The University of California at Berkeley and the not-for-profit Next 10 have released a research report regarding the long-term economic threat to California from global warming. The report explores the potential toll on the state’s assets under three scenarios ranging from climate stabilization to high emissions. It also examines seven economic sectors and the issues they will likely face.
Here are three key passages from the report:
Taken together, real estate and insurance represent the largest economic climate risk for California, yet they are the least studied to date. The report finds that the state has $4 trillion in real estate assets, of which $2.5 trillion are at risk from extreme weather events, sea level rise, and wildfires, with a projected annual price tag of $300 million to $3.9 billion over this century, depending on how warm the world gets. If no action is taken in the face of rising temperatures, six additional sectors, including water, energy, transportation, tourism and recreation, agriculture, and public health, would together incur tens of billions per year in direct costs, even higher indirect costs, and expose trillions of dollars of assets to collateral risk.
Climate response – mitigation to prevent the worst impacts and adaptation to climate change that is unavoidable — on the other hand, can be executed for a fraction of these net costs by strategic deployment of existing resources for infrastructure renewal/replacement and significant private investments that would enhance both employment and productivity.
At the sector level, there will be some very significant adjustment challenges, requiring as much foresight and policy discipline as the state can mobilize. In this context, the political challenges may be much greater than the economic ones. The state’s adaptation capacity depends upon flexibility, but divergence between public and private interests may limit this flexibility. As in the current financial dilemma, resolving this will require determined leadership.
The report notes that if California improves its energy efficiency by just 1% per year, proposed state climate policies will increase the Gross State Product (GSP) by $76 billion and create up to 403,000 jobs. Doing nothing to address or prepare for climate change is the most expensive option. Policymakers must also push for improvements in the research and understanding of climate change. As with all trouble shooting endeavors, a complete picture of the problem is key.
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