The Risky Business Project Releases an Economic Assessment of U.S. Climate Impacts
by Elena Kazarov -- June 24th, 2014
As if my environmentalist heart needed any more reasons to flutter for Michael Bloomberg. His sustainability plan for NYC, PlaNYC, includes the Citi Bike system and Green Building Codes and is estimated to reduce the city’s carbon footprint by 30% by 2030. Other PlaNYC initiatives include developing an Urban Technology Innovation center to drive the creation of green technology; the establishment of “Solar Zones” to grow solar installations; an “Urban Wind Demonstration Project” to install small wind turbines; and the “Kick-off Green JumpStart” to train displaced workers in carbon trading and green finance jobs. As a business leader, mayor, and philanthropist, Bloomberg’s initiatives do not fit squarely into the “environmentalist” category. He is driven by public health, economic, and human quality of life concerns, which consequentially happen to be environmentally beneficial as well.
Bloomberg has his hands in many pots, one of them being the Risky Business Project, which he co-chairs along with Henry Paulson (former Treasure Secretary) and Tom Steyer (hedge-fund billionaire and major Democratic donor). Formed in October 2013, the Project is a joint partnership of Bloomberg Philanthropies, the Paulson Institute, and TomKat Charitable Trust, and seeks to quantify and publicize the economic risks from the impacts of a changing climate in a nonpartisan, unbiased way. Yesterday, the Risky Business Project released Risky Business: The Economic Risks of Climate Change to the United States, their assessment of the economic costs of climate change to the United States. The report focuses on the clearest and most economically significant risks: damage to coastal property and infrastructure from rising sea levels and increased storm surge, climate-driven changes in agricultural production and energy demand, and the impact of higher temperatures on labor productivity and public health. Compiled together with the Rhodium Group, an economic research firm that analyzes disruptive global trends; climate scientist Dr. Robert Kopp; economist Dr. Solomon Hsiang; and Risk Management Solutions, a catastrophe-modeling company, the report looked at peer-reviewed climate science projections through the year 2100, with estimates of the impact of various changes in temperature, precipitation, sea levels, and storm activity on the U.S. economy.
What kinds of goodies can we find inside?
In the short term:
- Higher sea levels and storm surges will increase the average annual cost of coastal storms on the East Coast and Gulf of Mexico by $2 billion – $3.5 billion over the next 15 years
- Accounting for expected increase and severity in hurricane activity, the cost grows to $7.3 billion annually – meaning the total cost of hurricanes and other coast storms could reach $35 billion
- Midwestern and Southern U.S. farmers could see yields decline by over 10% in the next 5 – 25 years
- Temperature changes will require the construction of around 200 coal or natural gas-fired power plants, costing consumers $12 billion per year
Over the long run:
- By 2050, $66 billion – $106 billion of coastal property will be underwater; $238 – $507 billion’s worth will be underwater by 2100
- Extreme heat – concentrated in the Southwest, Southeast, and Upper Midwest – will decrease outdoor workers’ labor productivity by 3% by 2050 and increase severe heath risks and potential death
- Air conditioning needs will surpass regional capacity and drive up costs
The report is highly focused, exploring the costs by region – even zooming in to a county level. Let’s look at the Northeast. Coasts are set up to suffer more from climate change. Thermal expansion of the oceans as they warm; sea level rise due to the melting of the Antarctic and Greenland ice sheets; and groundwater withdrawal causing the land near the ocean to sink will endanger the coasts of the Northeast. 88% of the population lives in coastal counties, and 68% of GDP is generated in these coastal counties. NYC can expect a rise of 0.9 – 1.6 feet by 2050 and 2.1 – 4.2 feet by 2100. Boston will see a rise of 2 – 4 feet by 2100. More coastline underwater means more severe impacts from coastal storms, amounting to $6 billion – $9 billion over the next century. But global warming actually exponentially increases storms likelihood and severity – meaning that these costs could be more in the neighborhood of $11 billion – $17 billion. The heat island effect, which causes higher temperatures in cities, means that temperatures in metro regions are expected to rise by 5.4°F during the day and 22°F in the evening compared to surrounding rural areas.
There is no region in this country that will escape the effects of climate change – and we’ll all suffer, whether or not we believe in globa warming. Looking forward, the report’s authors call for:
- Business adaptation to climate change realities
- Investor adaptation, taking into consideration multi-decade lifespans of projects and requiring business disclosure of climate risks in decision making
- Public sector response, demanding a better understanding of climate risks, increasing discussion around mitigation, and pressuring businesses and government to decrease risks
I appreciate people who break molds and challenge convention. Environmentalists get a bad reputation for being “head in the clouds” hippies with unrealistic motivations, whose actions go against business and modernization. And while I reference it above – and certainly consider myself one – I wish we would absolve with the world environmentalist altogether. We should all be concerned with the well-being of our planet, which is inextricably linked to our own. I hope business leaders, investors, and consumers will perk up their ears to the dollars and cents impacts of a warming climate. That’ll be something to dance in our underwear about….