3.11 Economy

Sustainable Washington

3.11 Economy

Climate change itself, as well as the array of mitigations required to reduce GHG emissions, will impact most sectors of the economy – agriculture, forestry, shipping, manufacturing, construction, tourism, professional services, and wholesale and retail trade. Business and industry recognize the significant risks posed by climate change-related disasters – the disruption to services and supply and distribution chains; the availability of raw materials; damage to physical infrastructure; unforeseen human losses; loss of sales; and the cost of withstanding or rebuilding from more devastating natural catastrophes. Depending on the intensity of climate change, economic disruptions and disasters can be expected to temporarily or even permanently affect businesses, and in some cases, alter local economies.

Climate change has the potential to significantly change the way we do business and how we develop our communities. But change is also an opportunity. In doing our part to address the underlying causes of climate change through smart economic investments and in developing environments that support a healthy, low-carbon lifestyle, we also set the stage for new business and social opportunities. In addition, the costs incurred now to reduce GHS emissions should be seen as a manageable investment which will help to avoid the need for more urgent, more expensive reductions in the future.

Most communities still have to contend with the legacy of past development patterns, some of which place development in known hazardous locations such as areas subject to wildfire, flooding, or eroding slopes. With more extreme weather events, structures in these areas will be even more vulnerable to damage. Therefore in preparing for an energy-efficient future, communities must balance the need to plan for increased costs associated with disaster management against decisions to invest in new development patterns.
A recent report 1 released by the State Department of Ecology projects:

“By 2020, these costs (related to climate change) [will] total $3.8 billion per year. The major components of climate-change costs are potential health-related costs of about $1.3 billion per year, potential reductions in salmon populations, with a value of $530 million per year, and energy costs of about $220 million. In addition, continuing with the activities that contribute to climate change potentially would cost Washingtonians almost $1.4 billion per year in missed opportunities to implement energy-efficiency programs and about $19 million per year in health costs from burning coal. The combined total annual costs would increase with time, more than three-fold by 2080.”

Economic impacts of climate change include:
  • Agriculture: Higher yields in some places while lower yields in others that face increasing drought, depleted water sources, or new pests.
  • Forestry: Increased growth in some areas from higher temperatures, but lower yields in others from forest fires, landslides, and pests.
  • Fisheries: Higher oceanic temperatures and salinity, sea level rise, flooding, loss of wetlands, erosion, and changes in oceanic currents have already significantly affected the fishing industry. Increasing ocean acidification also has the potential to have a devastating effect on the shellfish industry and other forms of sea life.
  • Shipping: Sea level rise is already affecting many ports, railroads and roads. Unpredictable severe weather-related events could delay delivery schedules, impacting the existing “just-in-time” delivery process. However, as the polar ice melts the emerging Northern Sea Route will change shipping and connect the Chinese and European markets.
  • Manufacturing: Diminishing water supplies and the flooding of manufacturing and other facilities that have historically located along riverfronts will affect the limited manufacturing sector that remains in the country. New manufacturing industries that cater to alternative and green technologies will offer new economic niches for many communities.
  • Construction: Construction costs could continue to rise, making new construction as challenging as repairing existing buildings and infrastructure. This may impact the ability of some communities to rebuild after a disaster. Extreme climate events may reduce the “construction period” within a region. There will likely be increased interest in buildings that are energy-efficient and “green.”
  • Tourism: Increased rainfall and other events such as flooding, forest fires and landslides may do irreparable damage to the state’s tourist destinations. Higher temperatures and other abnormal ecological stressors could negatively impact many of the state’s fishing and wildlife areas. On the other hand, higher energy prices may stimulate local tourism as more residents restrict their recreational travel to within the state.
  • Services: Service costs may increase to accommodate increased health insurance costs and greater absenteeism from climate-related events. Rising energy costs will affect the “cost of doing business” as the cost of traveling to work increases. Greater telecommuting and the use of other business models could, for a certain period, reduce the need to expand transportation infrastructure in parts of the country.
  • Insurance: The insurance industry will likely develop new models that reflect the changing pattern and degree of risk that climate change will bring, resulting in new patterns and distributions of costs. Health insurance premiums could increase as more people are affected by increasing incidences of asthma, heat strokes, and allergies in a particular region.

Actions

The following list of actions is separated into three categories: Getting Started, Making a Commitment, and Expanding the Commitment. This categorical approach allows jurisdictions to implement measures that are appropriate to their community’s current level of involvement in climate change and sustainability issues and in consideration of locally adopted plans, codes, regulations, policies and goals.
Getting Started

3.11.1 Encourage businesses to inventory GHG emissions.

Encourage local businesses to inventory, reduce and actively manage GHG emissions now, not at some future time. GHG emissions typically result from building heating and cooling, refrigeration and air conditioning leakage, electricity use, and vehicle fuels used for employee commuting and business travel, as well as for transporting products to market. (Local Action)

3.11.2 Encourage energy efficiency labeling.

Encourage local participation in the ENERGY STAR Program, a voluntary labeling program designed to identify and promote energy-efficient products to reduce GHG emissions. (Local and State Action)

3.11.3 Encourage economic resiliency.

Encourage resilience in the local economy through economic diversification and locating businesses and industry outside of areas of known – and anticipated – natural hazards. (Local, Regional and State Action)

3.11.4 Encourage community self-sufficiency.

Provide for a jobs-housing balance, encourage the development of local shopping districts and markets, and provide opportunities for community agriculture in local land use planning (e.g. Seattle’s Pea Patch program – http://www.cityofseattle.net/neighborhoods/ppatch/). (Local Action)

3.11.5 Encourage “green” (sustainable) businesses.

Encourage green technology businesses and training programs in local economic development programs. (Local and State Action)

Making a Commitment

3.11.6 Promote options to reduce commuting.

To reduce the need for employee vehicular transportation, encourage home offices and satellite offices within residential neighborhoods. Encourage business support centers in commercial areas. Subsidize bus passes for employees. Incentivize job-housing proximity. (Local Action)

3.11.7 Encourage local purchasing and recycling businesses.

Encourage the reduction and reuse of products. Consider developing a new economy based on recycling. Invite non-profits that promote local purchasing programs to strengthen local economies. (Local and State Action)

3.11.8 Support green power programs.

Support low-interest Green Technology investment funds for on-site generation and local green power purchasing. (Local and State Action)

3.11.9 Encourage disaster planning.

Encourage local businesses to participate in disaster planning. (Local Action)

3.11.10 Support bio-fuels research.

Support research into bio-fuels which do not negatively affect food production or land conservation, and which do not require large amounts of water or energy to produce. (State Action)

3.11.11 Provide information on climate impacts to local agricultural and forestry businesses.

Support improved information for agricultural and forestry uses – i.e., improved regional climate predictions, information regarding what crops and livestock will be successful with climate changes, etc. (State Action)
Expanding the Commitment

Bellingham’s Buy Local program
began in 2003. At present, 69% of Bellingham residents are familiar with the Think Local First program, and 3 out of 5 local households have changed their purchasing behavior to Think Local First. The program is underwritten by the City and managed by Sustainable Connections, a local group which offers online business directories, coupon books, and consulting services for communities looking to start similar programs.

3.11.12 Grow the local economy.

Encouraging locally-based businesses keeps money in the local economy. Consider “buy local” or local currency initiatives. Bellingham’s “Think Local” (http://www.sustainableconnections.org/thinklocal) and the Gorge Local Currency Cooperative (http://www.riverhours.org/) are just two of many examples. (Local Action)

3.11.13 Encourage new GHG-related technologies.

Encourage development of a low-carbon economy by placing a market value on technologies that produce energy with little or no GHG emissions, and on technologies and activities that remove GHG from the atmosphere. (State Action)

3.11.14 Encourage programs for carbon offsets.

Encourage development of a standardized program for the purchase of carbon offsets (vs. a piece-meal approach). (State Action)

3.11.15 Promote carbon sequestration.

Promote carbon sequestration as a new income stream. This may include forestry and algae-based sequestration, as well as geologic sequestration. (Local and State Action)


1 Niemi, Ernie. An Overview of Potential Economic Costs to Washington of a Business-As-Usual Approach to Climate Change and Climate Economics.   Climate Leadership Initiative, Institute for a Sustainable Environment, University of Oregon and EcoNorthwest. February 17, 2009.

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