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Posts Tagged ‘flooding’

If you want to give your children nightmares tonight, maybe reading the summary of the IPCC report that was released last month would be a good idea.

The report states that, ‘it is extremely likely’ that humans have been the dominant influence on observed warming since the mid-20th century. But whether you believe that the effects are man-made or not, the effects are real:

  • The rate of sea level rises have been faster since the mid-19th century than at any point in the previous 2,000 years;
  • 75% (high confidence) of the rise is due to glacier loss and ocean thermal expansion;
  • Global average sea levels rose by 0.19m between 1901-2010 and is expected to rise by 0.26m to 0.98m by 2100 (depending on which concentration path we follow);
  • It is very likely that there will be an increase in heavy precipitation events over most land areas.
  • Most aspects of climate change will persist over centuries, even if we stop CO2 emissions immediately.
  • Both rich and poor nations will be negatively affected.

Given that the effects will happen regardless of our emission path, a policy of adaptation is necessary alongside mitigation strategies.

It is often the case that any type of change brings about new markets – climate change is no different. When so many people see a problem, some people see an opportunity. Welcome to the era of environmental capitalism.

A recent Radio 4 programme called, The Great Global Warming Gold Rush, highlights a few of these entrepreneurs and companies who are making money off climate change. The Dutch water management department of Arcadis are set to benefit greatly from future flood protection schemes; they received $200m in contracts after Hurricane Katrina to prevent another flood happening in New Orleans.

Another Dutch company, Delta Sink is developing amphibious buildings and floating roads. With over 2.5bn people expected to live in coastal cities in the next hundred years, even a minute portion of the market will allow this company to have a pretty secure future.

Essentially, the Dutch have transformed a national vulnerability into a comparative advantage; they have the knowledge, the technology and the skills that they export – and will be exporting – around the world.

The programme also highlighted an example of how we can work with nature for a profit. Jason Drew grows and breeds around 8bn flies that recycle nutrients from waste (that they get paid to take!) and transform it into a cheaper substitute for fishmeal.

Entrepreneurs are by definition those that move faster than the rest of society, and their innovations can help us all adapt to climate change. But Governments need to implement policies that can steer these entrepreneurs to identify the best long term outcomes for us all, rather than just short-term fixes that make a quick buck. 

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The Economics of Ecosystems and Biodiversity (TEEB) for Business Coalition recently rebranded itself to the Natural Capital Coalition. This is one example of how the term ‘Natural Capital’ is increasing in popularity…but what is it? Essentially, it is the goods and services that nature provides us. An informative and accessible blog post on the ICAEW* website highlights that, other than sustaining life on Earth, nature provides us with goods and services that people value and should really recognise. There is a business workshop being held on 3April – organised by UKNEE** and University College London – that will be discussing the latest research in how businesses can incorporate natural capital into their accounting structures so that its value can be recognised.

For example, as the UK’s current flooding demonstrates, woodlands and other habitats are good at regulating water and slowing the uptake into rivers.

 

We invest in human capital and physical capital because they are productive; so by conserving their condition, they will continue to generate goods and services for us. Just as by training your employees and purchasing new machinery you are likely to generate more revenue as a business, if we agree that Natural Capital exists, why should we not also invest in improving it? For example, by investing more in the management of woodlands and upstream habitats mentioned previously, one is able to reduce the risk of flooding further downstream. A post in The Guardian by George Monbiot sheds light on this factor in more detail with regards to the recent UK floods.

Often, as the example above illustrates, the benefits of improving natural capital are public, but there are occasions where businesses can identify natural resources that generate a revenue for them at a private level (or reduce revenue if they were to be removed­­). Therefore, instead of having almost a zero value in private decision-making, nature can be recognised as an input in the production process, just like human and physical capital are.

*ICAEW (Institute of Chartered Accountants in England and Wales)

** UK Network of Environmental Economists

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