Nov 15, 2023

What the Fifth National Climate Assessment means for commercial property owners

| by Tess Townsend, Director of Communications | 2 Minutes

The US Government’s Fifth National Climate Assessment reveals that all parts of the country are experiencing changes in climate, though some are experiencing it with greater severity.

The report looked at economic impacts of climate change; explored advances in “attribution science” that enable scientists to show how climate change impacts extreme events; and discussed how mitigation, adaptation and resilience can all help reduce risk due to climate change

Here are key insights from the report for commercial property owners.

Every location is seeing rising risk from climate change

All regions are seeing warming. With the exception of the Northern Great Plains and Alaska, the number of warm nights per year is growing, meaning less respite after hot days. Most regions are seeing increased precipitation, except parts of the west and Hawai’i, where there precipitation has decreased. Heavy precipitation has increased everywhere but Hawai‘i and the US Caribbean.

Report contributor Katharine Hayhoe told CNN, “There is no place that is not at risk, but there are some that are more or less at risk. That is a factor of both the increasingly frequent and severe weather and climate extremes you’re exposed to, as well as how prepared (cities and states) are.”

Climate Change Risks and Opportunities in the US - graphic

Climate change has direct economic impact

The report was the first to include a chapter dedicated to the economic impact of climate change, notes The New York Times.

“These effects vary between regions, with hotter ones facing more harm and colder ones potentially benefiting. But the report cites studies showing an overall loss in the nation’s economic well-being. For every 1 degree Fahrenheit that the planet warms, the U.S. economy’s growth each year is 0.13 percentage points slower than it would be otherwise, the report finds, a seemingly small effect that can add up, over decades, to a sizable amount of forgone prosperity,” the Times reports.

The report’s chapter on economics shares three key messages:

  1. Climate Change Affects the Economy Directly: Many sectors will see growing costs from climate change, but adaptation measures can help improve outcomes.
  2. Markets and Budgets Respond to Climate Change: Climate risk will impact asset values, among other impacts.
  3. Economic Opportunities for Households, Businesses, and Institutions Will Change: Climate change means new and higher costs for households as well as new risks – but also new opportunities – for businesses.

Adaptation and risk mitigation measures hold promise

Businesses, government agencies and communities have the opportunity to take action that mitigates risks posed by climate change, according to the report.

“Public and private measures—such as climate financial risk disclosures, carbon offset credit markets, and investments in green bonds—can avoid economic losses and improve property values, resilience, and equity,” the report states.

But the report adds that solutions must be designed with public input to avoid unintended consequences that “result in increased vulnerability and cost burden.”

Looking to incorporate climate into your risk assessments?