Climate change is likely to exact enormous costs on U.S. regional economies in the form of lost property, reduced industrial output and more deaths, according to a report backed by a trio of men with vast business experience.
The report, released Tuesday, is designed to convince businesses to factor in the cost of climate change in their long-term decisions and to push for reductions in emissions blamed for heating the planet.
It was commissioned by the Risky Business Project, which describes itself as nonpartisan and is chaired by former New York City Mayor Michael R. Bloomberg, former Treasury Secretary Henry M. Paulson Jr. and Thomas F. Steyer, a former hedge fund manager.
'If we act immediately, we can still avoid most of the worst impacts of climate change and significantly reduce the odds of catastrophic outcomes,' Paulson said.
Among the predictions: Between $66 billion and $106 billion in coastal property will likely be below sea level by 2050, labor productivity of outdoor workers could be reduced by 3 percent because extremely hot days will be far more frequent, and demand for electricity to power air conditioners will require the construction of more power plants that will cost electricity customers up to $12 billion per year.
'Every year that goes by without a comprehensive public and private sector response to climate change is a year that locks in future climate events that will have a far more devastating effect on our local, regional, and national economies,' warn the report's authors.
The analysis and calculations in the report were performed by the Rhodium Group, an economic research firm, and Risk Management Solutions, a catastrophe-modeling company that works for insurance companies and other businesses. It was paid for by the philanthropic foundations of Bloomberg, Paulson and Steyer, among others.
The report analyzes the impacts of climate change by region to better show how climate change affects the businesses and industries that drive each region's economy.
- The Northeast will likely be most affected by sea level rise, which will cost an additional $6 billion to $9 billion in property loss each year.
- The Southeast will likely be affected both by sea-level rise and extreme temperatures. The region, which has averaged eight days of temperatures over 95 degrees each year, will likely see an additional 17 to 52 of these days by midcentury and up to four months of them by the end of the century. This could lead to 11,000 to 36,000 additional deaths per year.
- Higher temperatures will reduce Midwest crop yields by 19 percent by midcentury and by 63 percent by the end of the century.
- The Southwest will see an extra month of temperatures above 95 degrees by 2050, which will lead to more frequent droughts and wildfires.
The report does not calculate the cost of these droughts or wildfires, or many other possible costs such as the loss of unique ecosystems and species and the possible compounding effects of extreme weather conditions. Nor does it calculate some of the ways economies could adapt to the changing climate and reduce the costs of climate change.
'There's a whole litany of things not calculated in the assessment,' said Gary Yohe, an economics and environmental studies professor at Wesleyan University and vice chair of the National Climate Assessment, a U.S. government project set up to study the effects of climate change. Yohe was not part of the Risky Business Project report, but he was asked to review it.
Still, he said, 'The general conclusions are right on the money.'
He also said that while other groups have also attempted to calculate the financial impacts of climate change around the world, this report is notable because of the business and financial experience of the people behind it. Beyond the three co-chairs, the members of the group's risk committee include Former Treasury Secretary Robert Rubin, former Cargill CEO Gregory Page, and George Shultz, former treasury secretary and secretary of state.
'These are people who have managed risk all their lives and have made an enormous amount of money doing so,' Yohe said.