Tackling climate change will save Midwest US economy: New Risky Business report

Reading time: 4 minutes
26 January 2015

LONDON: A new report reveals how climate changes will have a big impact on the economy of Midwestern US in the next decades, and provides suggestions on what has to be done now to avoid expensive losses.

The report was released by The Risky Business Project, which was launched in October 2013 to assess the economic effects of climate change in the US, focusing on what policymakers, investors and business people can do today to prevent further damages to their economy.

Its new report, HEAT IN THE HEARTLAND: Climate Change and Economic Risk in the Midwest, has a specific focus on America’s Midwestern states. Those states are on the front line when it comes to dealing with climate change, as they are “responsible for 65% of U.S. production of corn and soybeans, a significant share of the national wheat crop, and about a third of all U.S. manufacturing operations”, and so risk greater economic losses from shifting weather patterns than other states.  

As the authors point out, longer summers and unbearable temperatures brought by runaway climate change will also involve rising prices in energy bills. For instance “by the end of this century, the average Missouri resident will likely experience 46 to 115 days above 95°F (35°C) in a typical year”, which will lead to electricity demands going up “as households and businesses increase their use of air conditioning in response to temperature increases throughout the region.”

The report stresses Missouri is likely to see a 4% to 16% jump in energy costs by mid-century, with a “1-in-20 chance this jump will be more than 20% by mid-century.”

RISKY SECTORS

The research lists agriculture, energy, health, crime and labor productivity as the economic and social areas that will be impacted most from exacerbated levels of heat, humidity and precipitation in the Midwest, if global temperatures keep rising.

Evan Juska, Head of US Policy for The Climate Group said: “Policymakers sometimes view climate change policies solely as an additional cost to the economy, because the costs of the status quo aren’t well understood. Risky Business is among the best efforts to date to help policymakers understand that there is an economic cost to inaction as well – and it’s often bigger than we think.”

The aim of the Risky Business Project is to point out that it is not too late to prevent the outlined scenario from happening. That’s why three main areas are suggested as key for collective action in the report:

  • Changing everyday business practices to become more resilient

The starting point for change begins with individuals, especially those who are on the front line like farmers. But some of the measures they must take to adapt can be expensive, and can not be taken without external help.

Finding new technologies to cool the temperatures in their lands, or substituting their current crops with others that can handle higher temperatures are examples of measures that, while making them more resilient, could require financial support from institutions.

  • Incorporating risk assessment into capital expenditures and balance sheets

Long-term investments often include risk assessments, be it real estate agencies evaluating the development of new areas or companies revisiting their energy demand.

Including climate change among the risks assessed is a smart decision, as it will prevent companies from future losses and will help investors take the right decisions.

  • Instituting policies to mitigate and adapt to climate change

The challenges the report poses are not limited to the Midwest or the US. Climate change is a global issue, which national and sub-national governments alike must tackle together by driving ambitious climate policies and sharing best practises on progress.

POLICY INNOVATION

While many national governments remain stuck in debates, state and regional governments around the world are moving forward to develop a new generation of innovative policy that will shape the future climate policy landscape.

Libby Ferguson, States and Regions Director at The Climate Group commented on the Risky Business study: “State governments are at the forefront of dealing with the risks posed by climate change and this latest report is an important resource to help all governments to better understand these risks and the most appropriate solutions to deal with them. That’s why we are constantly working to share the most impactful climate solutions with global states and regions.”

The Climate Group released a report last year, Age of experiments: How states and regions are developing the next generation of climate and energy policies, which examines the nature of these sub-national policy ‘experiments’ – as well as what it will take for them to contribute to the large-scale impacts that are needed.

Find out more about our States & Regions Alliance 

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By Denise Puca

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