Climate Risk Forecasting

“Climate change is real. It is underway and will intensify in the coming decades, posing far-reaching risks and impacts for virtually all private companies.”

This is the damning future the world is heading into if reduction of Green House Gas Emissions does not start now.

The World Bank Group says in its report, “Turn Down the Heat; Why a 4 Degree Warmer World Must be Avoided”, that forward-looking firms that obtain early information on coming changes in resource stocks and weather patterns can anticipate change rather than react to it, making the right investments for adaptation. Those who don’t may suffer severe consequences.

In 2008, the International Financial Corporation IFC initiated its Climate Risk Program to produce a series of pilot studies analyzing climate risks and adaptation options for private sector projects in several different sectors and regions.

One of the first studies was done in 2011 focusing on Ports says that they are among the installations most exposed to climate change, and thus must learn to adapt —not just knowing the risks, but knowing how to manage them.

Their ability to adapt to climate-related change will not only impact their investors, but also profoundly impact worldwide economic performance, growth, and development.

In this case, Colombia’s Muelles el Bosque (MEB), a private firm that has developed and managed a major port in Cartagena under a long-term government concession used the information to make a $30 million investment in new facilities to protect its port against future flood risks.

The study identified a number of specific climate change risks expected to impact specific port activities in the medium to long term, such as rising sea levels, increasing levels of precipitation, more severe tropical storms and surges, rising temperatures and changing trade patterns among others.

MEB President Gabriel Echavarria says, “The IFC study is one of the first to analyze how businesses and commerce will be affected by the changing environment in Colombia, and it will have a large impact on how we address climate change in the future.

A number of adaptation options to prevent or reduce climate change impacts from these risks were also made, weighed against their financial implications for the company. Its management then integrated the information into its own investment decision-making.

While the report focused on climate change risks to MEB, it also explored how other ports in Colombia can be affected by climate change. There and in other coastal countries, port operators and other industry leaders who manage their climate change risks effectively and are seen as climate-resilient by its clients, insurers, and other stakeholders could gain a competitive advantage.

In another report issued this month by the Boston Consulting Group (BCG), ICT can cut global greenhouse gas emissions by 16.5%, saving up to $1.9 trillion USD annually.

The report revealed that large amounts of emissions are generated as a result of unnecessary travel to access banking services in Africa. This includes emissions from the use of private and public transportation and, in the long run, additional road infrastructure, more public vehicles, and increased banking infrastructure requirements.

In Kenya for instance, there are 6.5 million subscribers who undertake 10 million banking transactions per day, with an average value of US $ 20. The calculated environmental impact is 22 kgCO2 per subscriber per year.

The potential 16% reduction is more than the estimated saving in a study conducted in 2008. The research identified Ericsson’s mobile money as a potential ICT-enabled solution for emission reduction.

Mobile money can also reduce travel needs within communities by allowing direct mobile bill payment. For instance, Kenya’s telecommunications service providers have collaborated with other service providers like the electricity supplier Kenya Power Company to make payments. The consumers pay directly via their mobile devices, eliminating the need for the customer to travel to the company or the bank physically to pay the bill.

“Mobile network providers play an active role in fostering the adoption of mobile money to contribute to emission reduction. Network providers have proven to be more accessible than banks; they are in a better position to leverage mobile money as a way to positively impact the environment,” says Mwambu Wanendeya, Ericsson Vice president and head of communications Africa.

If this level of mobile money penetration and emissions reductions in Kenya holds for the rest of the continent, mobile money would reach 161.3 million consumers and would yield an estimated 3.55 Metric tons in carbon dioxide emissions reductions in Africa alone.

ICT-driven solutions such as smart electricity grids reap benefits at the national level, whilst others like mobile money can result in energy – and cost - savings for individual households and businesses.

The world is continually inventing but there seems to be no political will to cut down on GHGs. The inventions could greatly reduce the possibility of the four degrees rise in temperatures and thus avoid a catastrophe.

The Committee of Parties COP 18 meeting in Doha, Qatar did not seem to offer much but integrating technology with development will be a start. The world-Post Kyoto Protocol-is teetering but the situation can be salvaged if the players agree to score the same goal.

Info Source: World Bank

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