“Risky Business: The Economic Risks of Climate Change to the United States,” a report on climate change and how it will affect businesses, offers a variety of information on how a changing world will impact businesses and gross domestic product.
The report was issued this week, and is part of the Risky Business Project, chaired by the likes of former New York Michael Bloomberg and former U.S. Treasury Secretary Henry Paulson.
Frank Nutter, CEO of the Reinsurance Association of America, and several people involved with developing the report, discussed the implications of the findings on Thursday during a conference call hosted by the nonprofit group Business Forward.
The report covers several impacts that will affect businesses and the entire U.S. bottom line.
“The U.S. faces significant and diverse economic risks from climate change,” the report states. “The signature effects of human-induced climate change—rising seas, increased damage from storm surge, more frequent bouts of extreme heat—all have specific, measurable impacts on our nation’s current assets and ongoing economic activity.”
The report focuses on risks such as: 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.
“Our findings show that, if we continue on our current path, many regions of the U.S. face the prospect of serious economic effects from climate change,” the report states.
“However, if we choose a different path—if we act aggressively to both adapt to the changing climate and to mitigate future impacts by reducing carbon emissions—we can significantly reduce our exposure to the worst economic risks from climate change, and also demonstrate global leadership on climate.
According to the report, by 2050 $66 billion to $106 billion in existing coastal property will likely be below sea level nationwide, with $238 billion to $507 billion worth of property below sea level by 2100.
The report covers many of the usual topics that have gotten plenty of play in a recent string of climate change reports that have come out lately, but it focuses heavily on economic loss.
By the middle of this century, the average American will likely see between 27 to 50 days over 95°F each year—that’s at least twice average annual number of 95°F days we’ve seen over the past 30 years, according to the report.
Because of that increased heat the labor productivity of outdoor workers, like those in construction, utility maintenance, landscaping, and agriculture, could be reduced by as much as 3 percent, particularly in the Southeast, the report states.
“This is an effect that turns out to be one of the most noticeable effects if you look at for the nation as a whole,” said Bob Kopp, lead researcher on the report.
He added that a reduction the output in the agriculture labor sector, for example, “can end up giving you a GDP change that’s on the order of 1 percent.”
That heat is bad for the crops themselves as well, according to the report.
“As extreme heat spreads across the middle of the country by the end of the century, 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,” the report states.
The Reinsurance Association’s Nutter said the insurance industry is already feeling tension between the need to raise rates to reflect greater risk and the desire of consumers to have affordable insurance.
Nutter pointed to more than 200 catastrophic events in the U.S. in 2009 and 2010, and more than 150 catastrophes in each of succeeding years, and said things could get worse considering more properties continue to be built in areas where sea level rise is a major threat.
The insured value for coastal exposure properties in the U.S. $10.6 trillion, Nutter said, adding “16 of the most the expensive catastrophes have all occurred in the last decade.”
“We have seen lots of distress in insurance markets in coastal areas,” he said.
The report’s authors 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. This is only a first step, but it’s a step toward getting America on a new path leading to a more secure, more certain economic future.”