Climate change is Risky Business, according to a bi-partisan report released recently.
Former New York Mayor Michael Bloomberg, billionaire renewable energy advocate Tom Steyer, and George W. Bush’s former Secretary of the Treasury Henry Paulson commissioned the report. Risky Business is similar to Nicholas Stern’s groundbreaking analysis in 2006, which discussed the economics of climate change, but this has more focus on the US. Its conclusions provide stark warnings for various regions and sectors.
“Our economy is vulnerable to an overwhelming number of risks from climate change,” said Paulson in a statement. “These risks include the potential for significant federal budget liabilities, since many businesses and property owners turn to the federal government as the insurer of last resort.”
Coastal areas will feel the financial sting. Storm costs will increase $2 billion to $3.5 billion annually within the next 15 years. Add annual hurricane costs of up to $7.3 billion, and the yearly bill would go up to $35 billion. By 2050, current coastal property value of $66 to $106 billion could be under water, if emissions continue unchecked. By the end of the century, the analysis projects it to cost the US $238 to $507 billion.
Agriculture will see steep losses, too. Midwestern and southern areas will see sharp losses in crop yields of 10% within 5–25 years. These include: corn, soybeans, wheat, and cotton. There is also a one-in-twenty chance these crops will see a 20% decline in yields, without making any adaptation plans. By the end of the century, yield losses could reach 50% to 70%.
It’s anticipated by mid-century that Americans will see 27–50 more 95°F days then in the past thirty years. Also Risky Business expects the Southeast, Southwest, and upper Midwest to see many months of 95°F days annually.
Extreme heat will impact outdoor labor industries. Some regions could see a labor productivity loss of 3%, namely the Southeast. Agriculture, utility maintenance, and landscaping are the industries most vulnerable, the report said.
Energy demand could also spike upwards to 95 gigawatts within the next 5–25 years, as the need for more cooling rises. That is approximately 200 natural gas or coal-fired power plants. Consumers and businesses could expect to pay an extra $12 billion annually from the upsurge in energy use.
Climate Economics: Understanding the Risks
As deniers continue to battle the overwhelming scientific consensus that humans are contributing to climate change, attempts to understand climate change through risk management is now being used more often.
Economic reports on climate change, including The Stern Report, and now Risky Business, offer governments and businesses the tools necessary to not only better understand the science through economics, but offer guidance in mitigation and adaptation action plans. For example, insurance agencies know a warming world will have dramatic impacts on their pocketbooks, which will get passed on to consumers.
However, by understanding the risks, nations and businesses are becoming more aware of what needs to be done. Countries like China are leading the way in renewable energy investment. Tesla, SolarCity, SunPower, Yingli, Sungevity, Ecova, and many others are helping cleantech become mainstream with their innovative products.
Climate change will always be Risky Business. Considering the economic hazards will give a more concrete roadmap in solving this pressing issue.
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