If the Great Recession taught us anything, it was that decisions made around the country and around the world have very local impact. The lack of ability to understand that and mitigate risk brought the global economy to its knees.
Underestimating the potential risks of climate change presents a similar challenge to businesses, individuals, and our economy. According to recent studies from Risky Business, the non-partisan project to identify and publicize risks posed by climate change, we face potential reductions in crop yield and labor productivity, and increases in demand on limited energy resources and heat-related mortality. Anyone with invested retirement savings also faces exposure to national and global real estate, commodity, municipal bond, and corporate bond markets, all of which could be substantially affected by current and far-reaching effects of climate change.
This conversation of risk is not to say that we are doomed. The history of our country, our city, and of capitalism show that well-managed risk can actually lead to great opportunity. Two Chattanooga attorneys with no experience in food service pitched an idea to bottle and sell Coca-Cola; generations later our city still sees the benefits of that foresight.
The International Energy Agency states that to keep climate change below the critical two degree Celsius threshold, global clean energy investment by governments, companies and investors must be increased by an average of $1 trillion a year for the next 36 years.
This investment trend has already started. Warren Buffet recently doubled his investments in renewable energy. Green bonds that fund renewable energy and energy efficiency are being issued all over the world and are being met with strong demand. Every dollar we save through energy efficiency is a dollar that goes back into our local economy rather than into the ground. According to the Department of Defense, the internal rate of return on marginal investments in LEED certified buildings were between 15 and 39 percent. If you want guaranteed returns like that from stocks or bonds, you’ll have to talk to Bernie Madoff.
The emerging green market represents an opportunity for Chattanooga to export services, products and technology to the rest of the world, not unlike the Coke bottles that led to such great fortune for our city. Global demand for the technology necessary to leapfrog carbon-intensive industrialization is already at a fever pitch.
Luckily, some of the same solutions to help mitigate climate change also help address these public health issues. LEED-certified buildings have been shown not only to improve energy, water, and material performance, but also human health and well-being.
Chattanooga has two great opportunities in the face of climate change. We have a multitrillion-dollar market that we have only started to tap, and while we capitalize on this new market, we can invest it in a city that protects and promotes health while minimizing negative impacts on the environment.
Ultimately, Mark Twain put it the best: “history doesn’t repeat itself, but it does rhyme.” Let us make Chattanooga’s future rhyme with the brightest parts of our history.
Michael Walton is the executive director of green|spaces, a Chattanooga nonprofit whose mission is to advance the sustainability of living, working, and building in Chattanooga and the region. He spoke last week at a White House Business Council event.