As southern California recently endured a series of winter storms attributed to the El Nino effect, an acquaintance commented that his granddaughter, visiting from Portland, Oregon, could offer some tips about how to deal with so much rain. “Sorry, grandpa,” she told him, “but Portland was built for rain, so I never even think about it.”
Whether one attributes climate change to human activity, natural long-term patterns, or adolescent space aliens fooling around with their parents’ weather machine, the fact is that some parts of the world are seeing more frequent and more powerful storms and droughts than previously known. Can these changes produce opportunity rather than devastation?
Consider this analogy: Somewhere in Japan and California, there is an earthquake every day. Only rarely do we experience earthquakes as powerful as the one that recently ravaged Haiti, but large earthquakes have shaken Tokyo and Southern California in recent years, with minimal property damage and loss of life. Why? Because we are now built for earthquakes, much as Portland is built for rain. This wasn’t true in 1906, when San Francisco was destroyed, or 1923, when Tokyo was destroyed, or 1933, when Long Beach was destroyed. After each earthquake, new building methods and materials were developed to reduce risks.
After the 1994 Northridge earthquake, California and Los Angeles spent billions retrofitting buildings and freeways, making the area safer and stimulating the economy significantly. Does climate change afford similar opportunities for mitigation projects?
For example, several communities north of Los Angeles experienced severe flooding in storms of 1998 and 2005, yet escaped the storms of January 2010 relatively unscathed, because they chose to invest in flood mitigation projects, such as the widening of creeks. Homeowners experimented with new devices – or devices common to flood prone regions – to keep water out of their homes.
In part three of our four part series on natural gas and the future of energy, we cited Keith Rattie’s observation that innovations for adapting to climate change might make more sense than most of our attempts to stop or reverse climate change. Certainly, the latter represents massive entrepreneurial opportunities for green technologies and alternative energy, but the opportunities for adaptive inventions and projects are perhaps more urgent. The benefits of carbon cap-and-trade schemes might come a little too late for drought-stricken Australia and sinking Bangladesh.
Entrepreneurial investors cannot predict the future, but anyone can see that climate change creates opportunity for problem-solving companies. It seems unlikely that coastal communities in the First World will give up without a fight, so we wonder which companies are ahead of the curve in initiatives to adapt to climate change.
Apple’s catchy ads for the iPhone declare, “There’s an App for that.” Whatever problems face people on Main Street, we like to think that on Wall Street, there’s a company for that.