Though many fondly remember the 1983 Tom Cruise film, the phrase “Risky Business” recently took on darker connotations. It’s the name of a new report on the economic risks of climate change, organized by former U.S. Treasury secretary Henry Paulson, former New York Mayor Michael Bloomberg and billionaire hedge fund manager Tom Steyer, in which business leaders are challenged to view global warming as they would any other serious risk to their bottom line.
Economic research firm Rhodium Group partnered with Risk Management Solutions (RMS), which performs catastrophe modeling for insurance purposes, to compile the data. The resulting report estimates the economic impact of climate change in several ways. One major predicted consequences is damage to coastal infrastructure due to rising sea levels. According to the findings of the Risky Business Project, between $66 billion and $106 billion worth of existing U.S. coastal property are on track to be below sea level by 2050. By 2100, that range rises to between $238 billion and $507 billion.
In parts of the country where temperatures may rise the most, demand for electricity will surge due to an increased need for air conditioning. This, in turn, will strain existing infrastructure and increase costs for consumers. The report also notes that rising temperatures stand to decrease the productivity of outdoor laborers (such as construction and agricultural workers) by up to 3%, causing economic damage.
Dramatic harm to agricultural production, a potential risk often cited in discussions of climate change, may be felt regionally, the report emphasized. Unless crops and farmers can adapt, extreme heat in the Southeast, lower Great Plains, and Midwest may lead to 50–70% losses in average annual crop yields for species like corn, soy, cotton and wheat. Though this may be offset on a national scale by gains in crop yields for Northern farmers, the impacts on local economies may be negative and significant.
As a whole, the report focuses on the considerably different effects climate change could have on the economies of various regions. “There is no single top-line number that represents the cost of climate change to the American economy as a whole: We must take a regional approach to fully understand our climate risk,” it reads.
Beyond the numbers and specific predictions, the influential people behind this report set out to make clear that global warming means real dollars and cents, and that businesses need to react accordingly. “With this report, we call on the American business community to rise to the challenge and lead the way in helping reduce climate risks,” the authors state.
Published in WholeFoods Magazine, August 2014