In late 2013, a trio of
business leaders including Michael Bloomberg, Hank Paulson and investment fund
billionaire Tom Steyer teamed up to found the
Risky Business Project with a
simple mandate:
Determine the potential
consequences for the U.S. economy without significant changes in the way we
consume and deploy natural resources.
The report is quite sobering,
and few industries will be impacted by these changes as much as home building, even though housing reportedly accounts for just 18
percent of greenhouse gas (GHG) emissions. Yet there is still plenty of hope, as the most severe risks can still be
avoided by early investments in resilience and immediate action to reduce the
emissions which have been found to increase global warming.
In terms of geography, the
Risky Business report concludes that the two main impacts of climate change –
extreme heat and a rise in sea levels – will likely affect certain regions of
the country more than others.
In the
states along the Gulf Coast and in the Northeast and Southeast, higher sea
levels and stronger storm surges could lead to increasing property losses by
2030 which could total as much as $35 billion each year. For states in the Midwest and Southwest, a
larger number of high-temperature days could threaten human health, reduce
labor productivity (especially for those working outside in land development
and home building) and strain already aging electrical grids.
Yet there will be some areas
which will benefit from a warmer climate, such as northern latitude states
including North Dakota and Montana. With
higher winter temperatures, both frost events and cold-related deaths will
decline while the growing season for certain crops will lengthen.
So just what can the building
industry do to be resilient and protect its own interests while continuing to
house a growing population?
Several years ago, the NAHB conducted
its own research into the
effects of housing and homebuilding on GHG emissions using data from the
Department of Energy, the Census Bureau and other agencies. Similar to the Risky Business Project, the
association hired its own researchers and economists to review existing data on
density, land-use patterns and vehicle usage.
What they concluded was that given the complexity of building communities, caution
is strongly recommended as choices are made about the future due primarily to
the law of unintended consequences. Solutions that may seem simple on the surface are actually much more
complex, and would involve various trade-offs that could create new problems to
solve.
For
example, increasing building density alone was shown to have minimal impacts on
vehicle miles traveled (VMT) unless it was also paired with providing access to
regional transportation centers. In
addition, there are also the issues of consumer choice and housing durability
which provide a huge reality check: Even
if the combination of higher densities, land-use diversity and access to
transit was maximized to reduce potential VMTs by 25 to 30 percent, those gains
would be slow to achieve given the existing housing stock of 133 million units,
up to 60 percent of which are still located in mostly car-dependent suburbs.
As
a consequence, the nation’s builders and developers can’t solve this problem
alone: they also need cooperation from
residents who vote with both their ballots and wallets, and that’s where an
“insurance policy” argument could assist.
Back
in the late 1980s, when Risky Business Risk Committee member George Shultz was
President Reagan’s Secretary of State, he urged Reagan to take action on the
scientific controversy of that period: the shrinking ozone layer which protects terrestrial life from harmful
solar radiation.
Rather
than take a confrontational tone, Shultz’s team instead suggested a type of
‘insurance policy’ in the event that the science was correct. That policy, formally known as the
Montreal Protocol on Substances that Deplete the Ozone Layer, was hailed by former U.N.
Secretary General Kofi Annan as "perhaps the single most successful international
agreement to date.”Eventually ratified
by 197 countries, if the international agreement remains in place, the ozone
layer is expected to recover by 2050.
While addressing the ozone layer is arguably much easier than general
climate change, convincing various parties to cooperate rather than confront is
perhaps our best hope for a sustainable planet.
Please click here to see the edition of BuilderBytes for 7/10/14 on the Web. 
My column for the June 2014 issue of Builder and Developer magazine is now posted online.
