Climate change will cost the U.S. economy dearly in the form of property damage, lost output and even deaths, a nonpartisan group backed by a trio of some of the heaviest hitters in the world of business said Tuesday.
According to a report published by the so-called Risky Business Project, American industry needs to start factoring weather and environmental-related losses into the cost of doing business, and take tangible steps toward reducing carbon emissions.
The group describes itself as nonpartisan and is chaired by former New York City mayor Michael R. Bloomberg, former treasury secretary Henry M. Paulson Jr. and Thomas F. Steyer, a former hedge fund manager.
Among the dire predictions in the report:
- Higher sea levels combining with storm surges will cost the Eastern Seaboard and Gulf of Mexico coastlines up to $35 billion a year.
- Increased drought and flooding will lead to a decline in crop yields of about 10 per cent per year, on average, for farmers.
- Between $66 billion and $106 billion worth of existing coastal property will likely be below sea level by 2050 in America alone, with $238 billion to $507 billion worth of property below sea level by 2100.
- Temperature changes driven by greenhouse gas will require about $12 billion a year to build new power plants capable of producing as much as 95 gigawatts of electricity (about the equivalent of roughly 300 coal or natural-gas plants).
- The productivity of outdoor workers will decline by about three per cent per year as America begins to experience three times as many days where the outside temperature is higher than 35 C every year.
"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," warn the report's authors.
"We have a choice whether we accept the climate risks laid out above or whether we get on another path. This is not a problem for another day. The investments we make today — this week, this month, this year — will determine our economic future."
- IMF says world must come to grips with cost of climate change
- Climate change costs seen as steep, but tough to tally
The analysis and calculations in the report were performed by the Rhodium Group, an economic research firm, and Risk Management Solutions, a catastrophe-modelling company that works for insurance companies and other businesses. It was paid for by the philanthropic foundations of Bloomberg, Paulson and Steyer, among others.
'This is not a problem for another day.' - Risky Business Project report
The report says the U.S. southeast will likely be affected both by sea-level rise and extreme temperatures, with the latter leading to 11,000 to 36,000 additional deaths per year.
Crop yields will be most impacted in the Midwest, declining by 19 per cent by 2050 and by 63 per cent by the year 2100.
"Our goal with the Risky Business Project is not to confront the doubters," the report says. "Rather, it is to bring American business and government — doubters and believers alike — together to look squarely at the potential risks posed by climate change, and to consider whether it’s time to take out an insurance policy of our own."
The report does not calculate the cost of some environmental calamities such as droughts or wildfires, or many other possible costs such as the loss of unique ecosystems and species and the possible compounding effects of extreme weather conditions.
Nor does it calculate some of the ways economies could adapt to the changing climate and reduce the costs of climate change — or indeed benefit economically from new technologies and habits being developed and deployed.
"There's a whole litany of things not calculated in the assessment," said Gary Yohe, an economics and environmental studies professor at Wesleyan University and vice-chair of the National Climate Assessment, a U.S. government project set up to study the effects of climate change. Yohe was not part of the Risky Business Project report, but he was asked to review it.
"The general conclusions are right on the money," he said.
While other groups have attempted to calculate the financial impacts of climate change around the world, he said this report is notable because of the business and financial experience of the people behind it. Beyond the three co-chairs, the members of the group's risk committee include former treasury secretary Robert Rubin, former Cargill CEO Gregory Page, and George Shultz, former treasury secretary and secretary of state.
"These are people who have managed risk all their lives and have made an enormous amount of money doing so," Yohe said.