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After Paris, A More Fluid Approach To Climate Change?

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By John H. Matthews & Regina M. Buono

Last Friday, representatives of 175 countries met in New York to sign the Paris Agreement on climate change. Thanks to the agreement, the UN climate change conference in Paris last December has been largely hailed as a success, ticking the box for many climate advocates, at least in terms of promoting low-carbon economies. Though not perfect, the agreement addresses both developed and developing countries under one framework and signals accelerating regulatory intervention promoting low carbon development. The financial sector has begun to take note of the risks surrounding climate change, with some investors shifting support to wind, solar and other renewables. These trends are lagging indicators, however. Indeed, the events in Paris undoubtedly marked a policy change, but perhaps not the fundamental shift that was first proclaimed. The agreement signaled a broad commitment to slow the rate of climate change and to provide support to many of the poor countries facing big climate impacts to their most vulnerable citizens. But what the Paris agreement really indicated is a shift in perspective: from a planet thinking about reducing the rate of climate change (and the regulatory and other risks inherent in managing businesses and economies with the primary objective of halting or slowing carbon emissions) to one looking at adapting to climate change by addressing the risks inherent in climate impacts. And the most important element in this shift—the medium through which change and adaptation can be seen most clearly and quickly—is water.

The Paris agreement is only the beginning of a transition toward a focus on the impacts of climate change to which we are already committed regardless of lower carbon emissions in coming decades. Picture a developed-world driver shifting into the slower, middle lane on a rainy autobahn in danger of flooding, steering around new developing-world drivers entering the road and throwing a life preserver to a soggy, developing-world hitchhiker. The driver has not exited the highway, much less stopped or done a U-turn; carbon is still being emitted in climate-altering quantities, and the new drivers are raising the stakes. If anything, the Paris agreement means that the life preserver is next big topic for the pedestrian (“Is it big enough?) and the driver (“Can I drive through heavy water at a slower pace? Does my car float?”).

As climate change evolves to become a concern in most industries, this transition raises new questions: how do we account for and reduce risks associated with climate impacts on physical assets and supply chains, as well as company reputation and investor awareness? Much of the shift from mitigation to adaptation is also a shift in who is crafting and implementing the policies. National-level adaptation will always be important, as well as blunt, slow, and reactive. The rest of the economy—states, cities, and companies of all sizes—will now also need to “own” climate change, with all of the divergence in insight and competitive advantage that implies.

As U.S. chief climate negotiator Todd Stern observed, “Paris wasn’t the end; Paris was the start.” And the start of the next discussion—the one we need to be having around adaptation and impacts—is about water. Ten years ago, a World Bank economist and a South African engineer wrote that humans will experience most of the impacts of climate change through water. Others have echoed that sentiment in recent years. WWF-US CEO Carter Roberts argued in 2009 that “the very language of climate change is the language of water.” In 2015, “failure of climate change mitigation and adaptation” ranked first and “water crises” ranked third (constituting the latter’s fifth consecutive appearance in the top 10) among global risks as determined by the World Economic Forum’s survey of the business community, academia, civil society, and the public sector. The increased emphasis on climate and water in the report seems to reflect a growing awareness in boardrooms and by decision makers that most businesses are up to their necks in water that, though perhaps hard to see directly, flows through manufacturing and supply chains, energy (thermal as well as hydro and biofuels), agriculture, and transportation. Surrounding the negotiations in Paris, the #ClimateIsWater (http://climateiswater.org) campaign emphasized that water is not a “sector” but a connector—a medium flowing through and linking communities, economies, companies, and ecosystems.

Can we see emerging patterns in climate adaptation and water? Climate change is changing the types and severity of risks that will confront developed countries and their infrastructures. Middle and high income countries—with their older infrastructure—will need to reinvest in existing systems that were designed for climates that are either gone or disappearing rapidly. Las Vegas has invested over 800 million USD in a “bathtub drain” for Lake Mead in anticipation of climate change dropping the lake’s level below current intake tunnels. Miami is preparing to invest over 400 million USD in flood control measures, while San Francisco’s Public Utility Commission is preparing a multi-billion USD bond to ensure it can cope with higher stormwater flows and sea-level rise. Countries such as the Netherlands and Great Britain are moving even more aggressively.

In contrast, the developing world is rapidly investing in new infrastructure now. Vietnam alone plans more than 200 new hydropower dams by 2017. In most cases, developing world investments are being made without consideration of how—or how soon—climate might impact them. As a result, these new systems may be rapidly undermined in function and accelerate stress on ecosystems. Zambia’s Kariba Dam—a youngster compared to Lake Mead’s Hoover Dam—once contained one of the largest reservoirs in the world and generated electricity to meet Zambia’s electrical needs and for export to neighboring countries. Today, the dam generates little or no power and sits at less than 15 percent capacity, an investment gone deeply awry with no clear engineering or ecological answers, stranding the regional economy. Thus the risks that confront developing nations are different, including prohibitively expensive electrical grid development that may impede development.

The World Bank recently released a stepwise methodology to support loan officers in assessing and reducing climate risks. The recent development of a Water Climate Bond Standard, a new mechanism to help businesses and investors evaluate and compare climate risk for water-related projects that includes measures for flexible management for an uncertain future, may be a further signal of a new wave of more holistic thinking. Shifts in awareness—and behavior—seem to be accelerating. In the past, sustainability has been envisioned as a one-time investment but stories like those of Lake Mead and the Kariba Dam demonstrate that sustainability is a moving target. Adaptation is an evolutionary process that may require multiple, simultaneous, and alternate pathways, as well as integrated and interdisciplinary research approaches in areas such as the water-energy-food nexus. Paris has signaled that the attention to climate will move from greenhouse gases to water and adaptation, from global leaders to middle management, and from a rigid view of sustainability to keeping a weather eye on sustainable development.

John H. Matthews is the Secretariat Coordinator for the Alliance for Global Water Adaptation, http://alliance4water.org/

Regina M. Buono is the Baker Botts Fellow in Energy and Environmental Regulatory Affairs at the Center for Energy Studies at Rice University's Baker Institute for Public Policy.