Americans understand risk. Our ability to evaluate risk—to take calculated plunges into new ventures and economic directions and to innovate constantly to bring down those risks—has contributed immensely to the nation’s preeminence in the global economy. From the private sector’s pioneering venture-capital financing model to the government’s willingness to invest in early-stage inventions like the computer chip or the solar panel, our nation’s ability to identify and manage potential risks has moved the economy forward in exciting and profitable directions.
The Risky Business Project is designed to apply risk assessment to the critical issue of climate change, and to take a sober, fact-based look at the potential risks facing specific sectors and regions of the national economy. As in a classic business risk assessment, we analyzed not only the most likely scenarios, but also the scenarios that, while less likely, could have more significant impacts.
Our conclusion: The American economy faces multiple and significant risks from climate change. Climate conditions vary dramatically across the U.S., as does the mix of economic activity. Those variations will benefit our economic resilience to future climatic changes. But each region of the country has a different risk profile and a different ability to manage that risk. There is no single top-line number that represents the cost of climate change to the American economy as a whole: We must take a regional approach to fully understand our climate risk.
Given the range and extent of the climate risks the American economy faces, it is clear that staying on our current path will only increase our exposure. The U.S. climate is paying the price today for business decisions made many years ago, especially through increased coastal storm damage and more extreme heat in parts of the country. Every year that goes by without a comprehensive public and private sector response to climate change is a year that locks in future climate events that will have a far more devastating effect on our local, regional, and national economies. Moreover, both government and the private sector are making investment decisions today— whether in property, long-term infrastructure or regional and national supply chains—that will be directly affected by climate change in decades to come.
Our assessment finds that, if we act now, the U.S. can still avoid most of the worst impacts and significantly reduce the odds of costly climate outcomes—but only if we start changing our business and public policy practices today.
The Risky Business Project does not dictate the solutions to climate change; while we fully believe the U.S. can respond to these risks through climate preparedness and mitigation, we do not argue for a specific set or combination of these policies. Rather, we document the risks and leave it to decision-makers in the business and policy communities to determine their own tolerance for, and specific reactions to, those risks.