Science and Business: Allies in Addressing Sea Level Rise
Science and Business: Allies in Addressing Sea Level Rise
“This event is designed to get us out of our ecosystem and into yours, so you can see how dynamic climate-change research is,” said climate scientist Peter de Menocal of Lamont-Doherty Earth Observatory (LDEO).
On May 4, members of the business community gathered at UBS, a midtown Manhattan investment bank, to learn how advances in climate science can be used to reduce investment risk and improve returns. The event, sponsored by LDEO and the Columbia Business School, was called “Ice Sheets and Sea Level Rise: Implications for Coastal Property.”
As befit a meeting between two professions, after de Menocal used the vocabulary of science, Bruce Usher, co-director of the Tamer Center for Social Enterprise (TCSE), deployed the terminology of business in his concluding remarks. “Climate change,” he stated, “is a negative externality.” Usher noted that in the usual order of things the cost of the externality is determined, the cost of removing the externality is calculated, and then the government changes the rules to make removal possible.
Experts from the worlds of science and business were gathered in a conference room, Usher said, because “the government is not stepping in [to address climate change] and that will not be changing any time soon, particularly in the U.S., but also globally.” Therefore, he said, “we need for science to talk directly to business.”
The scientist speakers explained the current understanding of sea level rise (SLR) and how it had been achieved. Robin Bell, an LDEO scientist specializing in Antarctic ice sheet dynamics, told her audience that the polar ice caps are large enough to exert a gravitational pull on ocean water; sea level is therefore higher in their immediate vicinity. As their volume diminishes through melting and calving, the pull weakens, and the ocean will re-distribute its mass; it will rise along shorelines distant from the ice sheets. In addition to global effects, there are regional ones. Rebound of the crust from Ice Age glaciation in Scandinavia and tectonic uplift along the Pacific rim of the Americas, for example, cause sea level to apparently fall along those coasts.
Greenland is the focus of the work of LDEO scientist Marco Tedesco. Tedesco summarized the different rates of SLR possible by 2100, the data on which they were based, and the shift over time in the balance of contributions to the rise. At present, expansion of warming ocean water accounts for over half the SLR observed since 1800. By 2100, the melting of Greenland ice will be the largest single contributor. Fifteen years ago, Bell noted, scientists did not believe ice sheets were reacting to global warming. Recently they have found that not only do they contribute, but the melting is causing the SLR rate to accelerate.
Radley Horton, an LDEO climate scientist who regularly works with policymakers, shifted the focus to the increased frequency of nuisance and catastrophic flooding caused by SLR. Even small rises cause more frequent flooding over wider areas because the angle of upward slope across many coastal regions is very low. Nuisance flooding occurs regularly when spring tides and high winds coincide. Using Horton’s figure, Geoffrey Heal of the TCSE showed nuisance flooding in Charleston, South Carolina is predicted to increase from 8 or 10 times per year historically to 200 to 300 annually by 2050. The message was clear: flooding need not be catastrophic to have a significant economic effect, particularly on infrastructure.
LDEO hurricane specialist Suzana Camargo warned that although the warming ocean would produce fewer storms, they would be stronger and last longer. She also noted that cyclones do not occur frequently enough to make predictions about the future; available data must be integrated into models. European governments, she said, are giving more support to model development, and consequently theirs are better than U.S. storm prediction models.
An audience member asked the climate scientists how much lead time the business community has before their efforts would have an impact on climate change. “We should have started 10 years ago,” said de Menocal. “Now the next 30 to 50 years of sea level rise are locked in.”
Bell allowed that the models were “agnostic” about what will happen beyond 50 years from now. De Menocal added that while there is a large range in the predictions, all trend upward, from 2 to 15 feet by 2100.
For their part, the business speakers showed the audience how some members of their community are already taking sea level rise into account. Chris Mayer, a Columbia Business School professor of real estate, offered data from the residential housing market that showed a mixed response to SLR. On one hand, Mayer cited a study that found properties within the areas affected by a 6-foot SLR to be discounted by 7.5 percent. Furthermore, with recent revisions to FEMA floodplain maps, in some places even properties that have not been flooded have declined 18 percent in value. On the other hand, government bailouts continue to mitigate losses, so developers still build in floodplains.
But the National Flood Insurance Program (NFIP) is running out of money. According to Marla Schwartz of the international reinsurer Swiss RE, since 2010 private firms have been returning to the flood insurance market. She predicted they would provide cheaper and better policies than the NFIP. Improved understanding of the physics of flooding, better weather data, and more robust computation now reduces the uncertainty associated with this most common of natural disasters. This is an opportunity for insurers, said Schwartz, because flood insurance is not a saturated market and a more nuanced understanding of the phenomenon allows for development of new products.
In contrast, Michael Wertz of Moody’s Investors Service stated that his company’s existing methodologies could incorporate climate change as a factor affecting governments’ ability to repay their debts. In evaluating credit, Wertz differentiated between a risk profile and a resiliency profile. Before the hurricanes struck, Puerto Rico was more vulnerable to risk than Houston, and it was less resilient following Irma and Maria. According to Wertz, resilience is enhanced by efficient transfer of resources through layers of government, good monitoring of local government response, and the effectiveness of FEMA.
Rich Sorkin and his partners founded Jupiter in 2017 to produce risk models for developers without regard for government regulations, which he feels have not kept up with the reality of climate change and are therefore irrelevant. Jupiter has formed alliances with Columbia University scientists in order to use the computation resources and organizational efficiencies at Jupiter’s disposal to put academic data to practical use five times more quickly.
Jupiter’s flood prediction service is in place to do site selection for real estate development. “We are connecting the business and academic silos,” Sorkin said. “We will have all the major population centers covered by the end of 2020.”
Like Wertz, Sorkin spoke of evaluating resiliency. But while Wertz used government response as a measurement, Jupiter relies on data to develop models that can understand physical vulnerabilities, quantify costs and their manageability, and identify adaptation options. Michael Samuelian, director of the Governors Island Trust, described in detail how adaptation options can be devised and deployed at a site vulnerable to SLR.
Until recently, investors did not consider climate change when making investments in real estate because it has been difficult to know when and what extreme climate events will occur and what problems they will cause. As the primers from the LDEO scientists showed, however, the steady accumulation of high-resolution data now allows them to make predictions in a time frame that is meaningful to the business community. Collaborations between academic and commercial entities like those between Columbia University and Jupiter represent the next step in using climate change research for reducing risk and protecting investments in coastal real estate development.
— Bill Chiasson