Climate Change Puts California Real Estate, Economy at Risk
- Nov 17, 2008
While the real estate sector continues to take a beating by economic forces, there may be yet another peril on the horizon that could harm the industry just as much–if not more. According to a new report by the University of California, Berkeley, the state of California currently has a total of $2.5 trillion in real estate assets at risk from “extreme weather events,” such as wildfires and rising sea levels. That figure represents more than half of the $4 trillion in total real estate assets in the state, according to the report, which was released in the wake of yet another string of uncontrolled blazes which have swept through the Los Angeles and Santa Barbara areas over the past week, destroying hundreds of homes and scorching acres of land. The report stated that, depending on how extreme global warming levels become over the rest of the century, California faces a projected annual price tag of $300 million to $3.9 billion due to weather events. In addition, the report warned that, should sufficient action not be taken to curb the impact of global warming, additional sectors will also be affected, including water, energy, transportation, tourism and recreation, agriculture, and public health. Damages arising from these sectors “would incur tens of billions” in additional costs. “Our report makes clear the most expensive thing we can do about climate change is nothing,” said its lead author, UCB Adjunct Professor David Roland-Holst, of the university’s Center for Energy, Resources and Economic Sustainability. “In these dire financial times, California is at a crossroads. As we learned in New Orleans, turning your back on the threat of natural disaster doesn’t make it go away.” Instead, the report’s authors advocated immediate action on three fronts: expanding technical assessment of climate risk and policy options; re-deployment of existing resources for infrastructure renewal and/or replacement; and providing private incentives to promote investments for climate security and energy independence. The report’s sponsors drew parallels between the current economic crisis and the dangers brought by climate change–the consequences of which, they say, are even more dire. “The scale of climate risk over the coming decades dwarfs today’s financial crisis and will long outlive it,” said F. Noel Perry, founder of Next 10, the nonprofit organization that funded the study. “As the current market turmoil proves–markets may deliver profits, but not sustainability. It is up to responsible leadership to protect the public interest.” The change must come not only from policymakers, according to Roland-Holst, but from the business and civic arenas as well. “Not only governments, but every enterprise and household needs to evaluate their economic vulnerability and begin adaptation now,” he cautioned.