In “Scared Central Banks Face Up to Threats From Climate Change” (Sept. 23) , Bloomberg News reported that “Most major central banks — with the exception of the U.S. Federal Reserve — are joining forces to promote sustainable growth, after realizing that climate change threatens economic output and could even sow the seeds of a financial crisis.” Now it appears that even the U.S. Federal Reserve Bank, or at least one of its components, the San Francisco Fed., is catching up to the rest of the world. Climate Change and the Federal Reserve drew attention when it was published by the San Francisco Fed in March 2019, and a special climate change-themed issue of the newsletter, Community Development and Innovation Review was published by the San Francisco Fed in October , highlighting independent economic analysis it had commissioned. The New York Times summarizes that research in “Bank Regulators Present a Dire Warning of Financial Risks From Climate Change ”.
The economic research was also highlighted in a conference on November 8. Host Mary Daly, President and CEO of the Federal Reserve Bank of San Francisco, introduced the event with a speech entitled, “Why Climate Change Matters to Us ” . Two highlighted conference papers: “Climate change: Macroeconomic impact and implications for monetary policy ” presented by Sandra Batten from the Bank of England, which explains why central banks care about climate change, and includes the warning that “for each degree the temperature rises above a daily average temperature of 59°F, productivity declines by 1.7%”. In “Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis “, six academics from the U.S., U.K. and Taiwan modelled the links between historical levels of temperature and precipitation and changes in labour productivity. They conclude that global GDP per capita could fall 7% by 2100 in the absence of climate change mitigation effects, but that loss could be reduced to 1% by conforming to the Paris Agreement.
Of related interest: SHARE Canada (Shareholder Association for Research and Education) summarizes the position of the major Canadian banks in an October 10 blog post “Responsible Banking – Part 2: Aligning finance with the goals of the Paris Climate Agreement .”
According to a study published in August by both the National Bureau of Economic Research and by U.K.’s Cambridge University Institute for New Economic Thinking, the overall the global economy could shrink by 7% unless the world’s nations meet the Paris Agreement targets for GHG emissions reductions. “Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis” analyses data from 174 countries over the years 1960 to 2014 to model changes in output growth related to temperature and precipitation. The result: “Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04°C per year, in the absence of mitigation policies, reduces world real GDP per capita by 7.22 percent by 2100. On the other hand, abiding by the Paris Agreement, thereby limiting the temperature increase to 0.01°C per annum, reduces the loss substantially to 1.07 percent.”
The effects differ widely across countries. For Canada, the analysis finds that a “business as usual” scenario could result in a 13% loss in growth for the Canadian economy. A summary for non-economists from the Climate News Network quotes one of the authors of the study: “The idea that rich, temperate nations are economically immune to climate change, or could even double or triple their wealth as a result, just seems implausible.”
A newly released survey conducted by the researchers at the Massachusetts Institute of Technology investigates the progress in climate adaptation planning in 468 cities worldwide – 298 of which were in the U.S., 26 were in Canada. Results show that 92% of Canadian cities are pursuing adaptation planning, compared to 68% worldwide, and 59% in the U.S.. The top ranked impacts identified by cities that conducted assessments were: increased stormwater runoff (72%), changes in electricity demand (42%), loss of natural systems (39%), and coastal erosion (36%). Other important issues were loss of economic revenue, drought, and solid waste management. The report, Progress and Challenges in Urban Adaptation Planning: Results of a Global Survey is available at: http://www.icleiusa.org/action-center/learn-from-others/progress-and-challenges-in-urban-climate-adaptation-planning-results-of-a-global-survey, and summarized at: http://www.icleiusa.org/blog/survey_us_cities_report_increase_in_climate_impacts_lag_in_adaptation_planningworldwide-progress-on-urban-climate-adaptation-planning. For a policy perspective, read the David Suzuki blog “Canada’s Success depends on Municipal Infrastructure Investments” (March 13) at: http://www.davidsuzuki.org/blogs/science-matters/2014/03/canadas-success-depends-on-municipal-infrastructure-investments/. For a more anecdotal report which names and describes some innovative Canadian municipalities, see “Five Canadian Communities Fighting Climate Change That You’ve Probably Never Heard of Before” from the DeSmog Blog at: http://www.desmog.ca/2014/04/03/five-canadian-communities-fighting-climate-change-you-ve-probably-never-heard-of-before. It describes Dawson Creek, B.C.; Guelph, Ontario; Varennes, Quebec; T’Sou-ke First Nation, B.C.; and Bridgewater, Nova Scotia. An overview of the Upwind-Downwind Conference of municipalities in Hamilton in March, and a summary of Hamilton’s climate action initiatives, appears in “Ontario Municipalities take Action on Air Quality and Climate Change” at: http://www.alternativesjournal.ca/community/blogs/current-events/ontario-municipalities-take-action-air-quality-and-climate-change.
From the industry point of view, a study by consultants IHS CERA was published in January reporting focus group discussions by the oil sands multinationals in Calgary in summer 2013. The report projects that the oil sands’ contribution to Canadian GDP could reach $171 billion in 2025, with total contribution to employment in Canada reaching 753,000 jobs by 2025.
See Oil Sands Economic Benefits: Today and in the Future (Jan. 2014) at: http://www.ihs.com/pdfs/OSD-2013-Economic-Benefits-Jan-2-2014.pdf.