A group of influential climate policy advocates has just published a landmark assessment of the economics of climate change risk to the United States. It’s the first detailed analysis of the range of potential consequences for each region of the United States—as well as for selected sectors of the economy—“if we continue on our current path.”
The report, which says climate change could cost the U.S. economy billions of dollars over the coming decades, was created by a group of former federal cabinet officers, business leaders and scientists.
The report, titled Risky Business (download PDF), is the product of a project of the same name co-chaired by former New York Mayor Michael Bloomberg, former U.S. Treasury Secretary Henry Paulson, and Tom Steyer, retired founder of Farallon Capital Management and a leading climate advocacy philanthropist. It’s a powerhouse trio comprised, respectively, of a political independent, a Republican and a Democrat.
They call upon the business community to treat climate change much as they would any other risk.
The 56-page report focused on “the clearest and most economically significant” of the many potential risks of a changing climate: “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.”
The Risky Business Project tasked the Rhodium Group, an economic research firm that specializes in analyzing disruptive global trends, with an independent assessment of the economic risks posed by a changing climate in the U.S. Rhodium convened a research team co-led by Dr. Robert Kopp of Rutgers University and economist Dr. Solomon Hsiang of the University of California, Berkeley. Rhodium also partnered with Risk Management Solutions, the world’s largest catastrophe-modeling company for insurance, reinsurance, and investment-management companies around the world.
The report examines the risks of the U.S. continuing on its current path, or “business as usual.” It assumes no new national policy or global action to mitigate climate change and an absence of investments aimed at improving our resilience to future climate impacts.
The analysis projects risks and costs from present day to the year 2100. That end date “may seem far off to many investors and policymakers. But climate impacts are unusual in that future risks are directly tied to present decisions.” The report’s findings “underscore the reality that if we stay on our current emissions path, our climate risks will multiply and accumulate as the decades tick by.”
Among the impacts identified by the report:
Large-scale losses of coastal property and infrastructure
- By 2050 between $66 billion and $106 billion worth of existing coastal property will likely be below sea level nationwide, with $238 billion to $507 billion worth of property below sea level by 2100
- There is a 1-in-20 chance that by the end of this century, more than $701 billion worth of existing coastal property will be below mean sea levels, with more than $730 billion of additional property at risk during high tide
Extreme heat across the nation—especially in the Southwest, Southeast, and Upper Midwest—threatening labor productivity, human health, and energy systems
- Labor productivity of outdoor workers, such as those working in construction, utility maintenance, landscaping, and agriculture, could be reduced by as much as 3 percent, particularly in the Southeast. For context, labor productivity across the entire U.S. labor force declined about 1.5 percent during the famous “productivity slowdown” of the 1970s.
- Demand for electricity for air conditioning will surge in those parts of the country facing the most extreme temperature increases, straining regional generation and transmission capacity and driving up costs for consumers.
Shifting agricultural patterns and crop yields, with likely gains for Northern farmers offset by losses in the Midwest and South
- Some states in the Southeast, lower Great Plains, and Midwest risk up to a 50 percent to 70 percent loss in average annual crop yields (corn, soy, cotton, and wheat), absent agricultural adaptation. At the same time, warmer temperatures and carbon fertilization may improve agricultural productivity and crop yields in the upper Great Plains and other northern states.
The authors emphasize that “each region of the country has a different risk profile and a different ability to manage that risk.” For example, the energy story in the warming North is starkly different than in the increasingly unbearably hot South, not to mention the differences in discomfort, heat-related stresses and other outcomes. Sea level rise at New York will likely be higher than at Boston, and sea level rise at San Diego will likely be higher than at San Francisco.
The regional nature of climate impacts and the regional nature of the overall American economy and cultural identity mean that there may not be one single national response to the risks highlighted by the Risky Business Project. But the reality of these impacts, especially in the Southwest and Southeast—which will likely experience the most extreme heat and sea level rise over this century—may also mean that Americans have no choice but to migrate to cooler and more livable areas, disrupting lives, livelihoods, and regional identities formed over generations.
It’s unclear what impact this report will have on what appears to be an emerging movement among corporate leaders to press U.S. political leaders for climate action. Given the political stalemate at the national level of this issue (and many others), it is unclear whether and when such pressure could lead to the kind of meaningful proaction called for by Bloomberg, Paulson and Steyer.
Conclude the authors: “With this report, we call on the American business community to rise to the challenge and lead the way in helping reduce climate risks. We hope the Risky Business Project will facilitate this action by providing critical information about how climate change may affect key sectors and regions of our national economy.”