Will the PRIPs' KID live up to its promise to protect investors? ECMI Commentary No. 33, 6 July 2012

Unveiled by the European Commission on July 3rd, the proposed Regulation on key information documents (KID) for packaged retail investment products (PRIPs) represents a step forward in enhancing the protection of retail investors and advancing the single market for financial services. While acknowledging in this Commentary that the KID is a commendable effort, ECMI/CEPS researcher Mirzha de Manuel Aramendía observes that pre-contractual disclosure is just one of the pieces in the jigsaw puzzle of investor protection and regrets that other pieces, such as MiFID and the IMD, are not so ambitiously constructed.

Will Extratropical Storms Intensify in a Warmer Climate?

Extratropical cyclones and how they may change in a warmer climate have been investigated in detail with a high-resolution version of the ECHAM5 global climate model. A spectral resolution of T213 (63 km) is used for two 32-yr periods at the end of the twentieth and twenty-first centuries and integrated for the Intergovernmental Panel on Climate Change (IPCC) A1B scenario. Extremes of pressure, vorticity, wind, and precipitation associated with the cyclones are investigated and compared with a lower-resolution simulation. Comparison with observations of extreme wind speeds indicates that the model reproduces realistic values. This study also investigates the ability of the model to simulate extratropical cyclones by computing composites of intense storms and contrasting them with the same composites from the 40-yr ECMWF Re-Analysis (ERA-40). Composites of the time evolution of intense cyclones are reproduced with great fidelity; in particular the evolution of central surface pressure is almost exactly replicated, but vorticity, maximum wind speed, and precipitation are higher in the model. Spatial composites also show that the distributions of pressure, winds, and precipitation at different stages of the cyclone life cycle compare well with those from ERA-40, as does the vertical structure. For the twenty-first century, changes in the distribution of storms are very similar to those of previous study. There is a small reduction in the number of cyclones but no significant changes in the extremes of wind and vorticity in both hemispheres. There are larger regional changes in agreement with previous studies. The largest changes are in the total precipitation, where a significant increase is seen. Cumulative precipitation along the tracks of the cyclones increases by some 11% per track, or about twice the increase in global precipitation, while the extreme precipitation is close to the globally averaged increase in column water vapor (some 27%). Regionally, changes in extreme precipitation are even higher because of changes in the storm tracks.

Modelling monsoons: understanding and predicting current and future behaviour

The global monsoon system is so varied and complex that understanding and predicting its diverse behaviour remains a challenge that will occupy modellers for many years to come. Despite the difficult task ahead, an improved monsoon modelling capability has been realized through the inclusion of more detailed physics of the climate system and higher resolution in our numerical models. Perhaps the most crucial improvement to date has been the development of coupled ocean-atmosphere models. From subseasonal to interdecadal time scales, only through the inclusion of air-sea interaction can the proper phasing and teleconnections of convection be attained with respect to sea surface temperature variations. Even then, the response to slow variations in remote forcings (e.g., El Niño—Southern Oscillation) does not result in a robust solution, as there are a host of competing modes of variability that must be represented, including those that appear to be chaotic. Understanding the links between monsoons and land surface processes is not as mature as that explored regarding air-sea interactions. A land surface forcing signal appears to dominate the onset of wet season rainfall over the North American monsoon region, though the relative role of ocean versus land forcing remains a topic of investigation in all the monsoon systems. Also, improved forecasts have been made during periods in which additional sounding observations are available for data assimilation. Thus, there is untapped predictability that can only be attained through the development of a more comprehensive observing system for all monsoon regions. Additionally, improved parameterizations - for example, of convection, cloud, radiation, and boundary layer schemes as well as land surface processes - are essential to realize the full potential of monsoon predictability. A more comprehensive assessment is needed of the impact of black carbon aerosols, which may modulate that of other anthropogenic greenhouse gases. Dynamical considerations require ever increased horizontal resolution (probably to 0.5 degree or higher) in order to resolve many monsoon features including, but not limited to, the Mei-Yu/Baiu sudden onset and withdrawal, low-level jet orientation and variability, and orographic forced rainfall. Under anthropogenic climate change many competing factors complicate making robust projections of monsoon changes. Absent aerosol effects, increased land-sea temperature contrast suggests strengthened monsoon circulation due to climate change. However, increased aerosol emissions will reflect more solar radiation back to space, which may temper or even reduce the strength of monsoon circulations compared to the present day. Precipitation may behave independently from the circulation under warming conditions in which an increased atmospheric moisture loading, based purely on thermodynamic considerations, could result in increased monsoon rainfall under climate change. The challenge to improve model parameterizations and include more complex processes and feedbacks pushes computing resources to their limit, thus requiring continuous upgrades of computational infrastructure to ensure progress in understanding and predicting current and future behaviour of monsoons.

Where do winds drive the Antarctic Circumpolar Current?

The strength of the Antarctic Circumpolar Current (ACC) is believed to depend on the westerly wind stress blowing over the Southern Ocean, although the exact relationship between winds and circumpolar transport is yet to be determined. Here we show, based on theoretical arguments and a hierarchy of numerical modeling experiments, that the global pycnocline depth and the baroclinic ACC transport are set by an integral measure of the wind stress over the path of the ACC, taking into account its northward deflection. Our results assume that the mesoscale eddy diffusivity is independent of the mean flow; while the relationship between wind stress and ACC transport will be more complicated in an eddy-saturated regime, our conclusion that the ACC is driven by winds over the circumpolar streamlines is likely to be robust.