Home Global warming It’s time to invest in climate adaptation

It’s time to invest in climate adaptation


Companies around the world are increasingly engaging in climate change mitigation, pledging to reduce carbon emissions and water consumption in their operations and supply chains to slow the pace of climate change. global warming and to better protect environmental ecosystems. However, while essential, these efforts only prevent a worse future rather than remedying the inevitable consequences of the damage already done. Carbon offsets, for example, have yet to demonstrate a significant impact on the atmosphere, and currently global carbon sequestration efforts would only remove 1% of annual global emissions.

We therefore believe that the climate adaptation – helping people, animals and plants survive despite increasing climate volatility – should be an equally urgent priority. According to a 2021 report by the Climate Policy Initiative, these types of initiatives only receive 7% of climate-related investments, spread across a wide range of needs such as flood and wildfire prevention, resilient agriculture , drinking water supply, modification of infrastructure and resettlement of populations. They deserve much larger business investments, particularly because they represent short-term opportunities at lower capital expenditures that provide faster returns on investment. Indeed, according to this Bloomberg report, Bank of America analysts estimate that the climate adaptation market could be worth $2 trillion a year within five years.

Fundamentally, climate adaptation is about moving organizational and institutional practices, infrastructure and technologies to the places where they are most needed – that is, wherever hazards such as floods and sea ​​level rise, droughts and heat waves are exposed. We advocate low-cost, effective and immediate-impact solutions, such as early warning systems for extreme weather events, coastal barriers, water desalination and wastewater treatment, vertical farming and l hydroponics, improved cooling and insulation systems, 3D printed and modular housing, and many other measures.

Insurance conglomerate SwissRe warns that a global temperature rise of 3.2°C by 2050 would wipe out 18% of global GDP. But, as two OECD studies point out, widespread climate adaptation measures can have a positive impact on growth, especially in G-20 economies.

When governments, capital market investors, commercial lenders and businesses, from multinationals to small businesses, work together on climate resilience, as well as mitigation, the result will be a stronger global economy. Some are already ready to do so. For example, the Coalition for Climate Resilient Investment (CCRI), an umbrella organization of more than 120 companies and other stakeholders representing over $20 trillion in assets, has launched pilot projects focused on building infrastructure to withstand anticipated climatic effects. We also see notable positive developments in other areas. Here we will explore projects in water and agriculture, construction and real estate.

Water and Agriculture

Water scarcity is already a short-term crisis and an even greater long-term challenge that even the most robust mitigation initiatives cannot immediately address. Water is the single most important and important input to human life and global agriculture and is therefore essential for our health, livelihood and productivity, yet many heavily populated geographic areas are already hit by shortages.

Some of the most affordable water-related adaptation interventions involve rainwater harvesting and more efficient irrigation techniques. As countries invest in cloud seeding to boost rainfall, plant drought-tolerant seeds, and deploy atmospheric water harvesting systems, water conservation for agriculture is an effort obvious complement. London-based engineering consultancy Arup (which brings in nearly $2 billion in annual revenue) has been ahead of the game on completing flood control projects that increase Poland’s natural water retention and water programs. flood mitigation in England. Rainwater harvesting projects now represent 5% and a growing share of the portfolio of Kingspan, a leading Irish construction company whose energy-efficient insulation systems are present at Bloomberg’s London headquarters and Changi Airport in Singapore. The city of Sydney, which has suffered constant droughts with dams falling to record capacity, commissioned Kingspan to audit the city’s 48 stormwater management systems.

There are also signs of progress in developing countries. Israel’s Netafim (a billion-dollar company) has installed irrigation systems in more than 100 villages in India, using soil and plant data to direct metered doses of water to optimize yield while reducing water consumption and fertilizer use by 40%. Olam, one of the world’s largest agribusiness producers of rice, cotton, cocoa beans and coffee that operates in 60 countries, is committing to reducing wastewater at 30% of its upstream farms and plantations that are located in water-stressed regions.

The economic benefits of water conservation include saving money on water purchases, storage and maintenance, all of which accrue to businesses and villagers. Especially in regions like India, where only 10% of potential water-saving measures have been implemented, these kinds of adaptation efforts deserve significantly greater investment and scale. .

The production of clean water is another critical and growing business opportunity. Existing desalination systems often run on oil or gas and consume a lot of energy. In contrast, Elemental Watermakers’ solar-powered reverse osmosis system uses the force of natural gravity to receive and clean pressurized seawater and is compact and mobile enough to be deployed in industrial sites and residential communities. . One of his customers in Aruba reduced his water costs by 67% and his carbon emissions by 180 tonnes per year. Another company, Terraformation, meanwhile operates what may be the world’s largest full-scale, fully solar-powered water desalination plant on a 45-acre reforestation project site in Hawaii. However, similar ventures remain woefully underfunded despite their regenerative potential for local ecosystems and economies. Perhaps the most promising innovation would be nuclear-powered desalination, which would have huge applications around the world.

A stable and efficiently managed water supply would also support more environmentally friendly agriculture, such as hydro- and aquaponic food production. Chinese company Sananbio, for example, operates large indoor farms in Beijing that can produce about six tons of leafy greens a day using just 5,000 square meters of space. Its plants absorb 60% of the water used, while the remaining 40% is recycled. Small, strategically vulnerable countries like Israel, the United Arab Emirates and Singapore have emerged as leaders in this type of food production, and this could greatly benefit many other water-stressed geographies.

Construction and Real Estate

Our built environment is a major driver of climate change and must also be a key front of adaptation. Due to their fixed location, real estate assets – valued at $200 trillion worldwide – are particularly vulnerable to natural disasters and resource shortages. And many opportunities lie at the intersection of geography and technology. For example, from the Netherlands to Denmark and the Maldives to Singapore, developers and localities are planning or building floating cities that can rise with the tides and desalinate and recycle water for hydroponic agriculture.

Astro Teller, director of the Google X Lab, suggests that we may also one day need “mobile cities” to deal with the effects of climate. First, companies like ICON are creating 3D printed houses. Its Vulcan building system can deliver homes and structures up to 3,000 square feet that meet International Building Code (IBC) requirements and are expected to last as long or longer than standard concrete masonry units (CMUs) , making them more resistant to extreme conditions. Weather report. They are the first of their kind to be sold in the United States and the company, currently valued at around $2 billion, is working with leading US homebuilder Lennar to build a community of fully 3D-printed homes in Austin. In Mexico and El Salvador, ICON is also building entire villages of homes, schools and libraries.

Similarly, Boklok produces kit houses designed and built by Skanska and sold at Ikea. The houses are mostly made of wood that is sustainably sourced from Scandinavia due to its relatively low climate impact, and around 14,000 of them have been erected in Sweden, Finland, Norway and the UK, generating 250 million dollars in revenue for the adaptive-focused manufacturer. .

According to UN Habitat, at least three billion people will need better housing by the end of this decade, meaning 96,000 new homes need to be built every day by then. Eventually, rather than building these habitats where people are, we will need to start moving some populations to geographic areas less damaged by climate change, with lower risk of future effects, and with better resources and technologies. Rising fire and flood insurance premiums, along with chronic droughts and heat waves, make this almost inevitable.

Our own Climate Alpha research suggests that investing early in climate-resilient geographies will generate over 70% higher returns on real estate portfolios by 2030 alone. Real estate developers, asset managers and insurers must take this into account, accelerating land acquisition, building affordable housing and adjusting premiums to anticipate, encourage and profit from climate-induced migration. New technologies should help us do this quickly. Take the example of the American company Alquist, which can now print a three-bedroom house in just over 24 hours, compared to the usual four weeks it takes to build a house at non-profit Habitat for Humanity.

Addressing climate change requires both mitigation and adaptation, and we believe the latter represents an even greater business opportunity. As Charles Darwin taught us, those who adapt are the most likely to survive and thrive. Small investments lead to significant preparation for an unpredictable future.