Category: Business & Private Sector

Spiraling wildfire fighting costs are largely beyond the Forest Service’s control

Spiraling wildfire fighting costs are largely beyond the Forest Service’s control

By Cassandra Moseley, University of Oregon

Just six months after the devastating Thomas Fire – the largest blaze in California’s history – was fully contained, the 2018 fire season is well under way. As of mid-July, large wildfires had already burned over 1 million acres in a dozen states. Through October, the National Interagency Fire Center predicts above-average wildfire activity in many regions, including the Northwest, Interior West and California.

Rising fire suppression costs over the past three decades have nearly destroyed the U.S. Forest Service’s budget. Overall funding for the agency, which does most federal firefighting, has been flat for decades, while fire suppression costs have grown dramatically.

Earlier this year Congress passed a “fire funding fix” that changes the way in which the federal government will pay for large fires during expensive fire seasons. This is vital for helping to restore the Forest Service budget. But the funding fix doesn’t affect the factors that drive costs, such as climate trends and more people living in fire prone landscapes.

The cost of managing wildfires began to rise in the late 1990s and increased significantly after fiscal year 2000. CRS

More burn days, more fuel

Why are costs increasing so dramatically? Many factors have come together to create a perfect storm. Climate change, past forest and fire management practices, housing development, increased focus on community protection and the professionalization of wildfire management are all driving up costs.

Fire seasons are growing longer in the United States and worldwide. According to the Forest Service, climate change has expanded the wildfire season by an average of 78 days per year since 1970. Agencies need to keep seasonal employees on their payrolls longer and have contractors standing by earlier and available to work later in the year. All of this adds to costs, even in low fire years.

In many parts of the wildfire-prone West, decades of fire suppression combined with historic logging patterns have created small, dense forest stands that are more vulnerable to large wildfires. In fact, many areas have fire deficits – significantly less fire than we would expect given current climatic and forest conditions. Fire suppression in these areas only delays the inevitable. When fires do get away from firefighters, they are more severe because of the accumulation of small trees and brush.

Blue areas on this map experienced fire deficits (less area burned than expected) between 1994 and 2012. Red areas had fire surpluses (more area burned than expected), while yellow areas were roughly normal. Parks et al., 2015,, CC BY

Protecting both communities and forests

In recent decades, development has pushed into areas with fire-prone ecosystems – the wildland-urban interface. In response, the Forest Service has shifted its priorities from protecting timber resources to trying to prevent fire from reaching houses and other physical infrastructure.

Fires near communities are fraught with political pressure and complex interactions with state and local fire and public safety agencies. They create enormous pressure on the Forest Service to do whatever is possible to suppress fires, which can drive up costs. There is considerable pressure to use air tankers and helicopters, although these resources are expensive and only effective in a limited number of circumstances.

As it started to prioritize protecting communities in the late 1980s, the Forest Service also ended its policy of fully suppressing all wildfires. Now fires are managed using a multiplicity of objectives and tactics, ranging from full suppression to allowing fires to grow larger so long as they stay within desired ranges.

This shift requires more and better-trained personnel and more interagency coordination. It also means letting some fires grow bigger, which requires personnel to monitor the blazes even when they stay within acceptable limits. Moving away from full suppression and increasing prescribed fire is controversial, but many scientists believe it will produce long-term ecological, public safety and financial benefits.

Suburban and exurban development has pushed into many fire-prone wild areas. USFS, CC BY-ND

Professionalizing wildfire response

As fire seasons lengthened and staffing for the national forest system declined, the Forest Service was less and less able to use national forest as a militia whose regular jobs could be set aside for brief periods for firefighting. Instead, it started to hire staff dedicated exclusively to wildfire management and use private-sector contractors for fire suppression.

There is little research on the costs of this transition, but hiring more dedicated professional fire staffers and a large contractor pool is probably more expensive than the Forest Service’s earlier model. However, as the agency’s workforce shrank by 20,000 between 1980 and the early 2010s and fire seasons expanded, it had little choice but to transform its fire organization.

In six of the past 10 years, wildfire activities have consumes at least half of the U.S. Forest Service’s annual budget. CRS

Few opportunities for cost control

Many of these cost drivers are out of the Forest Service’s hands. The agency may be able to have some impact on fire behavior in certain settings, with techniques such as hazardous fuels reduction and prescribed fire, but these strategies will further increase costs in the short and medium term.

Another option is rethinking the resources for wildfire response. While there are almost certainly savings to be had, capturing these savings will require changes in how society views wildfire, and political courage on the part of the Forest Service to not use expensive resources on high-profile wildfires when they may not be effective.

Even if these approaches work, they will likely only slow the rate of increase in costs. Climate change, the fire deficit on many western lands and development in the wildland-urban interface ensure that continued cost increases are baked into the system for decades to come.

The ConversationWildfire fighting costs now consume more than half of the agency’s budget, reducing funds for national forest management, research and development, and support for state and private forestry. Even if it doesn’t lower costs, the fire funding fix is vital because it will help create space in the Forest Service budget to fund the very activities that are needed to address the growing problem of wildfire.

Cassandra Moseley, Associate Vice President for Research and Research Professor , University of Oregon

This article was originally published on The Conversation. Read the original article.

Cover photo by USFS/Flickr (CC BY 2.0): Air tanker drops fire retardant on the Willow Fire near North Fork, CA that began on Jul. 25, 2015 and has consumed an estimated 5,702 acres.
Major new report on physical climate risk to financial sector released

Major new report on physical climate risk to financial sector released

Financial institutions should undertake comprehensive climate risk assessments and disclose material exposure to climate hazards such as flood risk, water stress, extreme heat, storms, and sea level rise, according to a new report released today by the European Bank for Reconstruction and Development. The report focusses specifically on physical climate risks to the financial sector and calls for firms to integrate climate impacts into investment decisions.

The report, published today at a conference hosted by EBRD and the Global Centre for Excellence on Climate Adaptation (GCECA), presents guidance and recommendations developed over the last year by industry-led working groups that include representatives from AFD Allianz, APG, Aon, Bank of England, Barclays, BlackRock, Bloomberg, BNP Paribas, Citi, Danone, DNB, DWS, The Lightsmith Group, Lloyds, Maersk, Meridiam Infrastructure, Moody’s, the OECD, S&P Global, Shell, Siemens, Standard Chartered, USS and Zurich Asset Management. An expert team led, by Acclimatise and Four Twenty Seven served as the secretariat to the working groups throughout the course of the meetings.

The report, Advancing TCFD guidance on physical climate risks and opportunities”, also recommends that firms investigate benefits from investing in resilience and opportunities to provide new products and services in response to market shifts. In order to do this, the report calls for organisations to use scenario analysis and incorporate long-term climate uncertainties into business planning and strategic decisions.

The report and the conference, respond to calls for strengthening financial stability in the face of climate change uncertainties, through the disclosure of climate-related market information.  This was the core message, delivered last summer, of the Task Force on Climate-Related Financial Disclosures (TCFD), initiated by the Financial Stability Board (FSB) in response to a call from the G20 economies.

The report is available on a dedicated website, as are opinion pieces from heads of working groups and other leading experts.

Download the report’s executive summary here.

Cover photo by Ryan L.C. Quan/Wikimedia Commons (CC BY-SA 3.0): Looking downtown from Riverfront Ave in Calgary, during the Alberta floods 2013.
Climate Risk Insurance: Preparing for the Next Superstorm

Climate Risk Insurance: Preparing for the Next Superstorm

By Soenke Kreft and Michael Zissener, United Nations University

In September 2017, the Atlantic basin was ensnared in one of the most active hurricane seasons of all time. With wind speeds of 185 miles per hour, Irma was the strongest hurricane ever recorded in the Atlantic. This one storm produced as much cyclone energy as is considered “normal” for an entire Atlantic hurricane season.

And it was not alone.

Irma ravaged the Caribbean Islands just one week after Hurricane Harvey hit the southeastern United States. Hurricanes José, Katia, and Maria followed, leaving a trail of destruction in their wake with more to come. By some estimates, the damage of Harvey and Maria alone totaled US$215 billion.

As if this wasn’t bad enough, the climate disasters of 2017 were not limited to the North Atlantic. Heavy downpours in Western Africa and an abnormally strong monsoon season in India and Bangladesh killed thousands of people and destroyed infrastructure and economies. Likewise, heavy rains caused floods, landslides and deaths in Peru, Columbia, Sri Lanka, China, and elsewhere.

With the increasing regularity of climate disasters — and with related costs quadrupling in the past 30 years — governments are beginning to prioritize disaster risk reduction and climate change adaptation.

Many countries already promote risk management measures, like using hurricane-straps to prevent roofs from flying off, and building dykes to minimise tidal flooding and coastal storm surge. But while these measures can reduce part of the risk posed by extreme weather events, superstorms like Irma show they are not enough. Not all damage can be avoided. As such, we must look to solutions to cover the risks to which we cannot adapt.

Climate risk insurance offers one such solution.

Some Caribbean countries affected by Irma bought an insurance policy with CCRIF SPC (the former Caribbean Catastrophe Risk Insurance Facility). CCRIF announced on 7 September, the day the storm hit, that a payout of US $15.6 million would be made to the governments of Antigua & Barbuda, Anguilla and St. Kitts & Nevis to cover damages. The payouts were to be made not more than 14 days after the storm hit — as mandated by CCRIF’s guidelines.

While these payouts are not nearly enough to cover all storm reparations, the example still illustrates that tailored insurance coverage can provide much-needed funds, and quickly. The payout mechanism is triggered by objective catastrophe models (data from the National Hurricane Center in this case), which avoids delays caused by uncoordinated responses in the aftermath of many major catastrophes.

Studies show that economies with high (private) insurance coverage bounce back quicker to pre-disaster development once hit by earthquakes, storms or floods.

But before we look to climate insurance as a panacea for disaster recovery, we must understand its strengths, and its limitations. Research from the United Nations University finds that while climate insurance offers a compelling solution to increased climate disasters, three things must be considered in its implementation.

First, events like Irma help gauge our preparedness for superstorms and help us better understand who is the most affected by them. Research shows that poor people are the most exposed to — and least protected from — climate risks, and affordable risk-based insurance premiums remain a major challenge. To make insurance an affordable solution, the product can be subsidized by governments or other donors. Regional risk pools can also protect the poorest and most vulnerable. Those who still struggle to afford a premium could pay for coverage through an insurance for assets scheme, where they would be awarded a premium in exchange for taking part in risk reduction activities, like building flood defenses in their own communities. Bottom line, climate insurance schemes must be designed to meet the needs of all socio-economic classes.

Second, climate insurance schemes must be tailored to local needs and conditions, both in terms of the potential types of climatic risks, and the needs and economic abilities of potential clients. With the local context in mind, a properly designed scheme can give incentives for risk reduction by rewarding clients for taking positive action. Higher premiums can discourage people from living in areas that are at heightened risk of flooding or landslides, or encourage them to take preventive measures, reducing their levels of vulnerability over the long term.

Third, climate insurance is not a stand-alone solution. It can only reach its full potential if complemented by other risk management measures and integrated into a wider risk management framework including risk reduction and preparation. The key is to reduce and avoid as much risk as possible first, then use insurance to cover only what cannot be prevented or adapted to.

Climate change is set to intensify and drive an increase in all categories of meteorological hazards — storms, droughts and floods. The 2017 hurricane season was a strong reminder that governments, businesses and individuals must boost their preventative risk management activities, while also designing climate insurance approaches for protection when nature’s harm cannot be avoided. Together, these measures will give us the best chance to adapt to, and survive, a future of superstorms.

This article originally appeared on Our World by UNU and can be accessed here. It is share under a Creative Commons license (CC BY-NC-SA).

Cover photo by DFID/Flickr (CC BY SA): View of damage caused on by Hurricane Irma in Road Town, the capital of the British Virgin Islands.
Climate risk disclosure can help companies create competitive advantage

Climate risk disclosure can help companies create competitive advantage

By Caroline Fouvet

Businesses across all sectors will be affected by climate change. Corporations, from Starbucks to Google, will be affected by climate impacts that can disrupt their supply chains and damage their physical infrastructure. However, comprehensive climate change adaptation assessments and strategies are infrequently considered as part of companies’ business plans. As suggested by Professor Michael Porter, the perception of “an inevitable struggle between ecology and the economy” leads some companies to be wary of environmental regulations, often viewing them as expensive procedures that lie outside of core business planning.

Professor Porter, however, disagrees and claims that there is a complementary relationship between environmental protection and business.  He argues that companies that pay attention to environmental risks are likely to be more competitive. The ‘Porter hypothesis’, formulated in the 1990s, is still relevant today especially with the implementation of disclosure policies on climate change–related risks gaining traction.

In July 2015, France introduced mandatory climate disclosure requirements as part of its law on “energy transition for green growth”. Institutional investors must now report on how their investment policies integrate climate change considerations, and where applicable, climate risk management. This was followed the following year by legislation passed by the European Union’s parliament targeting pensions funds and requiring them to include climate change in their investment strategies. Climate disclosure requirements could help companies to be prepared for emerging climate risks and increase their resilience.

Furthermore, in 2017 the Financial Stability Board’s Task Force on Climate-related Financial Disclosures published its final recommendations to help companies disclose climate-related risks and opportunities. Following the release of these recommendations, a group of 16 leading banks is participating in a UNEP Finance Initiative project, co-lead by Acclimatise and Oliver Wyman, that is developing a methodology for the banks to help them strengthen their assessments and disclosure of climate-related risks and opportunities.

Although the businesses are becoming increasingly aware of climate risks to their operations, there remains plenty of room for progress. For example, even though the insurance sector is particularly vulnerable to climate-related risks, its business strategy does not shield it from the impact of climate change. A study shows that many assets are becoming uninsurable, leading to an estimated US$ 100 billion ‘protection gap’ – the difference between the costs of natural disasters and the amount insured.

Assessing the impact of climate change on investments and adapting business strategies accordingly can help businesses save money in the medium-long term. For that to happen, it is up to governments to implement disclosure requirements. For companies it is important to pre-empt such regulation, and take early action to reduce climate risks to both core operations and supply chains.

Cover photo by Dan Schiumarini on Unsplash.
How climate services could revolutionise the aviation industry (and save you money)

How climate services could revolutionise the aviation industry (and save you money)

By Suzi Tart, LGI Consulting

Flying is a contributor to climate change, but how will climate change impact flying? A new report finds that under the emissions scenarios of RCP4.5 and RCP8.5,* both medium- and large-sized aircraft will be unable to lift as much weight at their current speeds. The reason is that the predicted higher temperatures will result in lower air density, yielding a less-effective plane lift. Indeed, The Economist reports that this has already happened, with dozens of planes being grounded in Arizona on a particularly hot day in 2017.

Several factors of course play into this equation, but the report notes that aircraft flying out of airports with higher elevations, as well as aircraft using shorter runways in high temperatures, will be the most affected. Anywhere from 10%-30% of all flights taking off during the daily high temperatures are predicted to have reduced lift abilities, resulting in the need to cut as much as 4% of their overall weight.

This difference in weight could mean that quite a few seats must go empty in order for planes to take off. It does not take a rocket scientist to figure out that airlines will not continue to earn the same amount of profit with flights that are less full. For travellers, this could result in more expensive flights, vis-à-vis hauling fewer passengers on the same trips, or higher luggage fees due to new luggage weight restrictions. Airlines may also cut back on ammenities such as the drinks they offer, in order to cut weight in other ways. Also likely are increased delays at airports due to planes being unable to depart on time, indirectly adding to the costs. Changes to airport infrastructure, should airports need to extend runway lengths to provide planes more time to generate the same lift capacity, could also hit travellers with higher airport fees.

Apart from the financial impacts, there are some safety concerns as well. The temptation for airlines to book a seat too many when there are seats sitting idle is imaginable, particularly if there is no guarantee of higher temperatures on the day of the flight. A quick look at the runways of the Madeira (recently renamed Cristiano Ronaldo) Airport in Portugal, Barra Airport in Scotland, Courchevel Airport in France, or Gibraltar Airport in Girbraltar, is all it takes to realise that there is little room for error on the current runways. Perhaps these airports offer more extreme examples, but if planes can’t get the lift they need before hitting the end of their runway, it could be disastrous.

Dealing with future air density restrictions no doubt calls for technological innovation. Yet climate services should be an integral part of the solution as well. Most people have never heard of the term “climate services,” including those who actually use them in their work. The EU’s Roadmap for Climate Services defines it as “the transformation of climate-related data—together with other relevant information—into customised products such as projections, forecasts, information, trends, economic analysis, assessments (including technology assessment), counselling on best practices, development and evaluation of solutions and any other service in relation to climate that may be of use for the society at large.”

The MARCO project, for which LGI is a contributing partner, shows us that although the climate services market is still in its infancy, there is an increasing trend of both public- and private- sector professionals across many economic sectors who are starting to use climate services. The aviation industry is among them. Should Europe’s airports effectively incorporate climate services into their work, requiring all airlines and aircraft flying into and out of the airports to do so as well, Europe’s aviation industry as a whole would become much more adept at handling the impacts of climate change. Foreseeable examples include:

  • Aircraft manufacturers being able to better predict and construct the features that planes (including electric planes) will need, based on future atmospheric conditions;
  • Airlines having a better idea of when to schedule flights and how many seats to book under the predicted conditions;
  • Air traffic controlers having a less-stressful job, with better-planned flight schedules and fewer disruptions;
  • Airport authorities being able to invest in future terminals and tarmacs in a wise, climate-proof manner;
  • Aviation schools being aware of the future conditions under which pilots should spend more time training.

There are many foreseeable benefits stemming from applying climate services to the aviation industry, and this does not exclude related financial benefits. However, one major hurdle is getting companies with short-term time frames to look at such long-term aspects. Guidance from the government, via regulations and policies promoting the use of climate services, would no doubt help to send a strong signal to the market. By way of example, in 2011 the City of Copenhagen implemented similar regulations for its built environment sector, incorporating climate services for flood risks into its new urban development projects. Today, the city now expects to gain a whopping EUR 700-900 million.

While the financial gain for the aviation sector has not yet been calculated, climate services offer strong economic incentives, both for travellers and the aviation industry alike. Moreover, climate services support fewer chances of human error under the predicted tougher atmospheric conditions—something that even the most powerful engine may need.

This article was originally published on LGI Consulting‘s blog and is shared with kind permission, read the original article here.

*RCP stands for Representative Concentration Pathway. Established by the Fifth Assessment Report (AR5) of the Intergovernmental Panel on Climate Change (IPCC), there are four RCPs: RCP2.6, RCP4.5, RCP6, and RCP8.5. The numbers refer to the increase in radiative forcing in the year 2100 from pre-industrial values.

Cover photo by Gerrie van der Walt on Unsplash.
Hold on to your Christmas trees – climate impacts on the season’s favourite plant

Hold on to your Christmas trees – climate impacts on the season’s favourite plant

By Elisa Jiménez Alonso

Christmas trees, most commonly firs, pines or spruces, are a beloved staple during the holiday season. Behind all the fragrant green needles, colourful baubles and sparkling fairy lights lies a billion-dollar industry that produces tens of millions of live Christmas trees each year. The demand in Europe alone reaches about 50 million every year and in the US trees were sold at a retail value of over $2 billion in 2016. Due to climate change this massive industry is now facing some serious challenges from pests to frost.

Ironically, as our globe warms, trees are getting cold feet. In Scandinavia, Norwegian spruces are missing the insulating blanket of snow that helps protects their roots from sub-zero temperatures penetrating the soil. The frozen soil takes longer to thaw in spring, which in turn can stunt the trees’ growth and affect its overall health. Several snow-scarce years in a row can significantly impact production. In 2010, a tree shortage followed very harsh winters in Europe and led to a 25%-price hike – Christmas tree demand outstripped supply by 70 million trees.

Warmer temperatures also work in favour of Christmas trees’ biggest nemeses: pests. In Canada, the Balsam twig aphid loves sucking sap out of the popular Balsam and Fraser firs. While it gorges on the sap, the insect secretes a substance that makes the trees’ needles swell and curl. As the infestation increases, trees grow less needles and they start experiencing stunted growth. Southern Québec has seen a temperature increase between 0.8 °C and 1.6 °C since the 1960s and at current emission rates, temperatures could increase up to 4.6 °C above average in the 21st century.

As climate change progresses, Christmas tree producers will have to start thinking about ways to adapt their business to changing conditions. Solutions can range from moving production areas to higher altitudes for better weather conditions to diversifying the tree species in order to discourage pests from spreading. Given the long cycles tree farms go through, early adaptation measures are very important to ensure the businesses’ bottom line – and to save a beloved holiday tradition.

Photo by Diogo Palhais on Unsplash
Popular consumer goods like fashion & coffee at risk from climate impacts

Popular consumer goods like fashion & coffee at risk from climate impacts

By Elisa Jiménez Alonso

Climate change is increasingly having an impact on our daily lives. While many might think of the impacts in terms of extreme and sudden weather events, many problems are creeping up on our society. Such is the issue with many popular consumer goods. We are used to seeing densely stocked shopping aisles full of food, beverages, clothing and much more. But without adaptation measures from the private sector, the landscape of consumer goods as we know it might change very quickly. In a recent episode of the “Material World” podcast, hosts Jenny Kaplan and Lindsey Rupp explore how climate change might affect the consumer universe and what that means for popular products.

Going to the supermarket and buying groceries feels very removed from the actual food production. Shelves are always stocked, and if a consumer in the UK wants to buy an avocado in January, they will easily find one. Agriculture and food production are very complicated because they create globally traded goods and shortages in one country can potentially have knock on effects all over the world.

That is also the case for coffee. Illy Caffé CEO Andrea Illy explains that in the short term, as global temperatures begin to rise, the areas where coffee can be grown will expand. This can be seen in California where coffee production is on the rise. In the long term, however, the total area suitable for coffee production will significantly decrease. Illy estimates that about 50% of suitable areas today will not be able to produce coffee by the end of the century. In some traditionally coffee producing countries stagnating yields and decreasing quality can already be observed today. Adaptation actions are necessary today to reduce the negative impacts as much as possible. Andrea Illy recommends three broad areas of action: adapting agricultural practices, diversifying cultivated plants, and migrating plantations to more suitable areas. These will require enormous resources in terms of investments, knowledge, infrastructure, and people.

Cotton is another plant that is sensitive to a changing climate. While increased CO2 concentrations in the atmosphere boost cotton’s growth, the growth boost also leads to increasing water and nutrient needs. With rising temperatures and changing rainfall patterns, water availability is set to fall in many regions. The devastating 2011 drought alone led to the abandonment of 55% of Texas’ cotton fields and an estimated loss of US$2.2 billion. Major fashion companies like H&M are starting to look into changing how they source cotton and other textiles. With all signs pointing towards a significant reduction of global cotton production, H&M have pledged to use 100% sustainably sourced or recycled materials by 2030, in 2016 the share was 26%.

While the private sector’s efforts to adapt to climate change are absolutely crucial for global resilience building, governments also have an important role to play. In the first half of the 20th century, the US experienced a devastating drought that led and unsustainable farming practices led to the so called “Dust Bowl” in the Great Plains. The government then rolled out massive efforts to conserve soil and restore destroyed lands. One such effort consisted of planting a huge belt of 200 million trees from the Canadian border to central Texas. Without interventions and support from the public and private sectors, adaptation efforts and climate resilience building will only be partially successful.

Cover photo by Kimberly Vardeman (CC BY 2.0).
How business can help build climate resilience today

How business can help build climate resilience today

By Eileen Gallagher, Manager at BSR

Around the world, we are experiencing record-breaking extreme weather events—from monsoon flooding in South Asia, to Hurricanes Harvey and Irma the United States and Caribbean islands, severe flooding in Nigeria, and Typhoon Hato here in Hong Kong and southern China. The loss of life, displacement, and financial damage are devastating.

While seasonal storms are nothing new, climate change is expected to make them more powerful. Warmer temperatures elicit more rainfall, and storm surge is worsened by sea-level rise. When combined with, in some cases, poor urban planning, existing socioeconomic vulnerabilities, and lack of preparation, these stronger storms can cause significant damage.

The recent and ongoing events illustrate for many of us the very real impacts of climate change. This begs the question: are those of us who work in or for the private sector doing everything we can to prepare for and build resilience to future weather- and climate-related impacts?

The private sector faces a range of climate risks that can affect overarching strategies, finances, human resources, and sales. And businesses are exposed to these risks throughout their operations, supply chains, and communities where they work. Companies rely on suppliers and communities around the world for both human and natural capital including land, water, and a consistent energy supply, among other critical resources. Simply put, the range of impacts from climate change can directly affect business continuity.

Catastrophic weather events or natural disasters can serve as “trigger events”—prompting (rightfully) an uptick in support from governments, businesses, and communities to aid relief and recovery efforts and “build back better” homes, schools, and roadways. But preparation can dramatically reduce the cost of recovery—studies show that for every US$1 spent to mitigate risks, US$4 is saved on recovery costs. We are not seeing the same level of investment or urgency to proactively prepare for extreme weather events and build climate resilience as we see for recovery.

As Alice Hill of U.S. President Obama’s National Security Council recently lamented, it took eight years and the destruction of Hurricane Sandy to agree on federal building standards to protect against floods. Despite this, President Trump revoked the flood protection rule 10 days before Harvey made landfall.

While “trigger events” can drive us to act, the implications of climate change for business go beyond extreme weather. Gradual, slow-onset climate events—sea-level rise, increasing temperatures, ocean acidification, glacial retreat and related impacts, salinization, land and forest degradation, loss of biodiversity, and desertification—are also affecting business in myriad ways.

For example, salinization, brought on by sea-level rise, is shrinking rice yields in Vietnam, Bangladesh, and other major rice-producing markets, which in turn affects global commodity supply chains and threatens food security. Salinity can also cause structural damage to buildings, equipment, and roads, which can impact the production and transport of goods and services.

To build their resilience to salinization, businesses can protect or install a combination of green and gray infrastructure: wetlands and forests act as natural barriers, and drainage systems and subsurface barriers can stop the flow of contaminants. In the agriculture industry, farmers can diversify crops and livelihoods to help maintain or build financial security; investments in new research could help uncover alternative solutions such as salt-tolerant crops.

Given that we’re experiencing the impacts of climate change today, it’s important that we invest in climate resilience. Here are three ways businesses can start building their adaptive capacities:

  1. Assess and disclose climate risk: In addition to assessing both gradual and sudden climate hazards, businesses should take inventory of their exposure and vulnerability throughout their operations, supply chains, and communities. Poor infrastructure and communication channels, existing labor issues, low-income communities, and social injustices are a few examples of vulnerabilities that can exacerbate climate risk. Disclosing risks can help companies generate awareness of issues, facilitate goal-setting for risk mitigation, and identify opportunities to collaboratively address challenges.
  2. Leverage expertise: Businesses should consider leveraging their knowledge and skills to build resilience throughout their value chains. For example, real estate developers can partner with city planners to solve for local vulnerabilities, such as planting trees to provide shade in hot environments and investing in safe and secure infrastructure like permeable pavers to reduce flooding.
  3. Empower individuals: Companies can up-level their civic engagement by empowering individuals to build personal resilience to climate change. For example, information and communications technology and financial services companies can collaborate with local governments to expand access to information and insurance for at-risk populations, including women, people with disabilities, the elderly, poor, homeless, and outdoor workers, among others.

As affected communities assess the damage brought on by the recent extreme weather events and work together to heal and recover, let’s take action within the businesses where we work. Let’s ask ourselves how we can make sure our companies and our communities are prepared.

With thoughtful, proactive, and collaborative efforts, we can build the resilience that’s essential for today’s climate reality. Learn more and get your business involved on our climate change page.

This article was originally published on and is shared with kind permission. Read the original article here.
Cover photo by Oskari Kettunen (CC BY 2.0).
Is global climate change good for business?

Is global climate change good for business?

By Steve Wilson

In addition to increasing temperatures and rising sea levels, global climate change represents a complex exercise for the great majority of businesses, which must frame the meaning, the costs, and the business and investment opportunities associated with this ongoing phenomenon.

For a large number of companies, action on climate change is embedded in some version of a “sustainability” or “green business” program aimed at improving environmental and business performance. These initiatives are typically focused on mitigation, or the reduction of greenhouse-gas emissions, rather than on building climate resilience in the face of risks such as cyclonic winds, heat waves, flooding and storm surge, and drought. The most effective of these sustainability programs, by whatever name, manage to reduce emissions and lower the environmental footprint of companies and their supply chains, by using renewable energies such as solar and wind power, improved energy and water efficiency, recycling, and reducing waste of all types. Companies that use these programs are viewed as responsible environmental stewards, and at the same time, reap the benefits of process efficiency and lowering their costs, as illustrated in the 2013 book, Eco-Business: A Big-Brand Takeover of Sustainability.

From Sustainability to Climate Resilience

The drive for sustainability will continue to generate opportunities in renewable energy, energy-efficient technologies, and other products that help lower emissions and waste.  But the market potential in climate resilience is far larger.

After all, climate risks pose an increasing threat to business continuity, private and public property, supply chains, human health, and critical infrastructure. As I noted in a previous post, these risks drive the demand for a wide and growing range of products and services that help buyers better manage their vulnerability to climate risks: from climate-resistant seeds, to financial and insurance products that encourage resilience. In effect, the private sector is already in the business of climate resilience—although companies do not account for this business using climate-related terminology.

A First Inquiry into the Market for Climate Resilience

A new study attempts to shed some light on the growing market opportunity posed by climate resilience. The inquiry, by the Global Climate Adaptation Partnership  in the United Kingdom and Grupo Laera in Colombia, will assess the markets for climate-resilience solutions in two sectors, agriculture and transportation, in three emerging markets: Colombia, South Africa, and the Philippines. These solutions are in the form of many types of products and services that help buyer better manage their exposure to climate risks, and they also include emerging investment models and public-private partnerships that help to reduce climate vulnerability.

The agricultural sector is recognized everywhere as the most vulnerable to climate risks. This pioneering study, expected to be completed in 2017, will examine the market for climate-resilient solutions in high-value agricultural commodity chains, including coffee, cacao, wine, rice, and maize. These commodities are important to the exports of each country, and generate the demand for climate-resilient solutions in local economies. These solutions include water-efficient technologies, drought-resistant seeds, applied climate and weather analytics, and new types of financial and insurance contracts.

In the case of transportation, the public and private sectors are closely related and the industry is likely to incur very high costs to achieve climate resilience. However, with trillions of dollars set to be spent on infrastructure worldwide in the next 10 years, there is a clear opportunity for resilience investments in the short term that save money during the lifetimes of the projects. Roads are the backbone of all agricultural supply chains, and crucial for many other sectors, such as tourism. Coastal infrastructure, including ports, adds a long-term dimension to the new study, with the prospect of stranded assets affecting company balance sheets and risk ratings. Both roads and ports are crucial for national and international trade, and their need for long-term, large up-front cost investments sometimes is met by public-private partnerships.

Lessons derived from this new study can applied to other sectors and geographies and make an important contribution to a rapidly growing market that remains largely hidden in plain sight.

This study will join a growing list of inquiries into private challenges and opportunities in climate resilience. For example, the recent report “Bridging the Adaptation Gap,” by the Global Adaptation and Resilience Investment roundtable, highlights the major challenges facing private-sector investment in climate-resilience projects, and outlines a menu of actions for facilitating the flow of private capital toward the global need for greater resilience.

Steven R. Wilson manages projects related to climate change adaptation and resilience for the Multilateral Investment Fund. He recently co-created PROADAPT, a $12 million facility that helps build climate resilience in the private sector in Latin America and the Caribbean.
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Cover photo by Daniel Parks (CC by NC 2.0)
Collaborative effort of European financing institutions to help improve implementation of climate change adaptation

Collaborative effort of European financing institutions to help improve implementation of climate change adaptation

By Craig Davies, Associate Director, Head Climate Change Adaptation, EBRD

When the Paris Agreement on climate change was adopted in December 2015, it included a long-term goal for the adaptation to climate change – “enhancing adaptive capacity, strengthening resilience and reducing vulnerability to climate change, with a view to contributing to sustainable development […]”. It recognised the direct link of climate change adaptation to sustainable development and further highlighted its importance. This added momentum to an increasing need for practical approaches for climate change adaptation, which can range from making transport infrastructure more resilient to storms and floods, to helping small businesses adapt to increasing water scarcity.

The demand and importance of integrating climate-resilient solutions into project development has also grown and become more visible for EBRD. Already since 2009, the Bank has collaborated with other European financing institutions on the issue under the umbrella of the European Financing Institutions Working Group on Adaptation to Climate Change (EUFIWACC). Following a jointly-organised consultant day in June 2015, where emerging experiences and future needs for expertise in the field of climate change adaptation were discussed, the Group agreed that in order to be able to further scale up activities in the area, there was a need for the development of practical and structured approaches. The Group agreed to capture the emerging experience of its experts to provide insights into how climate issues can be best integrated into project development and implementation.

“Making long-term investments more resilient to the impacts of climate change is a major challenge for investors” said Terry McCallion, Director for Energy Efficiency and Climate Change at the EBRD. “At the EBRD, we have developed approaches that integrate climate change adaptation into our investment operations. Working with partner organisations to share experience and knowledge will build momentum towards larger volumes of effective adaptation finance”. Since 2011, EBRD has invested more than €790 million of adaptation finance in over 120 projects.

Through several rounds of workshops and reviews that also included technical experts from an advisory group of consultancies, a note summarising the groups’ experience – titled “Integrating Climate Change Information and Adaptation in Project Development: Emerging Experience from Practitioners”– has been prepared in order to help practitioners assess climate change risks and vulnerabilities and integrate adaptation measures into project planning, design and implementation. The measures can include structural and non-structural components. The note’s overall aim is to help make projects and investments more resilient to the effects of climate change and to implement adaptation measures reinforcing the climate resilience of goods, people, economies and territories of the beneficiaries.

For the Group, the publication of the first version of the note is a milestone to build on and it sees the note as a continuous learning process that will evolve and benefit from future experience and developments in the field.

Download the full report by clicking here.

The EUFIWACC group comprises the French Development Agency (AFD), the Council of Europe Development Bank (CEB), the European Bank for Reconstruction and Development (EBRD), the European Commission’s Directorate-General for Climate Action (DG CLIMA), the European Investment Bank (EIB), KfW Development Bank (KFW), and the Nordic Investment Bank (NIB).

The note further benefited from the technical expertise of experts from the JASPERS partnership (Joint Assistance to Support Projects in European Regions) and the Climate Service Center Germany (GERICS), as well as an advisory group of consultancies, consisting of the following firms: Acclimatise, Agrer, Atkins, Baastel, CES Consulting Engineers Salzgitter GmbH, Climpact-Metnext, CrissCross Consulting, D’Appolonia, Eco Ltd., ENVIRON, Factor CO2, GOPA mbH, Green Partners, Guiran Consulting, Kommunalkredit Public Consulting, Luxconsult S.A., Mott MacDonald, Perspectives, Pöyry, Royal Haskoning DHV, Safege, SIA srl, Sofreco, Suez Environnement Consulting, Sweco, TA Consult Partners Ltd., and WSP Parsons Brinkerhoff.

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Cover photo: Pixabay.