Risky Business report urges America to secure economic future by facing up to climate change

Author:
Clare Saxon Ghauri
24 June 2014

LONDON: A new report that reveals the US industries and communities which are most prone to economic climate impacts, suggests the biggest risks can still be averted by 'aggressively' urgent action from businesses, investors and governments.

The long-awaited report released today by the Risky Business Project, is the first comprehensive assessment of the economic climate risks faced by the US. Presenting independent analysis of the multiple risks at the county, state and regional level, the report informs businesses, investors, households and policymakers of the most effective climate action to take.

Risky Business: The Economic Risks of Climate Change in the United States, suggests early support for climate resilience and measures to reduce pollution will avoid the worst impacts of global warming: "Every year that goes by without a comprehensive public and private sector response to climate change is a year that locks in future climate events that will have a far more devastating effect on our local, regional, and national economies."

Economic climate solutions

Warning of the urgency needed to curb climate risk, authors write: "[...] if we choose a different path—if we act aggressively to both adapt to the changing climate and to mitigate future impacts by reducing carbon emissions—we can significantly reduce our exposure to the worst economic risks from climate change, and also demonstrate global leadership on climate."

The report pithily summarizes key top-level responses for each sector as:

  • Businesses: Changing everyday business practices to become more resilient.
  • Investors: Incorporating risk assessment into capital expenditures and balance sheets.
  • Public sector: Instituting policies to mitigate and adapt to climate change.

The Risky Business Project is a non-partisan initiative of former Treasury Secretary Henry M. Paulson, Jr., former Mayor of New York City Michael R. Bloomberg and Thomas P. Steyer, former Senior Managing Member of Farallon Capital Management.

Co-Chair and finance expert, Tom Steyer, reiterated the economic opportunities of urgently acting on climate change in a press statement: “The Risky Business report confirms what many of us have long suspected: The longer we wait to address the growing risks of climate change, the more it will cost us all. From a business perspective, given the many benefits of early action, it would be silly to allow these risks to accumulate to the point where we can no longer manage them.”

Former US Secretary of the Treasury, Co-chair Hank Paulson agrees that reacting swiftly to the report's findings is key to reducing risk: “[...] if we act immediately, we can still avoid most of the worst impacts of climate change and significantly reduce the odds of catastrophic outcomes – but the investments we’re making today will determine our economic future.”

Gregory Page, former CEO and current chair of Cargill Inc, who sits on the Project's Risk Committee with six others, pointed to the report's role in encouraging the US economy to think longer term as it acts in the short term: “We need to invest in innovative technologies and practices today so that we’re in the best position to be prepared for the future.”

American regions at risk

While the US faces significant climate risks, both impacts and economic activity vary greatly across the country, so a regional approach is suggested by the report.

Speaking from his legacy of city leadership, Risky Business Project Co-Chair Michael R. Bloomberg said in a statement: "Damages from storms, flooding, and heat waves are already costing local economies billions of dollars—we saw that firsthand in New York City with Hurricane Sandy. With the oceans rising and the climate changing, the Risky Business report details the costs of inaction in ways that are easy to understand in dollars and cents—and impossible to ignore."

The report digs deeper into economic analysis based on existing research by leading climate scientists and economists, such as May 2014's National Climate Assessment (NCA), which is why it focuses on the NCA's 10 US regions: Northeast, Southeast, Midwest, Southwest, Great Plains, Northwest, Alaska, and Hawaii.

Without effective adaptation, US climate costs are estimated by the authors to grow over the next 5 to 25 years and affect the "future performance of today’s business and investment decisions" in the following regions:

  • In the next 15 years, higher sea levels combined with storm surge will increase average yearly costs of coastal storms on the Eastern Seaboard and Gulf of Mexico by US$2-3.5 billion. The total yearly costs associated with even more storms will likely reach US$35 billion.
  • There is a 1-in-20 chance that by the end of the century over US$701 billion worth of existing coastal property will be below mean sea levels, with more than $730 billion of additional property at risk.
  • Midwestern and Southern regions could see certain crop yield declines of more than 10% over the next 5-25 years. Extreme heat will see some states in Southeast, lower Great Plains and Midwest lose up to 50-70% in average yearly crop yields.
  • Extreme heat will threaten labor productivity, people's health and energy supplies, with predicted labor productivity of outdoor workers cut by up to 3%, especially in the Southeast. 

A particularly stark image from the report is the below graphic which shows how on our current path, the average American will experience vast changes in temperature over their lifetime, likely seeing 45-96 days per year over 95°F by the end of the century.
 

america risky business

US climate leadership

Despite the harsh predictions, a strong call to action drives the report, urging US business to lead the way for solutions that can secure America's economic future: "We believe that American businesses should play an active role in helping the public sector determine how best to react to the risks and costs posed by climate change [...] With this report, we call on the American business community to rise to the challenge and lead the way in helping reduce climate risks."

"This is only a first step, but it’s a step toward getting America on a new path leading to a more secure, more certain economic future."

While this report lays out a pathway in America, a separate report released today by an international group of financial organizations also states climate change presents an expensive risk to the world’s investments, but suggests there are many opportunities to grow the global low carbon economy in response.

Climate Change: Implications for Investors & Financial Institutions distils the Intergovernmental Panel on Climate Change’s Fifth Assessment Report for investors and financial institutions to better understand climate impacts, revealing how climate change and policy to reduce emissions will affect every sector of the economy and therefore the majority of the world’s assets and investments. However, it highlights increased opportunities for investment in areas such as renewable energy and energy efficiency, and in companies with expertise in adaptation.

Read Risky Business: The Economic Risks of Climate Change in the United States

Related news:

By Clare Saxon

External links about Risky Business:

E&E 

NPR

Wall Street Journal

Bloomberg

The Huffington Post

Ceres

C2ES

GreenBiz

 

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