I think it's entirely appropriate.
What I think is slightly inappropriate is the tone of surprise. Perhaps that
is being put on a bit in order to attract the attention of the press, but
watching the video that would make her much too good of an actress to
actually have spent time in Weaver's lab. She seems genuinely surprised, not
so much at the timing (which she admits is uncertain) but at the phenomenon,
which I think verges on obvious.
I agree with Chris's intuition that the linear extrapolation of the recent
ice area trend is probably a conservative estimate of the date of the
ice-free summer minimum. CCSM puts it at 2045 and the trend puts it at 2068.
The observational record shows no comparable excursions on a multi-year time
scale. It doesn't look like an oscillation in the record. Is there some
physical or statistical basis for arguing that the sea ice extent will
bounce back to the twenty-year trend line? Or even that the slope will
bounce back? I am inclined to say not.
The melting trend as expressed in perennial sea ice area ought to accelerate
gradually for a while and then very abruptly at the end. That is what we
would expect to see and that is what we are seeing.
So the best bet is that the trend line will stay the same or become steeper;
I would be inclined to pay a bit over 60 cents for a share. If I were
spending money I'd look to see how the Arctic correlates with El Nino.
It has been an astonishingly mild winter in Chicago so far, by the way.
Tonight's high is 9C above climatology, and the low is 16 C above. My
impression is that the temperature here has been at least 5C above normal
for weeks. Some of this is surely ENSO variability, but how much?
Here's something else to bet about. Will Lake Mendota freeze at all this
year and if so when?
http://www.aos.wisc.edu/~sco/lakes/Mendota-ice.html
mt
On 1/4/07, crandles <[EMAIL PROTECTED]> wrote:
I have fixed a couple of typos.
If you divide the last figure 11.07 by 0.0135 and 12 then you get 68.3
years. However I don't really expect the .0135 per month rate to stay
steady until the arctic is ice free in summer let alone after it
becomes ice free in summer. If you take the last September extent of
5.9 million Km^2 and divide by 0.135 and by 12 you get 37 years to be
ice free in summer if the 0.0135pm rate continues. I would have thought
that by now further acceleration was more likely than it being due to
an oscillation.
Now how would you phrase the claim on Foresight Exchange ( a play money
market)? Perhaps something like:
If the best fit line for 2006 and 2007 is greater than or equal to 0.02
per month the claim pays FX$1.00
if greater than or equal to 0.015 per month and less 0.02 pm then the
claim pays FX$0.80
if greater than or equal to 0.01 per month and less 0.015 pm then the
claim pays FX$0.60
if greater than or equal to 0.005 per month and less 0.01 pm then the
claim pays FX$0.40
if greater than or equal to 0 per month and less 0.005 pm then the
claim pays FX$0.20
if less than 0 the claim pays FX$0
What value would you expect such a claim to trade at?
Would a claim like that attract more people to forsight exchange?
>
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