23 Feb Economist calls for an end to "business as usual" on climate change
Madison, Wis. – What would business people rather see – a shrinkage of one percent in the global GDP, or perhaps 5 to 14 percent?
That was the question posed in Madison during a briefing on global climate change, and the difference in the two scenarios are linked to the cost of taking action to stabilize greenhouse gas emissions linked to global warming, and the cost of doing “business as usual,” according to British economist Lorraine Hamid.
The briefing was sponsored by the law firm Michael Best and Friedrich, the Nelson Institute for Environmental Studies at the University of Wisconsin-Madison, and the Wisconsin Department of Natural Resources.
Hamid quoted figures from the recently released “Stern Review on the Economics of Climate Change,” which was commissioned by the United Kingdom and bears the name of its author, Sir Nicholas Stern, former head economist of the World Bank.
The consequences of inaction on climate change, Hamid said, are ecological in the form of lower crop yields, water stress, and human migration from distressed areas. Citing the disparate economic impacts of action versus inaction, she said these and other disruptions could result in a steep economic price that future generations will pay.
“It’s kind of a no-brainer to avoid the costly impacts later on,” she stated.
The most worrisome of the six greenhouse gases is carbon dioxide, or CO2, and its current concentration in the atmosphere is approximately 430 parts per billion. Since, at the current pace, two parts per billion are added each year, that number will reach 450 parts per billion in 10 years. The Stern Review has called for global concentrations to stabilize at 550 parts per billion, which it said will require a reduction of 60 to 80 percent in emissions in developed countries through a series of government policies – taxes, emissions-trading programs, and regulation – and private-sector initiatives.
The call to action could marginally shrink global economic growth, but it also will create more opportunities to connect the economy to ecology and make addressing climate change part of an economic-development strategy.
In the United states, where the Kyoto Protocol to limit greenhouse gases has been rejected, the issue is being addressed entrepreneurially with businesses starting in the alternative-fuels space.
Future examples could be the emergence of companies that develop low-carbon energy products, Hamid indicated.
The worst-case scenario for emissions, according to the Stern Review, involves conducting business as usual and allowing CO2 concentrations to eventually grow to 750 parts per billion. That would be accompanied by a global temperature increase of between of two to five degrees Celsius.
For the sake of comparison, Hamid said the temperature difference between now and the last Ice Age is five degrees Celsius. “That would be a transformed world in terms of how we live and where we live,” Hamid said. “We still don’t know what will happen if the concentration doubles or increases by a factor of three or four.”
Since global compliance efforts have fallen short, the effort to address climate change has become somewhat decentralized, with nations and regions deciding for themselves which strategies are sustainable economically and ecologically.
Given that the Kyoto Protocol has not been ratified in the U.S., Edgewood College business professor Denis Collins agreed that organizations of all types still have the capacity to reduce their ecological footprint.
Edgewood has introduced into its MBA curriculum the four-part Natural Step process, which was developed in Sweden as way to reduce energy use, avoid the use of chemicals that don’t break down in the natural environment, and institute other “green” business practices.
Few companies, even in ecologically sensitive Madison, have adopted Natural Step as a framework, but Collins expects more businesses to start taking incremental steps in that direction.
“The climate change piece, that will be bigger in terms of the greenhouse gases that are coming out of the companies,” he said. “In the Natural Step, we ask, `how much are you doing it now?’ Then we benchmark it and develop strategies to reduce your footprint.”
The business case
Paul Linzmeyer, president of Bay Towel in Green Bay, is making the business case to go green in northeastern Wisconsin. Bay Towel and three other companies with a combined 7,000 employees – and about 500 trucks – are sharing their best ecological practices and hope to convince other businesses to apply them.
“We can do things like create metric systems for the companies around environmental management, map waste streams, map energy streams, and look at all the sustainable practices that are successful,” Linzmeyer said. “We feel that if we put the business case together, we can get small and mid-sized companies to understand that this move really fits in with lean manufacturing practices.
“To move from lean to green is really basically intuitive.”
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