It was a dramatic contrast on our screens last week. As Hurricane Dorian unleashed nature’s fury on the Bahamas and danced with a wide swath of the East Coast of the United States, I flipped to the CNN Climate Town Hall, where Democratic presidential candidates discussed very expensive plans for taming global warming and other environmental threats.
These intense juxtapositions must leave many wondering what we should be doing in the face of these perils. Just what are the next steps?
I have an idea about that. My research indicates we need to go beyond observing wreckage and pondering trillion-dollar plans to attempt to mitigate carbon. Businesses, homeowners, and local governments must focus on what can be done today to address these direct threats to people and property.
There are three major tools in the “what to do next” approach: probability, selection, and migration.
Probability
We can’t know what will happen, but we have a good sense for what might or could happen. Don’t wait for the one moment of indisputable truth to emerge; act on the odds presented in the information available today in sea rise curves, flood maps, and risk models.
Sea level rise curves are projections by bodies like the National Oceanic and Atmospheric Administration and the Intergovernmental Panel on Climate Change. They show a range of sea rise probabilities in 2050, just 30 years from now. In Boston, for example, they show a rise from half a foot to two feet. We don’t need to get stalled in arguments about whether sea level rise is human caused or even if it’s real; we just need to invest with the probabilities in mind the same way we make risk management decisions under uncertainty about interest rates, exchange rates, or inflation.
To get more granular about probabilities, the flood insurance risk maps drawn by the Federal Emergency Management Agency show lower State Street in Boston, the location of a popular hotel and a subway entry, in the 1 percent flood risk zone. This means that insurance is written today as if there is a 1/100 chance of inundation in any given year. (This works out to a 35 percent chance in a span of 30 years if nothing else changes). The hotel’s owners should be balancing the near-term known cost of reinforcement—that is, investing in resilience—against the unknown but much higher probability-adjusted cost of recovering from disastrous inundation.
Further, if the sea were to rise two feet as some projections indicate is probable, the annual inundation risk would rise to more like 1/20. They might not even be able to buy insurance for any price at that level of exposure. One decision, then, is to use probability to decide whether to strengthen now…or wait a bit.
Selection
It’s not possible or even a defensible investment strategy to try to reinforce every asset everywhere, and forever. High value assets in high risk areas clearly merit investment in strengthening. Think of a hospital in Miami Beach that flood-proofs the ground-level emergency room. This solution can’t afford to fail.
However, owners of high-value assets in lower-risk areas probably should consider investing in less expensive interventions that help them live with water in the event of inundation; the price tag will be smaller than in the prior illustration. Think of properties on the Ohio or Missouri rivers that flood every now and then but can be cleaned up afterwards without terminal damage. Move the mechanical systems and electrical switchgear to a high floor, evacuate residents temporarily, and don’t store valuables in the basement.
But what about low-value assets in high-risk areas? In the long run it will not make economic sense for society to keep rebuilding homes that have been destroyed multiple times, or to raise ground floors in stores and office buildings that are barely economically viable even before a flood or tornado. This is of course a problem that hits hardest at people with the least capital and it’s a real social justice concern in the case of possible sea level rise.
Migration
Migration manifests in many ways. Florida is one of the fastest-growing states in the United States as people from the northern states (and from Latin America) relocate for economic opportunity and for lifestyle choices. At the same time, there is a growing body of evidence that South Florida housing prices are not rising as fast—and in some cases even falling—in areas with exposure to storm surge flooding. Another example is migration to large coastal cities like Mumbai or Lagos or Bangkok as people seek jobs or flee wars or drought. The fact of migration exposes more people to weather-related disturbances. If sea rise were to accelerate, many of the newcomers would be in peril.
There is also the trend of out-migration. Indonesia announced it will move its capital to Borneo from the current Jakarta because of advanced sea rise and concurrent ground subsidence.
On the other side of the spectrum, communities like Duluth, Minnesota and Rochester, New York are touting their robust infrastructure capacity (as a result of population decline over the last 20 years), their positions on the Great Lakes (which hold much of the fresh water in the world), temperate climate, and a welcoming attitude to people fleeing flood-prone areas. It’s too soon to know whether either Indonesia or Rochester will be successful in these strategies, but the positioning is clear.
What comes next?
We can’t just debate how many trillions of taxpayer dollars to spend on federal carbon strategies; we also have to think about what to do if that carbon mitigation does not work or is not even attempted. To this end, homeowners and businesses and mayors can’t just watch the news, react, and randomly pile up sandbags and pump basements, over and over. They need to think about which assets to protect and which people to relocate.
Finally, one area’s dislocation can be opportunity for another. How can cities think about this conundrum? How can investors uncover opportunity in resilience? What are implications for the most vulnerable populations that can’t or don’t want to move to Minnesota or even to Orlando?
Answering these questions is the next step in climate action.
About the Author
John Macomber is a Senior Lecturer of Business Administration at Harvard Business School, where his work focuses on the future of cities, particularly as aided by the private finance and delivery of public infrastructure projects in both the developed and emerging worlds.
[Image: Goddard Space Flight Center]
Related Reading:
Teaching Climate Change to Skeptics
More Than 900 Examples of How Climate Change Affects Business
The Business of Saving the Planet