14 October 2013

Smart tools for climate change adaptation

Do companies need to develop their operations to adapt to ongoing climate change? Several activities currently under way in Mistra-SWECIA are aimed at finding out how climate change will affect markets and the economy. A national macroeconomic climate model is on the drawing table.

A growing body of research shows, according to the latest IPCC report, that we face a warming climate with rising sea levels. Here in Sweden, precipitation is increasing. Tyréns, the consulting company, and the Krinova Science Park in Kristianstad have seen that business owners in Skåne need to adapt their operations to climate change. This part of Sweden is low-lying, with a long coast, and there are many companies in the farming and food sectors.

Jointly with Krinova, Tyréns is seeking to develop a process tool that can help individual companies perform financial analyses based on different climate scenarios. Mistra-SWECIA is a partner in the project.

‘Tyréns’ approach is very interesting. We’re taking part as a knowledge partner,’ says Oskar Wallgren, a researcher in Mistra-SWECIA.

Mistra-SWECIA is carrying out research on how society’s various sectors can adjust to future climate change. The current project is entitled ‘A Changing Climate for Business’ and Krinova is the project owner.

‘Decision-makers in the business sector are a partially forgotten group in the literature. Not much has been written about them, and they are often bundled with other decision-makers, although their behaviour differs in many essential respects from the ways in which politicians or government agencies conduct themselves,’ Wallgren says.

Insurance companies getting stricter
Maria Larsson, a climate expert at Tyréns, sees the new tool as addressing six sides of business that are subject to the impact of climate change: logistics, production processes, properties (if located near water, for example), market changes, employees, and financial and insurance aspects. She has already seen examples of how insurance companies in Skåne are tightening up on homeowners who suffer flooding, and demanding that they take protective measures.

In Larsson’s view, climate change adaptation may involve both minimising risks and perceiving opportunities. If there is a drought in Europe it affects market prices, and Swedish growers can benefit from this fact. Forest companies can also be favoured by climate change.

‘Up to now, the focus has been on risks. And there are heavy costs associated with a changed climate. But there’s been less discussion of the opportunities. For companies, it’s important to look at both sides,’ Larsson thinks.

Businesses in the value chain of food, land and forest, in particular, were invited to a joint conference that took place on 3 October in Kristianstad. The conference marked the start of the project. Mistra-SWECIA’s Programme Director, Markku Rummukainen, and its chairman Bengt Holgersson attended it, as did Maria Larsson. The primary aim is to find out what needs businesses may have. Perhaps symptomatically, one of the participants is a winegrower who sees a warmer climate as offering opportunities.

Global carbon tax one way forward
Introducing a carbon tax in as many of the world’s countries as possible is the best way of tackling climate change. This view is held by John Hassler and Per Krusell, researchers in Mistra-SWECIA. Both men recently attended a seminar at SNS, the Centre for Business and Policy Studies, about the climate and the economy. The researchers show that it is relatively easy to work out the optimal rate of carbon tax.

Three crucial factors determine how high the tax should be: how much ongoing damage is being done to the economy, how long carbon dioxide stats in the atmosphere and how highly we value future generations’ prosperity. The present-day Swedish carbon tax is at roughly the right level if future generations’ prosperity is valued highly. The researchers also assert that carbon tax at this level constitute no threat to growth and international competitiveness. They have jointly published a popular-scientific version of a report at SNS.

Forestry in a new climate
Recently, Mistra-SWECIA also arranged an excursion on the theme of forests and silviculture in a changed climate. In September, 50 forest decision-makers and researchers spent two days in the forests around Skinnskatteberg in Bergslagen. Joining the excursion were forest owners large and small, advisors and officials from the Swedish Forest Agency and other agencies, and researchers from Mistra-SWECIA and the Mistra programme Future Forests.

‘There were very productive encounters between researchers and decision-makers. It wasn’t primarily an event for disseminating Mistra-SWECIA’s research, but more of a meeting-place, which was good. My view is that funders are more often interested in getting a comprehensive picture of the overall research situation than in hearing about individual research findings,’ says Oskar Wallgren, who headed the excursion.

Text: Thomas Heldmark, Vetenskapsjournalisterna

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