On Friday, the three U.S. financial heavyweights behind the Risky Business Project — an effort to quantify the financial risks posed by global climate change — published the organization’s latest report to help people identify, understand and plan for the economic risks related to steadily increasing temperatures worldwide.
The analysis, called "Heat in the Heartland," is a granular look into the United States’ Midwest and threats the region’s cities and agricultural stakeholders will likely face due to unmitigated climate change and the continuation of present business and political practices.
The Midwest is home to 1 in 5 Americans and an outsized manufacturing sector that consumes 20 percent more energy per dollar of economic output than the national average, the report found. The region is responsible for higher per-capita greenhouse gas emissions, too, emitting 22 percent more than the U.S. average. In a county-by-county perspective, the study compiled results on heat-related deaths, increased electricity demand, climbing energy costs, dipping labor output, dwindling crop yields and damage to transportation infrastructure.
The investigation, which scrutinized data on 10 major urban areas in the Midwest — from Detroit to Des Moines and Chicago to Cleveland — found workers will generally be less efficient.
In the next five to 25 years, farmers in Missouri, Illinois and Indiana may lose 18 to 24 percent of their crops to punishing heat, according to the report, while warmer winters in the Upper Midwest will sap workers and income from the local winter tourism industry, which employs more than 35,000 in the region.
Productivity in St. Louis is forecast to decline 3.3 percent by 2100 within sectors particularly exposed to climate risk, including agriculture, construction, manufacturing and transportation. Iowa may be most at risk regarding labor, however, with about 40 percent of workers in the region tied to outdoor industries, largely transportation and farming.
Heat waves will kill in the Heartland’s cities also: In Kansas City, crippling temperatures will most likely claim up to 24 additional lives per 100,000 citizens by the end of the century. And under hotter conditions, which the FBI has linked strongly to jumps in violence, Midwestern police departments will have more aggressive suspects to pursue.
Now No. 1 and No. 3 in violent crime, Detroit and St. Louis will see spikes of 5.9 percent and 5 percent, respectively, in their violence crime rates. Cleveland, second to Oakland, Calif., in assaults today, will see a 5.9 percent increase, too, according to the study.
Founded by former U.S. Treasury Secretary Henry Paulson, former New York City Mayor Michael Bloomberg and Tom Steyer, a former hedge fund manager turned environmental advocate, the group released its first report in June, providing a business-minded risk assessment of national scope into what the country’s coastal communities, as well as its agricultural and energy sectors, stand to lose under a "business as usual" scenario.
Business impacts have been underplayed
At a rollout event Friday in Minneapolis-St. Paul, one of 10 metro areas studied in detail for the report, Paulson and Greg Page, executive chairman of Cargill, stressed that businesses and farmers can act in myriad ways to address climate change through daily management and supply chain decisions.
At the same time, they played down the value of "silver bullet" policy approaches such as a national carbon tax, at least in the near term, calling such measures politically untenable.
Paulson — who was appointed Treasury secretary by President George W. Bush in 2006 and grew up on a farm in Illinois — said climate change is a "very real" economic threat that has been typically cast as an environmental issue, rather than a financial one.
"This was an opportunity to fill a gap in the United States," said Paulson of last summer’s study, which focused on threats to U.S. coastal regions, housing, energy and infrastructure. "Climate has been talked about primarily in the language of science."
Both men stressed that Risky Business does not necessarily advocate policies that drive wedges between environmental activists and the business community. "We’re about speaking the language of business," Page said, "and about giving companies probable [climate] scenarios that they can respond to."
Ceres, the nonprofit investment network that presses companies to disclose their climate risks and, more generally, for sustainable business practices, applauded Friday’s news.
"This highlights that we need smart policies to keep these things from happening," said Chris Davis, director of investor programs at Ceres.
"I think it’s a really important report on the impacts of unchecked climate change in the Midwest," Davis said. "This [report] makes the business case that we should take preventative action to reduce greenhouse gas emissions and prevent some of the bad outcomes outlined in this report."
The report highlights local risk factors less evident in the national risk assessment published last year, said Kate Gordon, executive director of the Risky Business Project.
Gordon said she was surprised by how quickly crop yields are expected to decline. Illinois may see economic losses of $1.1 billion to $2.6 billion per year as soon as 2020 to 2039. The outlook is particularly sobering for Iowa, the state with the highest percentage of its economy predicated upon agriculture. Economic losses could reach as much as $12 billion per year by the end of the century.
The production losses could have wide-ranging impacts, since the Midwest cultivates 65 percent of the nation’s corn and soybeans.
Speed of coming changes worries agricultural sector
"If there was one thing that I was struck by, it was that the agricultural sector is leading the country in identifying and responding to the risks [of climate change]," she said.
Ray Gaesser, chairman of the American Soybean Association, said Iowa farmers are already using adaptive measures like installing drainage systems in response to heavier rainfall.
"The speed of the change is concerning. Most of us are looking at the extreme events we’ve had, and we try to best we can to prepare and feed the people of the world," he said.
Regarding change in Washington, D.C., Paulson, a Republican, said he is "hopeful" that the GOP-led Congress will be open to a dialogue on climate change. At the same time, Paulson praised President Obama for his climate goals and accomplishments, especially the recent bilateral agreement with China committing the world’s two largest economies to substantial carbon reductions.
"It’s a natural for the U.S. and China to work together on this," he said. "The fact that they did it with the U.S. was very important, substantively and symbolically."
Encouraging companies to access the group’s data, Paulson said the Risky Business project is focused on three business objectives: integrating climate mitigation and adaptation policies into daily business decisions, disclosing information about business-sector carbon emissions and steps being taken to reduce emissions, and engaging lawmakers at state and federal levels to elevate climate change as a political priority.
The Risky Business effort was designed to be bipartisan, Paulson said. Steyer is a Democrat, and Bloomberg has been a Democrat, a Republican and an independent.
Members of the organization’s so-called Risk Committee include political, business and academic leaders from both sides of the aisle.
In addition to Page, the current Cargill chairman, the committee includes Henry Cisneros, a former Secretary of Housing and Urban Development; Robert Rubin, a Treasury secretary under President Clinton; Donna Shalala, the Health and Human Services secretary from 1993 to 2001; George Shultz, secretary of State under President Reagan from 1982 to 1989; Olympia Snowe, one of Maine’s senators from 1995 to 2013; and Al Sommer, dean emeritus at Johns Hopkins University’s Bloomberg School of Public Health.
