Climate change impacts on the bottom dollar

 By Terence Houston, ESA science policy analyst

The second annual Climate Leadership Conference offered a new prism in which to consider an issue that has not gained much traction in recent years in the realm of federal policymaking. Various conference speakers representing a broad cross section of private industry sought to illustrate the notion that the debate over whether to prioritize efforts to address climate change over economic well-being is a false choice.

The first day’s keynote address was given by Environmental Protection Agency (EPA) Acting Administrator Bob Perciasepe who discussed the agency’s Energy Star program, which celebrates its 20th anniversary this year. He noted that the Energy Star program has helped customers save $230 billion in utility bills in the years since its inception. Perciasepe also mentioned EPA’s Center for Corporate Climate Leadership, which works as a resource for businesses to develop innovative cost-effective solutions to save energy and reduce their carbon footprint.

That businesses nationwide are already implementing such efforts is heartening, but the full scope of climate change’s effects on both the economy and national security priorities illuminate the need for private sector actions to be complemented and buttressed with leadership in the public sector. Several representatives from the private sector and key federal agency officials discussed how climate change has already impacted the US economy and national security.

Panelists Kenneth Kunkel (NOAA), Alice Hill (DHS) and Lindene Patton (Zurich Insurance) discuss costs of extreme weather

Department of Homeland Security Senior Counsel Alice Hill noted how increasing temperatures have led to a rise in shipping activity in Arctic routes, which in turn prompts the need for additional security infrastructure to deter illegal activities or threats to national security interests. She cited a 34 percent increase in the number of vessels in the Arctic region in 2008 as well as a 47 percent increase in transit along the Bering Strait. Hill cited a number of factors, including the state’s remoteness, vast land area, limited existing infrastructure and extreme cold temperatures as hindrances in efforts to expand national security in the region. She noted that DHS has published a Strategic Sustainability Performance Plan, which outlines its efforts to reduce greenhouse gas emissions and evaluate the extent of financial costs and outline threats to national security posed by climate change.

Lindene Patton, Chief Climate Product Officer with Zurich Insurance offered a perspective on how climate change has impacted the insurance industry. In her presentation, she noted that weather-related supply disruptions result in higher energy prices and increased cooling demand can coincide with an increase in blackouts. Overall she maintained that pre-emptive action by businesses to anticipate environmental risks from climate change can help reduce insurance costs.

Jay Bruns of the Hartford cited a study that noted the 2011 tornado and storm season was the fourth costliest event in insurance history thus far, even more so than the 9/11/2001 terrorist attacks. Only Hurricanes Katrina and Andrew have been more costly than those events. The study, published in Nov. 2012, does not factor costs associated with Hurricane Sandy. The study also notes that during the period between 1990-2011, while only six percent of financial losses were due to terrorism, 42.7 percent of losses were due to hurricanes and tropical storms, 31.8 percent due to tornadoes, and eight percent due to winter storms. Bruns also stated that effective risk management must also involve participation from the scientific community.

Jeff Williams of Entergy cited a study from Entergy and America’s Wetland Foundation that noted $2 trillion in US assets are at risk from increased storm frequency and intensity caused by climate change. The study focused on the financial impact climate change is having on the Gulf Coast region. Currently,  the region experiences an average of around $14 billion in losses from extreme storms each year. The report estimates that the Gulf Coast could cumulatively lose as much as $350 billion between now and 2030 due to such weather events.

Scientists attending the meeting included Kenneth Kunkel with the National Oceanic and Atmospheric Administration’s National Climatic Data Center. He noted that intensive thunderstorms   increased dramatically in the 2001-2011 period, particularly in the northeastern United States. He also stated that intense cold waves have declined over the last 10-15 years. Oceanographer John Englander said that melting ice sheets in Greenland and Antarctica caused by global warming will continue to lead to  shorelines moving inland that will have multifaceted impacts on businesses, real estate and infrastructure.  Englander had authored a book that described the devastating impact an extreme storm would have on the Northeast, which was published just one week before Hurricane Sandy hit.

Early in the conference, it was acknowledged that major efforts to mitigate the impacts of climate change at the federal level is highly unlikely with the notable exception of unilateral executive branch orders. As Entergy Corporation Executive Vice President Rod West suggested “suffering” (or the imminent threat of suffering) is necessary to spur the motivation and cooperation necessary for Congress to take action on policy to plan for adaptation and mitigation measures. West contended that  the suffering is already taking place. The main question is how much more suffering through increasing frequent and intense extreme weather events and their exceedingly costly consequences must the nation endure before the federal government tackles an issue in which many in the private sector are already very much engaged.

Author: Terence Houston

Science Policy Analyst for ESA.

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