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Climate Change Adaptation: From Big Taboo to Business Opportunity
Alan AtKisson, 16 Jan 09
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First and most importantly, the room was full. Not long ago, a seminar on climate change adaptation here would have been a lower-profile event. It might have drawn a few dozen people, most of them academics, activists and development workers. Even the topic would have been seen as controversial, even taboo: "Don't talk about adaptation," went the argument, "because that will signal that we've given up on stopping global warming." But as the evidence mounts that climate change is here, and that adaptation is imperative, that taboo has finally begun to crumble away.

And today, there was a room full of officials, business execs, and consultants like me crammed into a rather small auditorium to hear about "Climate Change Adaptation -- Finding the Business Opportunities." (The seminar was sponsored by Sweden's agency for international development aid, SIDA, and the networking group Globe Forum.) There was not a whiff of taboo in the room. In its place was the whiff of entrepreneurship -- driven in part, I sensed, by a healthy dose of genuine fear.

Why haven't the opportunities in adaptation been "found" already? After all, the world is plainly going to need new ways to do everything from watering crops in newly drought-prone areas, to keeping buildings cool in extreme heat waves, to responding quickly to floods and other extreme weather events. Somebody is going to make money finding -- and selling -- the answers to those problems. What's stopping them?

Actually, some people are already making money helping the world adapt to climate change. Australia, for example, has new desalination plants under construction in every major city, a friend there just related. Someone is surely making money on those. But the overall level of global progress on private sector investment to address adaptation to climate change is still just as frustratingly slow as progress on climate change generally.

The reasons have principally to do with the current rules of the game in financing, and -- said speakers at this symposium -- a simple lack of good communication and networking between the relevant players. Investors still don't talk enough with CleanTech entrepreneurs, mostly because the CleanTech people don't know how to talk to them. The interest is there, especially in the energy sector; but the flow of dollars, which requires first a flow of words, is still weak.

Moreover, the relevant technologies, which usually go under the heading of CleanTech (new energy, water, recycling, and waste disposal methods), are still perceived as high risk. Even risk-capital investors therefore want higher-than-normal returns. They are interested, they are moving in that direction, but they are wary -- especially since the relevant markets are highly politicized. As experience in countries like Denmark shows, your investment in something like wind energy may be entirely dependent on which government wins in the general election, and what policies they set.

Add the challenges of operating in a developing country, where the legal frameworks and working cultures are nowhere near as predictable as, say, Sweden, and you get a world of pent up demand for investment capital ... and a dribbling supply.

Nearly everyone at this seminar spoke of the need for greater partnership, dialogue, and collaboration between sectors. Those working on climate negotiations, like EU climate negotiator Angela Kallhauge, spoke urgently about this: "We have 325 days left till Copenhagen," she noted, and mobilizing stable investment flows over the long term was just one of the great challenges she saw ahead for the world. (The others were agreeing on ambitious mitigation targets, securing the participation of all parties, creating a sense of shared responsibility, and enhancing the role of adaptation in the negotiation process.) "We need to open up the 'black box' of what the private sector is doing ... We know things are happening, but we need to pull them into the debate" before the world meets to determine its climatic fate in December 2009.

Actually, much adaptation work has become mainstream business practice -- something several speakers noted. Nowadays, banks looking at "long-term risk management" for a dam project routinely include climate change projections in their calculations (or they should be doing so). This is adaptation work by another name. Kallhauge spoke of other examples, such as South African mining firm that projected an increasing, and therefore increasingly costly, prevalence of malaria among its workforce as global warming proceeded. So they invested in a strong malaria prevention program. It looked like a health program, with present-day benefits -- but it was actually a program to protect a key corporate asset against future climate change.

Strangely, the current financial crisis seems to be having no negative impact on the steady, if slow, growth in investment heading in this direction. Indeed, the economic crisis seems only to be strengthening the case for climate change investment. A senior executive from PriceWaterhouseCoopers spent half his speaking time quoting, verbatim, from a December 2008 speech by Prince Charles of the UK. The Prince drew the parallel (as others have done) between the credit crunch and the "climate crunch."

Both the credit and climate crises are characterized by (1) a huge increase in debt (in the climate case, the debt is a drawdown of natural capital); (2) overconfidence in the ability of markets and regulatory systems to identify and mitigate the risks of this accumulating mountain of debt; and (3) incentives driving individuals and organizations to prioritize short-term gains irrespective of their long-term sustainability. "Both crises require us to work together with urgency," said Lars-Olle Larson of PWC. "A growing chorus of voices urge a response that is geared to dealing with both [the credit and the climate] crises at the same time" and create a "transformation toward an ecologically durable economy."

Lars Wärngård, who heads a Swedish funding agency that provides hundreds of millions of dollars in funding to advance Swedish business innovation for sustainability (Vinnova), closed with some counter-intuitive thoughts about how to make that transformation happen. "We must be problem-oriented," he said, not oriented around today's perception of the solutions. Long-term focus on the problem of climate change -- how to stop it, and how to adapt to it -- will give rise to many solutions, over many years.

At long last, the issue of climate change adaptation is on the world's table -- and not just as a problem for researchers to study and activists to chant about (as well they should). The problem is reaching quickly into senior levels of business and government, and being framed as a problem, yes ... but as an opportunity-creating problem.

And where investors see opportunity, change is sure to come.

This article originally appeared on the AtKisson Group blog, WaveFront.

Photo credit: flickr/C.Nichols, Creative Commons license.

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Australia's Climate Action groups from across Australia are heading to Canberra, encircling Parliament House on the first day of sitting. After Rudd's pathetic announcement of 5% emission cuts for Oz, his failure to meet the bar at international negotiations, and $4 Billion pledged in hard cash to the coal industry, it is clear that Rudd is not serious about climate change. That's why it's time to take mass community action.

This year is our ONE CHANCE to affect international policy. Failing that, we are saying goodbye to the world as we know it.

So head down to our capital city, join us at Parliament House, and make your voice heard where it counts.

Be there, or be as lame as Kevin Rudd.
For details...

Posted by: Shweta Narang on 19 Jan 09

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