Facing the Rising Seas: Can we Learn from Climate Mitigation?

May 5, 2016

By David Levy, University of Massachusetts, Boston

This article was originally published in the Organizations and Social Change blog

It’s approaching three years since hurricane Sandy killed over 230 people in 8 countries, and wreaked havoc on the New York-New Jersey region – and put climate adaptation firmly on the national agenda. Sandy, which disrupted at least 450,000 businesses in New York and New Jersey, illustrated how cascading impacts not only damage property but also disrupt businesses for extended periods of time, due to the interaction of power and communication outages, infrastructure damage, and supply chain disruptions. These complex interactions were not adequately understood or anticipated. The reinsurance company Munich Re has estimated insured losses at $25 billion and total losses of at least $50 billion in the US from Sandy. Looking to the future, the 2011 Mass Climate Adaptation report notes that: “Sea level rise of 0.65 meters (26 inches) in Boston by 2050 could damage assets worth an estimated $463 billion”. Cities and states have begun to devotesignificant resources to planning for sea level rise, more frequent and intense storms, and more intense heat and drought. In one design-for-climate-change scenario, Boston would be transformed into an American Venice.

Boston and New York are hardly unique in their vulnerability. New research in the journal Nature, based on improved dynamic modeling of the West Antarctic ice sheet, suggests that the giant sheet might collapse much more quickly than previously thought, contributing up to three feet of additional sea level rise by 2100 – for a total of up to six feet. By the mid- 2100s, sea levels could be rising about a foot a decade. This would be devastating for low-lying cities, from London to Shanghai, Venice to Miami, and especially so in developing countries such as Bangladesh with few resources and large populations already vulnerable to flooding. Traditional defenses such as sea walls would become impracticable for many areas in this scenario, and policymakers would have to start contemplating vastly expensive retreat and relocation of infrastructure and buildings. The implications for business would also be far reaching; the business response is especially important, because business not only has the financial and technological resources to address the climate challenge, but also the political clout to support – or thwart – progress. In adapting to the physical effects of a changing climate, are there some lessons to be learned from our efforts at climate mitigation (reducing emissions of greenhouse gases)?

There are some similarities between climate mitigation and adaptation, but also some important differences that need to be considered if we are to tackle the adaptation challenge effectively.  Some environmental groups have tried to avoid discussion of climate adaptation, for fear that it was conceding the mitigation battle to solve the climate problem at its source by reducing greenhouse gas (GHG) emissions. Adapting to the physical effects of climate change, however, is now an unavoidable reality, because our emissions trajectory has already locked in substantial climate impacts. Indeed, the immediacy and tangible costs of climate impacts may well provide a new impetus to reduce GHG emissions, as policymakers realize the huge costs of preparing coastal urban areas, which will rise steeply without more aggressive action to reduce emissions. Adaptation and mitigation should therefore be seen as complementary.

As business, academics, and policymakers begin to grapple with climate adaptation, some key differences from climate mitigation are becoming clear. First, while mitigation has primarily been understood as an issue affecting the global commons, adaptation is a very local concern, where vulnerabilities are highly dependent on local geography and the urban landscape. Addressing mitigation therefore requires countries to negotiate and collaborate on emissions reductions, as seen in December at COP-21 in Paris, because our fate depends on everybody else reducing their emissions as well. Adaptation, however, does not have these positive spillover effects; New York does not directly benefit if London invests to protect itself from rising seas – though opportunities for learning do exist. At the local level, some adaptation measures, especially sea walls, can even exacerbate problems down the coast. Cities therefore have a strong incentive to invest to protect themselves, but much less reason to collaborate.

Second, the key business players are different: For climate mitigation, the fossil fuel industry (and related sectors such as automobiles) saw high economic risks from climate regulation, and has historically been a strong political force against regulation, especially in the United States. For adaptation, the property sector is most vulnerable to direct physical losses, including commercial and retail businesses that occupy buildings at risk. As a result, the sector has been active in local discussions about adaptation, and generally supports publicly funded city or region wide approaches. The sector has, however, been wary of expensive private mandates to enhance building resilience, and is unclear how it might monetize the benefits of reduced risks.

The insurance sector also bears considerable economic risks from exposure to physical climate-related damages, and so has an interest in enhancing resilience. Insurance rates could play an important role in shaping incentives: insurance represents the price of risk, and this price could be used to steer new construction away from vulnerable areas and to encourage investments to reinforce buildings against storm damage. The price of risk for climate adaptation is analogous to the price of carbon for climate mitigation. Yet it is a tool that offers less leverage, because insurance is a relatively small cost of doing business, compared with the role carbon prices can play in switching to cleaner energy sources. The financial sector more broadly will be taking note of these physical risks. Just as investors are growing increasingly wary of carbon intense investments, they are increasingly likely to avoid assets, from commercial property to agricultural land, that are vulnerable to climate impacts.

Third, the broader business opportunities are also less clear with climate adaptation – while there will be a growing market for large construction and engineering projects, and specialized consulting services, it is hard to imagine the equivalent of the clean energy sector, which has blossomed into a $250 billion global market for solar, wind, and biofuels in 2013, and has been growing rapidly as an economic and political force. For climate mitigation, there are also substantial short-term economic benefits for organizations that invest in their own emissions reductions through energy efficiency measures such as insulation and high-efficiency lighting. For adaptation, there might be some opportunities for profitable investments in improving the resilience of facilities to flooding and wind damage, but there will also be a need for major public investment in expensive neighborhood and city level protection schemes. This raises difficult finance and governance problems, especially in the US context of fragmented authority.

The clustering of clean tech activity in the Boston area creates regional competitiveness impacts and signals the strength of the regional innovation economy, which helped to motivate GE to announce the relocation of its headquarters to Boston in January. Although there is unlikely to be a parallel climate adaptation business cluster, there may well be real value in addressing climate adaptation at the regional level. In the wake of hurricane Sandy,rents fell precipitously in the New York city area, as people feared the long-term economic impact from businesses avoiding a region perceived as vulnerable to major climate-related disruption. Since then, rents have more than recovered, partly due to the ongoing economic recovery, but also, according to some observers, as a result of the comprehensive adaptation planning for the region. Adaptation planning is likely to become an important ingredient of regional economic competitiveness, at least for vulnerable areas. Less clear is how this value can be leveraged in a way that can finance the huge expenditures involved in protecting a large metropolitan region.

Fourth, climate change raises important equity issues for both mitigation and adaptation. International negotiations over emissions reductions have long been bedeviled by the North-South divide, as low income countries of the global South do not want their future growth constrained by stringent GHG targets, when industrialized countries are responsible for the vast majority of historical emissions. Closer to home, workers in coal, oil, or the auto sectors do not want to bear the burden of a shift to a low-carbon economy. Climate adaptation also raises equity issues regarding the distribution of risks and costs, that are shaped by the local character of climate impacts and adaptation efforts. Some of the most vulnerable regions are in developing countries with few resources and which have contributed little to historical emissions. For example, regions in sub-Saharan Africa and the Middle East are facing the prospect of severe drought, while countries such as Bangladesh face catastrophic flooding as sea levels rise.

Even in industrialized countries, communities with high proportions of low-income and minority people (and the businesses they own and frequent) are generally much more vulnerable to climate impacts – buildings might be older and less resilient to storms and floods, they are less likely to have air conditioning to protect against extreme heat, and less likely to carry adequate insurance coverage to rebuild homes and businesses after a disaster. As insurance rates rise in vulnerable areas, or coverage is cancelled altogether, poorer communities will be disproportionately affected. One of the first papers on social justice in urban climate adaptation was published in early 2016, and points to some key issues: (1) broadening participation in adaptation planning to include com­munity or social justice advocacy groups; (2) expanding adaptation efforts to rapidly growing cities and those with low financial or technical capacity – climate impacts are estimated to cost cities in the Global South more than $109 billion annually in infrastructure invest­ments alone; and (3) integrating justice into infrastructure and urban design processes – this is key, because “cities often undertake climate-change-oriented projects as strategic decisions to protect existing centers of global investment, economic growth and infrastructure expansion, and not towards broader environ­mental or social justice goals”.

As the scientific evidence regarding climate change grows more dire, the political community is waking up to the urgency of the challenge. The targets set at the recent Paris COP21 climate conference require substantial decarbonization of our economy, reducing GHG emissions by around 80% by 2050, which some groups estimate might cost upwards of $1 trillion per year globally to restructure our energy, housing, and transportation infrastructure systems. The costs of climate adaptation are largely unknown for a 6 foot rise in sea level, but are likely to be at least on the same order of magnitude. Clearly, climate change is going to be a huge economic, financial, and political issue for decades to come. But it also offers a unique opportunity to recreate local economies in ways that address many of the social and economic challenges and inequalities that beset our society.  If trillions of dollars need to be invested to decarbonize our economies and make our cities resilient, this investment should be guided by a transformational vision of creating sustainable, resilient, prosperous and equitable communities.

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