Bloomberg: Drought, Hurricanes Bigger Threat to World’s Top Companies

by Justin Doom, Bloomberg, May 16, 2014

An Indian man carries water as he walks on a dry pond on the outskirts of eastern Bhubaneswar on April 28, 2014.  Photographer: Asit Kumar/AFP via Getty Image

Drought, hurricanes and rising seas are becoming more significant threats to the world’s biggest companies and the risk is accelerating, according to the Carbon Disclosure Project.

Companies planning for various threats related to climate change say they’re grappling now with about 45% of the potential risks, or will be within five years, according to a report issued today by the London-based non-profit group. That’s up from 2011, when members of the Standard and Poor’s 500 Index expected 26% of the potential risks to affect them within five years.

The results show that climate change is having a measurable impact on business operations, and that many companies expect it to increase costs or hinder sales.

“Significant costs are already being incurred,” Tom Carnac, president of CDP North America, said in a phone interview yesterday. “It’s not just about making plans for the future, it’s about having to change what they do today.”

About 60 companies disclosed risks resulting from the planet’s rapidly changing environment. These included buildings destroyed by hurricanes, rising costs for raw materials, increasing insurance premium, slowing demand for cold-weather clothing and higher winter heating expenses.

Hewlett-Packard Co. (HPQ) said sales slipped as much as 7% after floods in Thailand in 2011 led to a shortage in disc-drive components.

Waste Management Inc. said both flooding and drought affect the rate of organic decay at landfills, driving up the cost of collecting landfill gas.

Operational Threats

The companies said that 68% of the potential risks would directly affect their operations, up from 51% in 2011. About 22% of the threats were to their supply chains and nine percent would impact clients.

The report highlighted how different companies’ operations are intertwined. For example, revenue at Union Pacific Corp. (UNP), the largest U.S. railroad, slowed in 2012 as the worst drought in more than 50 years drove down corn shipments by 11%.

“This is a great example of how our economy has become so complicated, how a change in agricultural yield affects the revenue achieved by a railroad,” Carnac said.

Union Pacific is reducing emissions by improving fuel efficiency, using more locomotives and improving the aerodynamics of train cars, Tom Lange, a company spokesman, said yesterday.

“We put a lot of energy into how we get better fuel efficiency,” Lange said. “It’s about finding the base hits of fuel technology -- there aren’t any home runs. We’re trying to hit a bunch of singles, add a couple percentage points here, a couple percentage points there.”

The report was funded in part by Bloomberg Philanthropies, formed by Michael Bloomberg, majority owner of Bloomberg LP.

To contact the reporter on this story: Justin Doom in New York atjdoom1@bloomberg.net

http://www.bloomberg.com/news/2014-05-16/drought-hurricane-bigger-threat-to-world-s-top-companies.html

The biggest coming economic showdown you haven't heard of

by David Atkins, Washington Monthly, May 18, 2014

Close followers of the climate change battle have been watching carefully for one major event that might serve as a bigger catalyst than other to mobilize legislative action. But that event has nothing to do with weather or natural disasters. It’s about money. Specifically, the big money behind the insurance industry.

You see, in the same way that net neutrality advocates benefit from having the support of companies like Google and Netflix, climate change advocates have been waiting for their own unlikely corporate allies in the insurance industry.

The reason is obvious in retrospect: rising sea levels and more frequent natural disasters will either make many areas uninsurable, or insurance companies will go bankrupt trying to insure them (and the same goes for insurance backed by the federal government). Insurance companies have an existential need to get ahead of the curve on the climate question. It has just been a matter of when the battle would be joined.

That time is finally here, and that’s a very big deal:

A major insurance company is accusing dozens of localities in Illinois of failing to prepare for severe rains and flooding in lawsuits that are the first in what could be a wave of litigation over who should be liable for the possible costs of climate change. Farmers Insurance filed nine class actions last month against nearly 200 communities in the Chicago area. It is arguing that local governments should have known rising global temperatures would lead to heavier rains and did not do enough to fortify their sewers and stormwater drains.

The legal debate may center on whether an uptick in natural disasters is foreseeable or an “act of God.” The cases raise the question of how city governments should manage their budgets before costly emergencies occur.

This is the first ever lawsuit of its kind, but it will not be the last. The insurance industry is not going to do down with a sinking ship, and communities are obviously not going to go without insurance. Nor can the federal government realistically afford to single-handedly cover the cost of repairing the damage from every increasingly severe wildfire, hurricane, drought, tornado, flood or snowstorm.

Right now the insurance companies’ strategy will be to lay the blame on governments for not doing enough to adapt to climate change. Attempts to set that precedent will be very challenging to say the least, and will likely fall short. The next step would be direct political action to support emissions reductions and to back away from coverage commitments.

Something is going to give. If the insurance industry gets serious enough to put enough of its money up to challenge the fossil fuel barons, we might even see some Republicans start to see the light on climate change. Probably not, but one can always hope.

http://www.washingtonmonthly.com/political-animal-a/2014_05/the_biggest_coming_economic_sh050399.php

New Yorker: Insuring the Apocalypse

by McKenzie Funk, The New Yorker, May 15, 2014


Last week, the White House released the National Climate Assessment, and the news is grim. Coral reefs are dying, shellfish will increasingly make us sick, and cherries are being decimated by weather extremes. Along the Eastern Seaboard, waters will rise up to 4 feet—perhaps 6 feet—by the end of the century, making Sandy-like storm surges a frequent event. California will continue to burn. Arizona will continue to burn. For most businesspeople, climate change seems bad for the bottom line.

But if you, like Berkshire Hathaway C.E.O. Warren Buffett, work in the disaster business, reports like the National Climate Assessment, all 829 pages of it, are free advertising. In a recent television appearance, Buffett suggested that global warming—at least the idea of it—has been good for the insurance industry. “I love apocalyptic predictions on it because, you’re right, it probably does affect rates,” he told an interviewer. “The truth is that writing U.S. hurricane insurance has been very profitable in the last five or six years.”

Buffett’s insurance companies have yet to adjust how they calculate their exposure to hurricane risk, he explained, though “that may change in ten years.” They haven’t been hoarding more cash to prepare for bigger storms; they haven’t been cancelling policies. His point was not that climate science is a sham but that what it has mostly done—for now, for him—is to prop up revenues and bring in new customers.

By 2012, insurers had introduced 1,148 climate-change products and services in 51 countries, according to a review by the Lawrence Berkeley National Laboratory. If you’re an executive today, for instance, especially if your business emits carbon, you may be interested in a policy from Liberty Mutual that protects against what the company calls “the continuously growing wave of litigation stemming from the alleged improper release of carbon dioxide and other greenhouse gases.” If you’re poor and African, you may be interested in reinsurer Swiss Re’s early efforts to insure you and 400,000 of your compatriots against drought. A 2007 program promised an US$18 million climate-adaptation payout to subsistence farmers if the right “weather trigger” was hit, with premiums paid by international donors. 

In 2008, while investigating how the insurance industry was faring in a warming world, I rode into a series of suburban wildfires near Los Angeles with a fire chief who worked part-time for A.I.G., the giant insurer that was then on the verge of being bailed out by the federal government. The company operated a squad of private firefighters, and, as helicopters clattered overhead, members of the A.I.G. team mostly drove around in haphazard circles, checking on client homes and sometimes spraying them with a fire retardant. They snuck across police lines. They made sure that A.I.G. clients had been evacuated. They made sure that brush wasn’t too close to any A.I.G.-protected structures. They stopped to get tacos, sip sodas, and watch news about the fire on a taqueria’s television set. They exchanged uneasy glances with public firefighters. They parked their trucks on a residential street for the better part of an hour and watched the public guys battle the blaze. The privateers didn’t do much good that day—not even for their own clients—but they made good money.

A boutique firefighting service is just one way that the insurance company attracts “high net worth individuals” to its private-client group. Another way, available in parts of Florida, New Jersey, New York, Massachusetts, and South Carolina, is its hurricane-protection unit: a jump team of contractors that arrives at your house armed with tarps and hammers, racing to beat looters and rain. If there are any holes, it patches them. If your expensive paintings or sculptures are threatened, it evacuates them.

The National Climate Assessment is, in fact, just what Buffett suggests: an argument for more insurance. As we face the future, insurance can help us grapple with the true cost of the present—something that we’ve largely proved incapable of doing by ourselves.

Outside of government agencies, the insurance industry is the primary funder of climate-change research. A trade group is sponsoring studies on how climate change affects tornadoes and hail. Another is backing university research on land ecosystems in a warming world, especially forests and crops. A British company is focusing on hurricane intensity and temperature rise, while an insurer in Bermuda researches cloud seeding to see whether the storms can be stopped before making landfall. A.I.G., for example, just released a climate report of its own, noting “a disproportionate increase in the number of extreme weather events” in North America. Buffett is right: in 10 years, if not sooner, calculations are bound to change. Those paying for the best research will get it first and, when they see an immediate risk, they’ll immediately price it in. For their own survival and for the sake of their shareholders, they will have to. Insurance rates will go up. And, if the risk is deemed too high or regulators block massive rate increases, as took place in coastal Florida some years ago, insurers will exit the market.

If profits equal progress, however, the insurance industry is on the right track. While researching a book that I wrote on the topic, I found that, when Hurricane Andrew landed in Florida and Louisiana, in 1992, insurers were caught unprepared, disbursing $1.27 in claims for every dollar of premium earned, for a total of US$23 billion. Those insurers started paying attention, and raised rates accordingly. Total claims were almost twice that when Hurricane Katrina hit Louisiana 13 years later—but insurers still came out ahead, losing just 71.5 cents per dollar of premium. Industry profits were US$49 billion that year. We continue to gamble with our environmental policies. But the insurance industry, year after year, keeps winning. [Until they don't, and go away.]

http://www.newyorker.com/online/blogs/elements/2014/05/insuring-the-apocalypse.html

Alun Hubbard on the 50- to 150-year storms hitting Aberystwyth, Wales

by Peter Sinclair, "This Is Not Cool," Yale Forum, February 25, 2014

I first interviewed Dr. Alun Hubbard on the edge of the Watson River in Kangerlussuaq, Greenland last summer.  His vivid language and lucid storytelling made that video on of the most popular in the Yale Series (see below).

Both Dr. Hubbard, and my Dark Snow Project cohort, Sara Penrhyn Jones, live in the tiny village of Aberystwyth, on the coast of Wales, and teach at the local university. I skyped with Alun a week or so ago in the midst of the storms hammering the area. Shortly after that he wrote me to explain that his roof had just blown off in hurricane force winds.

Sara was kind enough to shoot some video of the surf pounding the area, although not at the height of the storms, and she caught up with Hubbard long enough for a colorful and well-informed take on a seminal weather event.

I’ll cut together some of Alun's further remarks that did not make this video in the next day or so – see Hubbard’s Greenland interview below:

http://climatecrocks.com/2014/02/25/new-video-uk-hammered-by-climate-fueled-storms/

UK storms 'have changed coastline forever' -- 6,000-year-old tree stumps revealed

by Guy Jackson, AFP, London, February 21, 2014

The huge storms and powerful winds that have battered the coast of Britain in recent weeks have caused years' worth of erosion and damage, authorities said on Friday.

On some stretches of coast, the extreme weather has stripped away sand from stretches of beaches to reveal ancient forests, leaving the stumps of 6,000-year-old oaks protruding.

The National Trust, which manages much of the country's most scenic coastline, said the storms have caused problems that it did not expect to have to deal with for years.

Cliffs have crumbled, beaches and sand dunes have been eroded, heavy seas have breached defences and shorelines and harbours have been damaged.

At Birling Gap on the Sussex coast, a popular tourist spot, the speed of erosion has been "breathtaking," according to Jane Cecil, the National Trust general manager for the area.

"We've had about seven years of erosion in just two months. As a result of this loss of coastline, we are having to act now and take down the sun lounge and ice cream parlour, safeguarding the integrity of the rest of the building.

"We have to think long term," she said.

On the west coast Wales, the remains of oak trees dating back to the Bronze Age have been revealed as the sand has been stripped away.

The tree stumps on the beach between Borth and Ynyslas are said by some to be the origins of the legend of "Cantre'r Gwaelod," which according to myth was a kingdom now submerged under the waters of Cardigan Bay.

Meanwhile, as the mopping-up operation continues after widespread flooding in southwest and southeast England, a group of experts said the damage was preventable.

Some of the damage from the recent floods could have been prevented if the correct water management techniques had been used, they said.

The experts from 15 organisations urged Prime Minister David Cameron to convene a conference bringing together government departments and the embattled Environment Agency -- whose initial response to the floods drew heavy criticism -- to put in place measures to prevent a repeat of the floods.

The experts said sustainable drainage systems should be fitted on existing and new buildings and that buildings and land that cannot be properly protected should be made resilient to withstand flooding.

All new housing on flood plains should be resilient when built, they said.

In a sign of how the floods have re-shaped the political agenda, the main opposition Labour Party pledged that investment in flood defences would be a priority if it wins next year's general election.

The Met Office national weather service has said Britain suffered its wettest winter in records dating back more than a century.

http://www.google.com/hostednews/afp/article/ALeqM5gmFUWYUBdyO9Kqb_-Uu5OHPhLKQQ

Fergus Brown on Antarctic melt and sea level rise

from Fergus Brown's blog:

All Dishevelled Wandering Stars:

Call me paranoid but look anyway

It's probably just a function of an overactive imagination, but looking at the AMSR2 map of Antarctic sea ice (as one does), I get a 'feeling':

http://www.iup.uni-bremen.de:8084/amsr2/antarctic_AMSR2_nic.png

I sort of know that it isn't unusual for the sea ice to decline around the coasts a little quicker than it does in the middle of the 'pack', but it seems early in the melt season to see open water or low concentrations indicated at the level implied by the image.

Looking a little closer, a neurotic might note the correlation between the areas of lower coastal concentration and the glacier zones.

It would be useful for a Cryosphere/Antarctic specialist to call in and provide some reassurance, because right at this moment, I gotta feeling, and it's mainly anxiety.

http://whogoeswithfergus.blogspot.com/2013/11/call-me-paranoid-but-look-anyway.html

For everything there is a season - tide and time

Over at the warren, Uncle Eli has posted about SLR, a subject I touched on last month, here, and here, including references to Grinsted's excellent material.

It occurs that the Average Josephine (IOW, most of the world) might look at the projections of sea level rise and, whilst registering that a change will have an impact, might reasonably ask why a meter or so of extra sea might be such a big deal. So here's an attempt to place this into a 'human' context.

On its own, a few centimetres of water 'added on' to the water level at any given beach or dockside is no big deal. This is because the other forces which have an effect on sea level at any given location are much stronger (they create more variability) than the underlying 'signal' of sea level.

First and most obvious is the effect of the tides. Whilst in some places sea level fluctuates by a few metres over the course of a day, in others the tidal range can top ten metres and more (up to around 15-16 m for some locations). In practical terms, coastal human habitation and business takes this into account, so in most places human activity takes places above the high tide level, for obvious reasons.

At certain times of year, specifically the Equinoctial Spring Tides, the various forces which interact to create tides and tidal ranges combine to create particularly high and low tides. It is not uncommon already for these to overreach the human adaptation level and to result in localised flooding, which is further worsened if these tidal periods occur in sync with strong weather conditions (in particular, depressions, often related to storms).

Now, the current range of projections for changes in sea level have to be considered in the context of historic tidal ranges and existing infrastructure and human-ocean interfaces.

For example, the 'averaged' sea level range globally hits around 79cm during Spring tides. This means that, overall, the shoreline would experience a few extra inches more or less. But in a local and regional context this 'average' is effectively meaningless, and is not reflected in the real experience of many coastal dwellers. For most people on coasts, the tides go up and down several metres.

If global average sea level rises by, say, half a metre, what does this mean for local impacts? And what effect does this have on local tidal ranges and, in particular, during the upper bound of the ranges (the Equinoctial Springs) and those occasions when these coincide with storm surges?

Well, it should not be difficult to work out that an extra 'average' SLR of 50cm is going to mean a rise of high tides, and of high springs, in the order of 2 - 5 metres of 'extra' sea. Given that a storm surge can increase sea levels (for example, in the Philippines) by another 4-5 metres, and you end up with places which are likely to experience regular (annual or more frequent) tidal surges in the range of 5 -10 metres. We have seen the horrific effects on one part of the world where a tidal surge of 5 metres, added to extreme weather conditions, has resulted in devastation and carnage. Now multiply this by all those places which are 'vulnerable' to such variability.

As an aside (because I'm not certain of the projected effects), it should be noted that a Spring tide normally produces currents twice as fast as Neap tides, but with eight times the power, or force. Anyone who has struggled to get out of the water onto a beach during an ebb in difficult conditions can have a sense of how much power is involved - it is, literally, an overwhelming force.

It seems rational to presume that higher Springs will be associated with faster currents and therefore greater forces - resulting in more erosion, more localised damage and greater stress on infrastructure (including defences). So, the effect-multiplier of a few centimetres of extra sea level 'on average' produces impacts which can easily be seem to include, for example, the overwhelming of low-lying islands, or the inundation of coastal cites, oil refineries, nations (Bangladesh).

If all of this is the consequence of half a metre of sea level rise, what then is the consequence of a metre or more? Is it likely to be twice as bad? Or, given the 'effect multipiers, are we instead talking about a localised effect with a difference of an order of magnitude?

Finally, for the economically-minded amongst you, remember that an astonishing proportion of the world's trade is conducted across the oceans - around 90% of all trade goods is shipped at some point. Now, consider the impact on shipping of the changes outlined above. The cost of building tougher ships, the cost of building new, relocated shipping hubs (the World's three deepest 'ultratanker' and supercontainer ports are all vulnerable to rising sea level). The risks and losses, all to be paid for by someone.

A very high proportion of the Global population lives in the coastal strip - I think it's about 85% of the population. Not all of these people would be vulnerable in the way I outline above, but with sea level rise must come, inevitably, relocation and mass urban movement inland, fundamentally changing the dynamic geography of our society.

That's why sea level rise matters, and why a metre is more significant than half a metre.

http://whogoeswithfergus.blogspot.com/2013/11/for-everything-there-is-season-tide-and.html

Warsaw - Day 3: World faces more 'perfect storms'

FOR IMMEDIATE RELEASE

by Paul Brown in Warsaw, Climate News Network, November 13, 2013

One of the Climate News Network editors, Paul Brown, is in the Polish capital, host of the UN climate talks – the 19th Conference of the Parties (COP 19) of the United Nations Framework Convention on Climate Change. His latest report describes records continuing to tumble as sea levels rise and warming continues in 2013.
The world continues to heat up in 2013, with regional temperature records being broken and sea level rise accelerating, the World Meteorological Organisation (WMO) says in its latest report, Provisional Statement on Status of Climate in 2013.

Sea level rise was particularly significant in the Pacific around the Philippines and had contributed greatly to the devastation caused by the super-typhoon Haiyan, Jerry Lengoasa, deputy general secretary general of the WMO, said here.

The population should have been warned about the tsunami effect of a seven-metre storm surge caused by the typhoon, he said, so that they could have been better prepared to retreat to higher ground.

With the typhoon season not over yet there had already been 30 named storms in the Pacific this year; this was above the average of the last three decades.

Mr Lengoasa said: “What the science tells us is not that there will be more storms, but that the storms we do have will be more violent. ‘Perfect storms,’ if we can call them that, like hurricane Sandy last year and typhoon Haiyan this year will become the normal.”

Sea level had risen a third of a metre in the central Philippine area since 1901, making the area much more vulnerable to storm surges. The average sea level rise round the globe was much lower but was speeding up, and was now 3.2 millimetres a year. This is double the annual average of the last century, i.e., 1.6 mm.

Australian heatwave

Mr Lengoasa made special mention of the unprecedented heatwave in Australia, which had the hottest month ever observed in January 2013, and the hottest summer on record. On January 7th, a new national averaged daily maximum for Australia was set at 40.3 °C, and Moomba in South Australia reached 49.6 °C.

At the same time as Mr Lengoasa was speaking the Australian Government was being attacked in a nearby meeting for watering down its commitments to tackle climate change.

The German organisation Climate Analytics said that Prime Minister Tony Abbott’s plans to dismantle the current climate legislation in his country could lead to Australia increasing emissions in 2020 rather than meeting its target of reducing them by 5% on their 2000 levels.

Even the 5% target was inadequate and consistent with an increasing global temperature rise of 3.5 to 4 °C, well above the 2 °C danger level that world leaders have agreed must not be exceeded.  Climate Analytics claimed that under the Abbott plan emissions would increase by 12% by 2020.

Australia 'the new climate pariah'

Bill Hare, director of Climate Analytics, said: “The existing legislation would have bent the relentless upward curve of Australian emissions downwards, a first step towards a low carbon, climate-safe future. The new policy will see this dismantled and replaced by a climate policy that goes against the science.”

An Australian climate campaigner for Climate Action Network, Julie-Anne Richards, said her country was the new pariah in climate action. “Even the United States and China take more action in fighting climate change than Australia,” she said.

Mr Lengoasa’s presentation was a summary of the weather statistics up to the end of September this year. He said that the year was on course to be among the ten hottest years ever recorded, and warmer than both 2011 and 2012. “It looks as if after a dip during the La Niña episodes, the temperatures are rising again,” he said, cautioning that the statistics were for nine months only.

The year had also been notable for regional floods and droughts. In South America, much below average temperature was recorded in north-east Brazil, where parts of the region suffered their worst drought in 50 years. The Brazilian plateau, the monsoon region of South America received the least rainfall since records began in 1979. The southern African countries of Angola and Namibia “were gripped by one of the worst droughts in the past 30 years.”

At the other extreme in Europe Germany, Poland, the Czech Republic, Austria and Switzerland had intense and extended flooding in late May and early June, and the West African summer monsoon brought welcome rainfall over most of central and western parts of the Sahel.