New report puts huge price tag on climate risk

Climate Central

Climate change poses “multiple and significant risks” to the US economy, particularly along coastlines and to the energy and agriculture sectors, a new report released on Tuesday concludes.

Hurricane Sandy’s tremendous storm surge flooded the South Ferry subway station in Manhattan.
Credit: MTA New York City Transit / Leonard Wiggins

The report, the first to quantify the damage the American economy could sustain from unabated climate change, was compiled by the non-partisan Risky Business Project, a venture launched in October and co-chaired by former New York City mayor Michael Bloomberg, former Treasury Secretary Henry Paulson and former hedge fund manager and environmental activist Thomas Steyer.

“It makes the true costs for inaction on climate change frighteningly clear,” Bloomberg said at a press conference here announcing the report’s release.

The goals of the project and report, the co-chairs and members of Risky Business’s Risk Committee said, were to urge American businesses to lead the way on mitigating the effects of global warming and to pressure the national government into crafting a coherent public policy around the issue, though it stops short of making specific policy recommendations. Such efforts by businesses could not only protect Americans from the worst effects of climate change, but also grow and better insulate the American economy, the project’s members said.

“American business needs to lead in this area,” Paulson said.

While the report focused primarily on the most likely climate change scenarios to occur, it also examined the less likely but extremely high-risk scenarios, something the authors emphasized that businesses and individuals naturally do, for example, when they purchase fire insurance.

The report used climate projections through 2100 and what the participants said was a standard risk-assessment approach used by businesses to estimate how rises in temperature, sea level and other impacts of climate change would affect various parts of the U.S. economy and different geographic regions of the nation.

“It’s important to look at these things and look at them from an economic perspective,” said Henry Cisneros, a Risk Committee member and former secretary of Housing and Urban Development.

Risky Business Final Report

They found that the effects vary from region to region, with sea level rise posing the biggest threat to the Atlantic and Gulf coasts and that ever-increasing heat and humidity will particularly impact the Southwest, Southeast and upper Midwest.

Sea level rise and storm surge are likely — defined in the report as having at least a 2-in-3 chance of occurring — to increase the average cost of coastal storms in the East by $2 billion to $3.5 billion over just the next 15 years. When combined with anticipated changes in hurricane activity, such as stronger storms, the report found that average total annual losses from coastal storms could reach $35 billion.

Bloomberg raised the specter of Hurricane Sandy as an example of how the effects of global warming can exacerbate a storm’s impact.

There’s “no question that rising sea levels and temperatures made Sandy worse,” Bloomberg said.

A graphic showing how climate change shifts the odds for extreme events.

Sea level rise also poses a risk separate from its amplifying effects on storms surge, as it increasingly encroaches on valuable coastal property. The report estimates that by 2050, between $66 billion and $106 billion worth of such property will likely be below sea level nationwide. By 2100, that figure could grow to anywhere between $238 billion and $507 billion.

Sea level rise in the Miami area has led to the intrusion of saltwater into freshwater areas and has increased non-storm related flooding, said Donna Shalala, a Risk Committee member and president of the University of Miami.

“The future prosperity of Florida is inextricably linked to the sun and the sea,” Shalala said at the press conference.

The report also found that increasing heat will strain the nation’s energy systems, as it causes efficiency to decline while demand — in the form of a greater need for air conditioning — rises. Those simultaneous trends would drive the need for more power generation, which could simply add more carbon dioxide and other greenhouse gases into the climate system.

Heat and humidity pose public health threats, as higher humidity disrupts the body’s natural ability to cool itself since it prevents the evaporation of sweat from the skin. Urban dwellers are particularly at risk from this problem because of the urban heat island effects, as are those who work outside. Productivity of such workers could decline by 3 percent by the end of the century as it becomes increasingly too hot to work outside during parts of the day, the report found.

U.S. agriculture faces threats as a changing climate shifts where and how well particular crops grow. The report found that the production of key crops like corn, soy and wheat could decline by 14 percent by mid-century and up to 42 percent by the end of the century. Some areas, particularly northern states, could actually see increased crop yields, though.

All of the committee members and the three co-chairs emphasized the need for businesses to start examining these issues and pressing for public policy solutions now, due to the fact that greenhouse gases emitted today can last in the atmosphere for hundreds of years, effectively “baking in” a certain amount of warming.

“What we do today will affect us for centuries,” said committee member Robert Rubin, co-chairman of the council on foreign relations and also a former Treasury Secretary.

 Source: Climate Central. Reproduced with permission.