Climate Change Report Ominous for US Business
Climate change could cost US businesses billions of dollars over the next two decades and companies should treat it as they would any other business risk, according to a report produced by a bipartisan group of former cabinet officers, lawmakers, corporate leaders and scientists.
Those backing the report, entitled
, include former US treasury secretary Henry Paulson, ex-New York Mayor Michael Bloomberg and Thomas Steyer, a retired hedge fund manager, billionaire and major donor to the Democratic party.
The study focuses on the current and future effects of climate change on jobs, crop yields and energy production. Although it includes no new scientific evidence, it warns that a lack of action could lead to US crop yields falling by more than 70% in the Midwest and billions of dollars’ worth of East Coast real estate succumbing to rising sea levels.
The study suggests that there is a significant risk that by the year 2100 some US$23bn worth of coastal property in Florida will be inundated. However, a so-called ‘tail-risk’ event-which is deemed to be low-probability but would be extremely costly if it occurred-would push this figure much higher. For Florida property, the tail risk is a 1 in 100 chance that by the end of the 21st century, as much as US$681bn worth of property could be submerged.
Within only the next 15 years, higher sea levels, storm surges and hurricanes could raise the annual cost of coastal damage along the US East Coast and the Gulf of Mexico to US$35bn. Some Midwestern and Southern agricultural areas could see a decline in yields of more than 10% over the next five to 25 years due to increased drought and flooding, unless farmers adapt their crops.
Paulson, a Republican who served under president George W Bush, proposes a tax on carbon emissions that scientists have cited as the main cause of climate change that would provide an incentive to wean the economy off carbon-based fuels. “A carbon tax is one way of putting a price on this pollution, one way of letting the market operate,” he noted.
However, the US Chamber of Commerce and several energy companies are among those opposed to most stringent carbon emissions limits that would affect coal-fired power plants. They claim that stricter regulations from the Environmental Protection Agency (EPA) will lead to job losses, impose heavy costs on the utilities industry and raise electricity prices.
The former treasury secretary admitted that many in his party are sceptical of the science of climate change and want more research. However, the study argues that the business and investment community needs to take action. “It’s going to increasingly be difficult for anybody, regardless of party, to say there isn’t a problem,” Paulson said.
“The more we can talk about risk management, which is part and parcel of the free enterprise system and a conservative principle, I think we will make some headway.”