Scientists have long warned of the threats climate change poses to the stability of the global economic system. The severity of drought conditions this summer shows that the crisis is already here — and governments haven’t done nearly enough to prepare for it. Going forward, more urgent and coordinated investments in climate adaptation measures are necessary to prevent a dire situation from getting worse.
The depletion of water supplies has compounded existing stresses on global energy production and supply chains. In France, hot rivers have made it harder to cool nuclear power plants. The decline of lakes Powell and Mead, the largest reservoirs on the Colorado River, endangers hydropower generation that western states rely on. Drought in China may force the country to import more grain, putting pressure on already elevated global food prices. Then there’s the human impact — though droughts represent only 15% of natural disasters, the United Nations calculates that they take the heaviest human toll, causing about 650,000 deaths in the half century to 2019.
These systemic breakdowns reflect both poor planning and chronic underinvestment in programs to help industries and societies adapt to extreme heat. Out of $640 billion in global climate finance flows for 2020, less than 8% was devoted primarily to adaptation. The longer governments wait, the more expensive it becomes. A study last year found that taking proactive measures to protect rail, road and coastal infrastructure against a changing climate would save the US tens of billions of dollars a year.
Needless to say, the best way to limit climate emergencies is to make faster progress on reducing carbon emissions. But policy makers also need to devote more attention and capital to adaptation. To combat drought in particular, governments should be more aggressive in cutting water use and reducing waste. In agriculture, this includes increased use of drip irrigation, wider adoption of drought-tolerant maize and rice, and development of more resilient versions of cash crops; coffee, which sustains millions of smallholders, is particularly vulnerable to hotter, drier conditions. Reducing nonessential household consumption is also critical. In Cape Town, South Africa, public-information campaigns to promote conservation and tough penalties for noncompliance helped the city avert a feared “Day Zero” disaster in 2018.
Governments everywhere should also do more to increase water storage capacity, diversify supply and repair infrastructure. The drinking water crisis in Jackson, Mississippi, is a warning about the risks of neglecting basics like treatment plants and pipes.
The big challenge is paying for it. Unlike large-scale renewable-energy projects, such as wind farms and solar plants, many drought-adaptation measures offer limited financial returns and struggle to attract private capital. Government startup grants and tax incentives can help generate investment in water-management projects, for example. Governments and development banks can work together to absorb initial losses on much-needed projects, thereby helping to reduce risk and attract outside funding. Combining multiple projects into larger packages should also make them more appealing to potential investors.
Failure to prepare for changing conditions should be a more direct concern for companies and investors too. A pandemic and now extreme weather have exposed the vulnerability of the supply chains on which global commerce depends. Limiting future shocks will require businesses to explicitly consider climate risks. This year’s long, hot summer shows why they can’t afford to wait.
More From Other Writers at Bloomberg Opinion:
• Help the World’s Cities Prepare for Extreme Heat: Editorial
• Drought Scorches America’s Crops: Elements by David Fickling
• Europe’s Drought Could Have a Long Afterlife: Stephen Mihm
The Editors are members of the Bloomberg Opinion editorial board.
More stories like this are available on bloomberg.com/opinion
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