There are some aspects of the current international financial crisis debate that are eerily similar to the climate change debate. Some argue the current world economic situation is just a downturn in the economy and the best way to deal with it is to let the free market rule and the problems will fix themselves, the ‘hands-off' approach. Some advocate this same type of approach in relation to the issue of climate change, arguing the science is unclear and that the causes and effects of climate change are still in doubt.
Viewed from this angle the debates indeed look similar – however the reactions do not. In an attempt to avoid financial collapse, world governments came together and in one week consolidated huge resources to support failing banking systems the world over: a $700 billion bailout package in the US; $41.5 billion to help free up lending for small and medium enterprises in Europe; and $50 billion to increase liquidity in the Russian banking system, plus $100 billion as a crisis package for that country. One can only dream that the same sense of urgency, responsibility and commitment would be demonstrated towards another crisis looming on the world – one not less ominous and probably much more calamitous in terms of its possible deadly impact.
Climate change, as a threat multiplier, will affect EVERY nation simultaneously binding threats and challenges. As Al Gore stated recently in the Clinton Global Initiative meeting, "[T]he connection between climate change and poverty must now be forged as a priority item. Conflict resolution will become imperative as climate risks grow and scarcity of water and food drives populations across continents and borders."
Scientists predict that 145 million people – mostly in the Asia-Pacific region – will be displaced if seas rise by 1 metre. Some scientists think that a 5 metre sea level rise within this century is possible. Given the probable "tipping point" phenomenon when the Earth's surface temperature reaches a point where it catalyses several major events simultaneously, this could happen long before the end of the century.
Climate change is already impacting on the most vulnerable communities in the world. President Museveni of Uganda has called climate change an act of aggression by the rich against the poor, and its effects are already creating heightened tension within affected regions as natural resources – particularly water and arable land – become scarcer. The crisis in Darfur – where 200,000 people have already died – is at its heart a struggle between nomadic and pastoral communities for resources made scarcer through a changing climate. In the 1990s alone, resource conflicts led to the deaths of 5 million people worldwide and to the displacement of millions more toward already crowded cities. That climate change will increasingly affect those very cities, particularly large ones, becomes a concern for every country, especially considering that more than 3.3 billion people live in cities, which is more than the world population in 1960.
Dealing with climate change and its consequences on water resources will require more than a quick technological fix, as more developing countries become urbanised and aspire to standards set by high-consuming nations. Increasingly, climate change experts, water professionals, rural and urban planners will need to work together to define strategic priorities for adaptation to climate change. Strategies will need to take into account the concerns and needs of the various stakeholders, whether urban or rural. The way forward to meet the climate change challenge is an integrated approach that will help develop innovative solutions and prevent conflicts over natural resources.
Coming back to the financial crisis, if we want to cure the disease rather than its symptoms, it's time to start thinking in terms of synergies and opportunities, outside the usual multiple-choice box of threats and priorities. After all Climate Change is not a conqueror to be feared, but a challenge to be met. It generates opportunities to develop and sell technologies that will be demanded by tomorrow's markets. With underlying drivers such as droughts, rising sea levels, and increasingly extreme weather events, this new market will demand massive amounts of novel or adapted services and products in areas such as energy efficiency, water infrastructure, modified crops, flood defenses, new housing and commercial buildings. Given the nature of today's financial crisis, the climate change and related water challenges seized as an opportunity could be the catalyst for anchoring the runaway financial system to the basic and long term needs of real economy.
Actually the formation of a new market is already under way. Between 1995 and 2005, holding shares of companies in the water industry would have provided an annual average gain of 18.5 percent. That's better than double the S&P 500, nearly double the Dow, and more than double the NASDAQ over the same period! And this new market is more stable than any other foreseeable market trends because:
a) This is a market created by necessity and not by desire: demand for water is unaffected by inflation, recession, interest rates, housing, energy prices and even war;
b) Governments are going to be very large and bankable consumers of services and products. According to the Wall Street Journal, spending on new water infrastructure could top $1 trillion in the U.S. alone by 2015;
c) The demand will continue to grow: 80 countries and 3 billion people are desperate for it right now!
Winston Churchill famously said that, "a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty." It is encouraging that the OECD, together with the Club of Madrid, supported by the Provincia and the Commune di Milano, the Fondazione Eni Enrico Mattei are hosting this week the international conference on "Competitive Cities and Climate Change" in Milan to focus on the challenges and opportunities ahead.
Green Cross International
Adviser to the Club of Madrid
This op-ed appeared in the following newspapers