California property faces $2.51 billion risk due to climate change: study

14 November 2008

Global warming and subsequent climate changes have captured public imagination in recent years, and now, a report has placed a monetary value of the losses such catastrophic changes can impose. A University of California, Berkeley (UCB), report titled ''California Climate Risk and Response,'' and released on Thursday estimates that $2.5 trillion of California real estate is threatened by this phenomenon.

Real estate and insurance represent the largest sectors at risk from climate change in the state, according to the report. It found that the state has $4 trillion in real estate assets, of which $2.5 million are at risk from extreme weather events, sea level rise and wildfires. The projected annual price tag is $300 million to $3.9 billion over this century, depending on how the global temperatures rise.

If no action is taken in the face of rising temperatures, six additional sectors, including water, energy, transportation, tourism and recreation, agriculture, and public health, would together incur tens of billions per year in direct costs, even higher indirect costs, and expose trillions of dollars of assets to collateral risk.

''Our report makes clear the most expensive thing we can do about climate change is nothing,'' said lead author UCB adjunct professor Davis Roland-Holst, Center for Energy, Resources and Economic Sustainability, Department of Agriculture & Resource Economics.

"In these dire financial times, California is at a crossroads. As we learned in New Orleans, turning your back on the threat of natural disaster doesn't make it go away. We also know from history that decisive policy can turn adversity into economic renewal. WPA, the Marshall Plan, the Space Race, and even Homeland Security transformed threats into employment and growth. We can ignore change that is already happening or we can turn the threat of climate damage into a dynamic opportunity for change, renewal, and growth," he added.

"We are already seeing the impacts of rising temperatures," concluded Professor Roland-Holst. "Not only governments, but every enterprise and household needs to evaluate their economic vulnerability and begin adaptation now. As Charles Darwin said, "It is not the strongest, nor even the most intelligent that survive, but those most responsive to change."