Optimism in the face of ‘Risky Business’
New York – Unless US businesses and policymakers take immediate action to reduce climate risk, the American economy could face significant and widespread disruptions from climate change, according to a new report released titled “Risky Business: The Economic Risks of Climate Change in the United States.”
This report is a product of The Risky Business Project, a joint, non-partisan initiative of former Treasury Secretary Henry Paulson Jr.; mayor of New York City from 2002-2013, Michael Bloomberg; and Thomas Steyer, former senior managing member of Farallon Capital Management. They were joined by members of a high-level “Risk Committee” who helped scope the research and reviewed the research findings. The study summarizes findings of an independent assessment of the impact of climate change at the county, state and regional level. It shows that communities, industries and properties across the US face profound risks from climate change.
However, the findings also show the most severe risks can still be avoided through early investments in resilience and through immediate action to reduce the pollution that allegedly causes global warming.
|A farmer in Ashley, Ill. looks over a dried-up pond.
(photo: Risky Business)
According to an executive summary on this report, Risky Business uses a standard risk-assessment approach to determine the range of potential consequences for each region of the US — as well as for selected sectors of the economy — providing the US continues on its current path. The Risky Business research focused on the clearest and most economically significant of these risks: Climate-driven changes in agricultural production and energy demand, damage to coastal property and infrastructure from rising sea levels and increased storm surge — and the impact of higher temperatures on labor productivity and public health.
Left unabated, US agriculture could experience shifting agricultural patterns and crop yields, with likely gains for Northern farmers offset by losses in the Midwest and South. If the US continues on its current path absent agricultural adaptation, national commodity crop production (corn, soy, wheat and cotton) could decline by 14 percent by mid-century and up to 42 percent by late century as extreme heat spreads across the middle of the country, the report claims. As extreme heat spreads across the middle of the country by the end of the century, some states in the Southeast, lower Great Plains, and Midwest risk up to a 50 percent to 70 percent loss in average annual crop yields (corn, soy, cotton, and wheat), absent agricultural adaptation.
However, at the same time warmer temperatures and carbon fertilization may improve agricultural productivity and crop yields in the upper Great Plains and other northern states. Food systems are resilient at a national and global level, and agricultural producers have proven themselves extremely able to adapt to changing climate conditions. These shifts, however, still carry risks for the individual farming communities most vulnerable to projected climatic changes the study relays.
|A road is washed away by extreme flooding in Jamestown, Colo.
(photo: Risky Business)
“As we see it, the real value of the Risky Business report is the encouragement it will provide for our business leaders to think long-term about what actions we can begin taking today to put us in the best position to be prepared for what the future brings,” said Gregory Page, Risk Committee member, executive chairman of Cargill and former Cargill CEO, during a media teleconference this morning.
“At Cargill, we chose to participate in this effort — even in the face of a lot of climate uncertainty – because we feel it’s important to have a serious conversation about what we can do now to accommodate a whole range of climate-change scenarios,” he added. “Agriculture is, has been and will continue to be inextricably linked with the external environment. We think it’s the perfect place to talk about the economic risks related to changes or evolution of our climate and weather.”
Page said he thinks farmers everywhere are already imminently familiar with this situation. “They see it in their operations every day and they understand and act to adapt to the changing conditions they face,” he added. “Whether we’re farmers, ranchers or agribusiness people that work with them, we are able to see a more growing and prosperous world because of a lot of investments and innovations that were undertaken 40 or 50 years ago. We think it’s critical that this generation not interrupt that change of adaptation and innovation.
“Based on what we’ve seen in the past, we believe farmers — when faced with a changing climate and weather pattern — will do what they have always done: they will adapt,” Page continued. “The adaption of productivity through our changing climate is difficult to predict and the complexity increases the further out in time you go from the base line.
“We think it’s important that the message to agriculture is, ‘We may well face an evolving climate and weather environment, but we are highly confident, optimistic and committed to managing those innovations and adaptions that give us the flexibility to produce enough food in spite of localized disruptions, ’” he explained.
|A homeowner looks over storm damage in New York City.
(photo: Risky Business)
Page relayed there is a chapter in the study that covers high heat combined with high humidity and the potential impact on livestock productivity. “Improving [animal] housing facilities can allow ranchers to mitigate some of these impacts and we’ve seen that already,” Page said. “There are a lot of chickens raised in Saudi Arabia in conditions that we’re unlikely to face within the next century with any probability here in the US. The report shows unabated, they predict a 3-5 percent impact on livestock productivity—this is not a huge number, but if you’re a farmer and you lose 5 percent of your productivity…it’s a number to be strategized against.”
When asked by MeatPoultry.com to provide examples of how Cargill Meat Solutions has been adapting to points published in the study, Page responded, “We have a big poultry business in Central America; we’re raising livestock there. And I was involved in summertime temperatures working in Thailand above 100°F for multiple days. We had the chance in real-time to be working with changes in ventilation systems and housing designs, how hard you push the birds in terms of nutrient densities in the feed, and more.
“We work on it by learning from the places where we’re practicing agriculture already today under conditions that potentially can become more prevalent here in the US and we try to think about potential implications,” he added. “We’re now in the process of remodeling our sow facility in Dalhart, Texas [to better adapt to the high temperatures].”
Cargill learns from the places it’s already doing business, he iterated. “We buy and merchandise corn out of East Java, Indonesia, which is right on the Equator,” Page explained. “We have people raising 160-180 bushels of corn per acre under conditions that may become more prevalent in parts of Missouri in the future. So, our optimism comes from things we already see being done by agriculture on a global basis and thinking about where we might apply it.”
At the other end of the weather extreme, one of the three biggest capital investments of Cargill in the world this year is at 54 degrees N latitude in Alberta, which houses a canola crushing facility. “When I got out of college 40 years ago, the thought of building a canola crushing plant at 54 degrees N latitude was out of the question,” Page said. “So, we have seen as agriculture and the genetics have evolved, the range of places where Cargill needs to go in order to serve farmers has really widened significantly. We see the same things going on in parts of high-latitude parts of Russia where we’re also investing to support those farmers.”
In addition to Page, Risk Committee members include Henry Cisneros, founder and chairman, CityView Capital; former US Secretary of Housing and Urban Development (HUD); former mayor of San Antonio, Tex.; Robert Rubin, co-chairman, Council on Foreign Relations; former US Secretary of the Treasury; Donna Shalala, president, Univ. of Miami; former US Secretary of Health and Human Services; former Chancellor of the Univ. of Wisconsin-Madison; George Shultz, Thomas W. and Susan B. Ford Distinguished Fellow at the Hoover Institution, former Secretary of State, former US Secretary of the Treasury, former US Secretary of Labor, former director, Office of Management & Budget, and former president, Bechtel Group; Olympia Snowe, former US Senator representing Maine; and Dr. Al Sommer, Dean Emeritus, Bloomberg School of Public Health, Johns Hopkins Univ.