As discussed in the Fall 2013 issue of
The Climate Report, in
October 2013, hedge fund billionaire Tom Steyer, former U.S.
Secretary of the Treasury Hank Paulson, and former New York City
Mayor Michael Bloomberg launched the initiative "Risky Business−The Economic Risks of Climate
Change" to assess the economic risks of climate change in
the United States.
In June 2014, Risky Business issued its inaugural report, detailing the economic risks
of climate change in the United States. In April 2015, the
initiative issued a follow-up report focusing on California:
"From Boom to Bust? Climate Risk in the Golden
State." The report reached the conclusion that, on the
current path of global emissions, California faces multiple and
significant economic threats from climate change. However, the
report also concludes that if business leaders and policymakers act
soon to reduce emissions and adapt to climate change, they can
significantly reduce those risks.
Specifically, the report identified several statewide trends
resulting from climate change:
- Increasing heat;
- Accelerated sea level rise;
- Changes in water availability;
- Declines in agricultural productivity;
- Increases in electricity costs and demands; and
- Heat-related increases in mortality and decreases in labor productivity.
Report at 9-13. The report found that climate change presents a
particularly high economic risk to California's agriculture.
The report notes that two impacts in particular are likely to have
a major effect on California's crops: rising temperatures and
changes in precipitation.
California's agriculture is made up largely of fruits, nuts,
and vegetables. Many of these crops are perennial, meaning they
require several years of growth development. These crops are
therefore particularly sensitive to even small temperature changes
during certain phases of development. Orchard crops, for example,
require a certain amount of time each year below 45ºF in order
to rest and prepare for the next season's budding and
flowering. In fact, the report notes that higher temperatures and
the current drought already appear to be affecting California's
almond crop, which produces 80 percent of the world's
almonds.
California's agriculture is also heavily dependent on
irrigation and therefore will be particularly hard-hit by the
expected decrease in the Sierra region's winter snowpack. This
snowpack is a critical provider of freshwater for the state and is
therefore also critical to crop irrigation. Finally, agriculture
will also face challenges in caring for livestock and combating
invasive weeds and pests.
The report remains optimistic, however, that the agricultural
industry is well-equipped to adapt to and mitigate these potential
impacts, through practices such as seed modification, crop
switching, and crop relocation. However, such mitigation
opportunities may be limited by time, cost, infrastructure,
transportation, soil quality, and competing land uses.
The report goes on to discuss several other economic risks facing
California. Due to the high population density along the coastal
regions, accelerated sea level rise is expected to cause billions
of dollars of property and infrastructure damage in coming years.
Additionally, the expected increase in frequency and severity of
extremely hot days will put an increased demand on electricity
systems for residential and commercial cooling, leading to
increased energy costs. Finally, changes in the timing and amount
of precipitation are expected to lead to increased flooding and
drought.
Despite concluding that climate change poses many serious risks to
California's economy, the report asserted that the state can
reduce these risks and avoid many of the worst impacts if certain
steps are taken to mitigate the damage. The report advises three
specific strategies: (i) changing everyday business practices to
become more resilient to climate change, particularly in
agriculture; (ii) incorporating risk assessments related to climate
change into capital expenditures and balance sheets; and (iii)
instituting policies to mitigate and adapt to climate change.
Report at 52-53.
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