Risky Business in Nebraska: The Economics of Climate Change
Nebraska’s businesses and economy face a great risk due to climate change, according to a new risk management study that assesses the impacts of climate change on jobs, crop yields, infrastructure, and energy production.
A bi-partisan group including former New York Mayor Michael Bloomberg, former Wall Street titan and Treasury Secretary Henry Paulson, and other prominent businesspeople and public officials launched the Risky Business Project that developed this study called “Risky Business.”
Our current economy and society have been organized and built around normal weather patterns with some resilience to occasional extreme weather events. Due to climate change, weather events that are today considered “extreme” will soon be considered “normal.” This increase in extreme weather poses risks to our current economy and societal structures.
Through a risk assessment, the study looks at the likelihood of possible future scenarios and the risks associated with each. If we continue with carbon emissions associated with business-as-usual, the risks for Nebraska by 2050 include 2x-3x more days over 95°F each year than currently and average summer temperatures increasing by 1°-3°F.
This rise in temperature could increase the demand for electricity, primarily from air conditioning, by 2.2 – 6.7%. With increased electricity demand across the region, Nebraskans could see energy expenditures increase by 2.0 – 10.6%. The heat will also reduce labor productivity by as much as 1%, primarily for outdoor workers in such industries as construction, utility maintenance, landscaping, and agriculture.
By mid-century, Nebraska farmers could see crop yields either slightly increasing by 1.5% or dropping as much as 24%. By 2080-2099, crop yields look even worse with a decrease between 10-57%.
From the defense industry, to insurance companies, to healthcare, several of Omaha’s largest industries are studying the impacts of climate change on their organization in order to manage risk. The report indicates we must take action immediately:
“If we act today to move onto a different path, we can still avoid many of the worst impacts of climate change, particularly those related to extreme heat. We are fully capable of managing climate risk, just as we manage risk in many other areas of our economy and national security—but only if we start to change our business and public policy decisions today.” –Risky Business
So what can we do?
The value of a risk analysis is to help prevent or minimize negative surprises and unearth new opportunities. With climate change, there are two necessary approaches to minimizing risk: mitigation and adaptation.
Carbon dioxide and other greenhouse gases stay in the atmosphere for hundreds of years. What we emit today will impact our climate for at least another 100 years. To mitigate risks associated with future climate change, we must reduce or eliminate emissions today.
Organizations in Omaha have begun to take steps to reduce emissions. OPPD has taken a bold step by outlining its plan to reduce electricity demand while simultaneously increasing renewable energy generation, both of which reduce greenhouse gases.
And we have clients that are taking major steps forward as well. The University of Nebraska at Omaha is working on a Sustainability Master Plan that will outline steps the university can take to reduce emissions and improve its bottom line. Omaha’s Henry Doorly Zoo and Aquarium has already cut energy use per square foot by 7%, while saving over $100,000 each year, and the Omaha Public Schools have cut emissions over 42,000 metric tons and saved $2 million in the last four years. Just to name a few.
Adaptation is also necessary, because the impacts of climate change are already being felt from coast to coast.
Many businesses are developing adaptation plans that include both addressing new challenges as well as discovering opportunities they didn’t know existed. Farmers continue to shift to sustainable agricultural practices and use technology to adapt to changing weather. Irrigation research and technology continues to enable farmers to use less water while maintaining or improving yields, and the Land Institute cultivates perennial crops. Each of these practices saves farmers money while improving resilience to the risks of climate change.
For more systemic change, the report authors say “it is time for all American business leaders and investors to get in the game and rise to the challenge of addressing climate change.” This includes investors incorporating risk assessment into capital expenditures and balance sheets, and the public sector instituting policies to mitigate and adapt to climate change.
Ultimately, this is a problem of today, not some far off generation. Every decision we make today will either increase the likelihood of negative climate impacts or will help us manage the risk so we can thrive in Nebraska.
How does your organization plan to mitigate and adapt to climate change impacts?