WASHINGTON — Coca-Cola has always been more focused on its economic bottom line than on global warming, but when the company lost a lucrative operating license in India because of a serious water shortage there in 2004, things began to change.
Today, after a decade of increasing damage to Coke’s balance sheet as global droughts dried up the water needed to produce its soda, the company has embraced the idea of climate change as an economically disruptive force.
“Increased droughts, more unpredictable variability, 100-year floods every two years,” said Jeffrey Seabright, Coke’s vice president for environment and water resources, listing the problems that he said were also disrupting the company’s supply of sugar cane and sugar beets, as well as citrus for its fruit juices. “When we look at our most essential ingredients, we see those events as threats.”
Coke reflects a growing view among American business leaders and mainstream economists who see global warming as a force that contributes to lower gross domestic products, higher food and commodity costs, broken supply chains and increased financial risk. Their position is at striking odds with the longstanding argument, advanced by the coal industry and others, that policies to curb carbon emissions are more economically harmful than the impact of climate change.
“The bottom line is that the policies will increase the cost of carbon and electricity,” said Roger Bezdek, an economist who produced a report for the coal lobby that was released this week. “Even the most conservative estimates peg the social benefit of carbon-based fuels as 50 times greater than its supposed social cost.”
Some tycoons are no longer listening.
At the Swiss resort of Davos, corporate leaders and politicians gathered for the annual four-day World Economic Forum will devote all of Friday to panels and talks on the threat of climate change. The emphasis will be less about saving polar bears and more about promoting economic self-interest.
In Philadelphia this month, the American Economic Association inaugurated its new president, William D. Nordhaus, a Yale economist and one of the world’s foremost experts on the economics of climate change.
“There is clearly a growing recognition of this in the broader academic economic community,” said Mr. Nordhaus, who has spent decades researching the economic impacts of both climate change and of policies intended to mitigate climate change.
In Washington, the World Bank president, Jim Yong Kim, has putclimate change at the center of the bank’s mission, citing global warming as the chief contributor to rising global poverty rates and falling G.D.P.’s in developing nations. In Europe, the Organization for Economic Cooperation and Development, the Paris-based club of 34 industrialized nations, has begun to warn of the steep costs of increased carbon pollution.
Nike, which has more than 700 factories in 49 countries, many in Southeast Asia, is also speaking out because of extreme weather that is disrupting its supply chain. In 2008, floods temporarily shut down four Nike factories in Thailand, and the company remains concerned about rising droughts in regions that produce cotton, which the company uses in its athletic clothes.
“That puts less cotton on the market, the price goes up, and you have market volatility,” said Hannah Jones, the company’s vice president for sustainability and innovation. Nike has already reported the impact of climate change on water supplies on its financial risk disclosure forms to the Securities and Exchange Commission.
Both Nike and Coke are responding internally: Coke uses water-conservation technologies and Nike is using more synthetic material that is less dependent on weather conditions. At Davos and in global capitals, the companies are also lobbying governments to enact environmentally friendly policies.
But the ideas are a tough sell in countries like China and India, where cheap coal-powered energy is lifting the economies and helping to raise millions of people out of poverty. Even in Europe, officials have begun to balk at the cost of environmental policies: On Wednesday, the European Unionscaled back its climate change and renewable energy commitments, as high energy costs, declining industrial competitiveness and a recognition that the economy is unlikely to rebound soon caused European policy makers to question the short-term economic trade-offs of climate policy.
In the United States, the rich can afford to weigh in. The California hedge-fund billionaire Thomas F. Steyer, who has used millions from his own fortune to support political candidates who favor climate policy, is working with Michael R. Bloomberg, the former New York mayor, and Henry M. Paulson Jr., a former Treasury secretary in the George W. Bush administration, to commission an economic study on the financial risks associated with climate change. The study, titled “Risky Business,” aims to assess the potential impacts of climate change by region and by sector across the American economy.
“This study is about one thing, the economics,” Mr. Paulson said in an interview, adding that “business leaders are not adequately focused on the economic impact of climate change.”
Also consulting on the “Risky Business” report is Robert E. Rubin, a former Treasury secretary in the Clinton administration. “There are a lot of really significant, monumental issues facing the global economy, but this supersedes all else,” Mr. Rubin said in an interview. “To make meaningful headway in the economics community and the business community, you’ve got to make it concrete.”
Last fall, the governments of seven countries — Colombia, Ethiopia, Indonesia, South Korea, Norway, Sweden and Britain — created the Global Commission on the Economy and Climate and jointly began another study on how governments and businesses can address climate risks to better achieve economic growth. That study and the one commissioned by Mr. Steyer and others are being published this fall, just before a major United Nations meeting on climate change.
Although many Republicans oppose the idea of a price or tax on carbon pollution, some conservative economists endorse the idea. Among them are Arthur B. Laffer, senior economic adviser to President Ronald Reagan; the Harvard economist N. Gregory Mankiw, who was economic adviser to Mitt Romney’s presidential campaign; and Douglas Holtz-Eakin, the head of the American Action Forum, a conservative think tank, and an economic adviser to the 2008 presidential campaign of Senator John McCain, the Arizona Republican.
“There’s no question that if we get substantial changes in atmospheric temperatures, as all the evidence suggests, that it’s going to contribute to sea-level rise,” Mr. Holtz-Eakin said. “There will be agriculture and economic effects — it’s inescapable.” He added, “I’d be shocked if people supported anything other than a carbon tax — that’s how economists think about it.”
To be able to adequately feed and support the world’s growing population, our global economy needs to continue to grow. Water is critical to future growth. But it can also become the major limiting factor to growth. For instance, businesses in water-scarce areas are already at risk, and so investors are increasingly taking water supply into consideration during their decision-making processes. Given today’s approach to water management, there is only so much growth that can be sustained. Gains in efficiency and productivity in water management and utilization can reduce these risks and enable higher levels of sustainable growth, but how much higher? How far-reaching do those gains have to be? And can we make a difference in a timely enough manner by understanding that the path for sustainable growth requires more than green solutions – but also requires blue ones? The answers lie in examining current demand and supply pressures and looking at trends within each. Demand pressures include population growth and an increase in water-intensive diets as a portion of the population moves into increasingly higher water-consumption behaviors. Demand pressures also include growing urban, domestic and industrial water usage. Climate change plays a role by creating additional water demand for agriculture and for reservoir replenishment. On the supply side, issues such as water transport, availability and variability present challenges, as does the decline in renewable water resources.
In nearly every one of these categories, trends are moving in the exact opposite direction necessary to sustain future growth. Taken together, these trends create “water stress.” And the resulting ecosystem pressures along with economic and political conflict only exacerbate that stress.
Today, many regions of the world are already water stressed due to population and economic growth.
In fact, 2.5 billion people (36% of the world population) live in these regions and more than 20% of the global GDP is already produced in risky, water-scarce areas affecting production, as well as corporate reputations when competition over water usages develops. Given today’s accelerated pace of human development and the slow pace of managing issues as complex as water resources, tomorrow’s challenges are already at our door. Whether improving our governance models or our infrastructure systems, years and even decades (not weeks or months) are required to implement change! This is especially troubling when considering analysis by the International Food Policy Research Institute (IFPRI), which found that 4.8 billion people – more than half the world’s population – and approximately half of global grain production will be at risk due to water stress by 2050 if status quo, business-as-usual behavior is followed. The IFPRI study also found that 45% of total GDP ($63 trillion) will be at risk due to water stress by 2050. That’s 1.5 times the size of today’s entire global economy! By wasting less, polluting less, reusing more, managing effectively and becoming more efficient in all uses of water – individual, collective, agricultural and industrial – we can achieve higher water productivity levels (economic output per drop) and reduce water stress.
Continued evolution of technology and infrastructure improvements will enhance water supply capacity for cities and industries while helping deliver clean drinking water and sanitation services to rural populations and the urban poor. In so doing, more than 1 billion people and about $17 trillion in GDP will no longer be at risk of unsustainable water supplies by 2050.
Well it's official. Global record cold temperatures this year have been fantastic for The Great Lakes of North America. Another month of snow, ice, and freezing temperatures has led government experts to project water levels in the Great Lakes will rise even more in the coming months than earlier estimated. We will be back to historic averages.
On Wednesday, ice covered roughly 90 percentof the Great Lakes, according to the National Oceanic and Atmospheric Administration. It puts the Lakes within striking distance of the known record of 94.8 percent set in 1994. Six-month forecasts generated by the Army Corps raise the possibility that all but Lakes Michigan and Huron could rise above their long-term averages by this summer.
It's been a long, cold winter. The snow covered Pyramids--not the fake ones--looked astonishing this year. Snow on the pyramids has not happened in well over 100 years. And records have been set: The coldest temperature ever recorded on earth occurred in Antarctica this year at minus 135 degrees below Fahrenheit, trumping a record set in 1983. So cold, a NASA space suit would come in handy. The record was captured by NASA's Aqua MODIS Satellite.
Speaking of ice, a Russian expedition ship carrying a gaggle of Global Warming Scientists got stuck in the ice earlier this year. They were there to show how Global Warming had made the ice disappear, but, found themselves stuck in record-level Antarctic Ice.A Chinese Icebreaker Xue Long, or Snow Dragon, went to rescue the Global Warming Scientists, but the rescue Icebreaker also got stuck in the ice.