Weather-related disasters present significant opportunities for companies positioned to help clients prepare for, adapt to and even gain competitive advantage from the consequences of climate change, according to a new report by Environmental Business International. The global market for this could be as high as $2 billion.
In the report, EBI evaluates the first generation of service providers in this emerging business space, looking at how they are positioning their companies to win contracts and at the challenges involved in pioneering adaptation work.
Today, the climate change adaptation market remains primarily in the investigational phase, amounting to specialty service revenues of $700 million in the United States in 2013. However, EBI forecasts a billion-dollar U.S. industry by 2016 derived mostly from analysis, assessments, mapping and planning projects led by consulting and engineering (C&E) firms, specialist climate change consultancies, and professional service firms.
However, once adaptation moves into the design, engineering and construction phases, the market will see higher growth driven by major projects such as desalination plants, levees, sea walls, port reinforcements, and more. Long term, climate change adaptation projects will represent tens of billions of dollars annually, including design and construction, EBI forecasts.
"The accelerating nature of climate change and growing frequency of extreme weather events ensure that adaptation is going to be one of the fastest growing topics for government and the private sector," said EBI Senior Editor Jim Hight. "Whether companies are seeking or providing adaptation services, now is the time to understand the advantages of being early movers in responding to the challenges and opportunities of climate change."
While it would be prudent for companies to factor climate change adaptation into their business models, there is still time to avert the worst effects of a warming planet. According to the International Energy Agency, it will take $5 trillion of investments by 2020 to limit global warming to two degrees Celsius. However, global investment in climate change plateaued at $359 billion in 2012, roughly the same as the previous year, according to a study by the Climate Policy Initiative (CPI). The World Bank estimates we are on a path to four-degree Celsius warming, which suggests that efforts to scale up finance are falling further and further behind.
Any doubt that climate change is occurring due to human action was decimated last fall when leading scientists from the Intergovernmental Panel on Climate Change (IPCC) announced that they are now 95 percent confident that human influence is the dominant cause of global warming. They claimed the effects of climate change will persist for many centuries due to past, present and expected future emissions of carbon dioxide.