Climate Change in California: Risk and Response

THE STEPHEN BECHTEL FUND        

IMPRINT IN ECOLOGY AND THE ENVIRONMENT

The Stephen Bechtel Fund has

established this imprint to promote

understanding and conservation of

our natural environment.

The publisher gratefully acknowledges the generous contribution

to this book provided by the Stephen Bechtel Fund.

Climate Change

in California

Risk and Response

Fredrich Kahrl

and

David Roland-Holst

UNIVERSITY OF CALIFORNIA PRESS

Berkeley  Los Angeles  London

University of California Press, one of the most distinguished university presses in the United States, enriches lives around the world by advancing scholarship in the humanities, social sciences, and natural sciences. Its activities are supported by the UC Press Foundation and by philanthropic contributions from individuals and institutions. For more information, visit www.ucpress.edu.

University of California Press

Berkeley and Los Angeles, California

University of California Press, Ltd.

London, England

© 2012 by The Regents of the University of California

Library of Congress Cataloging-in-Publication Data

Kahrl, Fredrich

Climate change in California : risk and response /

Fredrich Kahrl and David Roland-Holst.

    p. cm.

Includes index.

ISBN 978-0-520-27181-4 (pbk., alk. paper)

1. Climatic changes—California.    2. Climatic changes—Economic aspects—California.    3. Climatic changes—Environmental aspects—California.   I. Roland-Holst, David W.   II. Title.

QC903.2.U6K35     2012

363.738'7409794—dc23

2012003935

Manufactured in the United States of America

21  20  19  18  17  16  15  14  13  12

10  9    8    7    6    5    4    3    2    1

In keeping with its commitment to support environmentally responsible and sustainable printing practices, UC Press has printed this book on 50# Enterprise, a 30% post consumer waste, recycled, de-inked fiber and processed chlorine free. It is acid-free, and meets all ANSI/NISO (z 39.48) requirements.

CONTENTS

Preface

Acknowledgments

Introduction

1. Economic Perspectives on Climate Adaptation

2. Agriculture, Forestry, and Fishing

3. Water

4. Energy

5. Transportation

6. Tourism and Recreation

7. Real Estate and Insurance

8. Public Health

9. Revelation or Revolution?

Notes

Index

PREFACE

It is difficult to overstate the benefits humanity has enjoyed from domesticating carbon fuels. Burning wood provided essential safety, food, habitat, and technology services for most of our history. Then, about two centuries ago, we began an innovation process that translated the latent energy in fossil fuels into a miraculous array of productive uses. This Promethean gift of the sun, captive in prehistoric biomass until we began our industrial revolution, has conferred on many living standards beyond what our ancestors could have imagined. The scope of this prosperity remains limited, but it is clear that our energy-driven technology revolution is irreversible and indeed has accelerated in recent decades. Now, however, we are awakening to an unintended and unwelcome side effect of our carbon fuel renaissance, the climate-altering influence of greenhouse gas emissions.

Changing climate processes will ultimately change our lives, and a better understanding of these impacts can help public and private actors adapt more effectively and perhaps even change the behavior that brought this global environmental threat upon us. To support broader awareness of the climate challenge, this book reviews the most recent economic evidence on climate risk for California, the world's eighth-largest economy and one of its most diverse. In these pages, readers can see examples of how pervasive the impacts of climate change will be; it will affect every form of economic activity, our natural resource security, and the livelihoods we all derive from these. For example, climate change will both directly and indirectly threaten trillions of dollars worth of public and private assets over the next two generations, primarily through escalating fire, sea level, and storm risk. At the same time, natural resources such as water, forests, and montane and coastal recreational assets will be seriously threatened. Although California is unique, the challenges it faces will be mirrored in diverse ways everywhere, and we hope the insights presented here will raise awareness, further stimulating climate change research and more proactive policy dialogue across the globe.

All these changes, and the new risks they pose, will require changes in human behavior at the individual, social, and political levels. We may feel individually powerless to change the path of global emissions that is changing our climate, but each of us has a responsibility to protect ourselves from its consequences. As we learned from the San Francisco earthquake of 1906, systemic environmental risk requires us to adapt, changing behavior and investing to protect ourselves from forces we may not control. The sooner society awakens to the reality of climate change risk, the more effectively we can begin adaptation to limit costs to present and future generations. Indeed, we argue in this book that climate risk presents a new opportunity for knowledge-intensive innovation, a post-industrial revolution that supports our aspirations to prosperity in a lower-carbon, climate-altered future in which we can continue economic progress without endangering our environment and ourselves.

ACKNOWLEDGMENTS

For financially supporting the research behind this book, we thank the foundation Next 10. For outstanding research assistance, our thanks are due to Sam Beckerman, Drew Behnke, John Chen, Henry Ching, Elliot Deal, Sam Heft-Neal, Adrian Li, Xian Ming Li, Katarina Makmuri, Joanna Nishimura, Cristy Sanada, Lawrence Shing, Sahana Swaminathan, and Rainah Watson. Wendy Tao contributed both text and insight to the chapter on transportation.

Noel Perry, Morrow Cater, Sarah Henry, John Andrew, Ralph Cavanaugh, Guido Franco, and Adam Rose offered helpful comments. We have also benefited from the research insights of many colleagues, all dedicated to advancing our understanding of climate change and the challenges it presents, and from the work of PIER and other California initiatives, which have generously supported much of the research we cite here. We have attempted to cite original research contributors in all cases when their ideas and findings are mentioned in this book. Opinions expressed here remain those of the authors, as do any expository and interpretive errors, and should not be attributed to the institutions with which they are affiliated.

Introduction

The Golden State: so much of the ethos of California, in the minds of those who live here and around the world, suggests opportunity, prosperity, and natural beauty that it is difficult to imagine a future of hardship and adversity. Even in the worst time of modern American economic history, the dust bowl era, California was a beacon for countless migrants seeking a better future. Today we a face a new global threat from climate change, one that portends dramatic adjustments in our natural world and the way we live in it. How will California and its economy adapt, and at what cost? This book reviews the latest evidence on how we can expect climate change to challenge us, putting our livelihoods and assets at risk, and how we can change our behavior and institutions to achieve more sustainable prosperity.

The Earth's average surface temperature has begun an upward trend that is largely irreversible over the next century, regardless of efforts to reduce greenhouse gas emissions. Whether this trend turns out to be moderate or extreme will depend on policy, but in any case extensive environmental change, with attendant economic adjustments, can and should be anticipated. Some areas of the world, especially those with poor majorities living close to sea level, may be catastrophically affected. California, for the opposite reasons, will not be. At the state level, climate change need not be thought of as an asteroid strike, and addressing it can appropriately be compared to the challenge of steering a supertanker to avoid a distant collision. Individual economic interests in the state may experience dramatic climate impacts, but the state as a whole has the means to avert large-scale adverse consequences. The extent of the state's success in this will depend on foresight, policy determination, and private agency.

This book supports proactive climate response with a multisector assessment of California climate risk and response. It includes a comprehensive review of the available evidence on future climate processes and potential damages, economic assessment of this damage, and a review of options for managing climate risk and securing the basis for a sustainable future. This chapter begins by summarizing our main findings, then reviews the salient opportunities and challenges that climate change presents to the people, enterprises, and public institutions of California.

MAIN FINDINGS

From the most general perspective, our review of existing research on climate risk suggests three findings.

First, at the aggregate level, California has the economic capacity to adapt in response to foreseen climate risk, but doing so effectively will require better information, determined policy making, and extensive institutional adaptation. Prevailing estimates indicate that if no action is taken, climate risk damages would total tens of billions of dollars per year in direct costs, lead to even higher indirect costs, and expose trillions of dollars of assets to collateral damage risk. Climate response, on the other hand, can be executed for a fraction of these costs through the strategic deployment of existing resources for infrastructure renewal and replacement as well as significant private investments, which can stimulate both employment and productivity. Damages will take two primary forms: effects of long-term shifts (e.g., average temperature increase) and effects from a higher frequency of extreme events (e.g., heat waves). The former will be gradual and easier to adapt to; the latter, which we may already be experiencing, will escalate public and private costs abruptly and (in the short run) unpredictably.

Second, there will be some very significant adjustment challenges at the sector level, requiring as much foresight and policy discipline as the state can mobilize. In this sense, the political challenges may be much greater than the economic ones. The state's adaptation capacity depends upon flexibility, but divergence between public and private interests can inhibit this adaptability, making long-term risks to society higher than necessary.

Third, despite the impressive scope and quality of existing climate research to date, the degree of uncertainty regarding many important adjustment challenges remains unacceptably high, and information on nearer-term adaptation options is completely inadequate. This uncertainly is costly, increasing the risk and potential magnitude of mistakes, including the deferral of necessary adaptation decisions. Further improving understanding of climate effects may itself be costly and difficult, but policy makers need much better information regarding climate risk and response options.

California can respond to climate risk by developing effective response strategies, including defense (against adverse impacts like a rising sea level) and adaptation (shifting to more sustainable growth patterns). A real commitment to this could begin immediately by establishing and extending the capacity for technical assessment and policy analysis, followed by timely and sustained policy activism. California's historic Global Warming Solutions Act (AB 32) initiative is a positive model for this, but it is only a beginning.¹ The scope of long-term climate issues is much wider than the greenhouse gas mitigation agenda, and addressing climate change could sustain a broader and longer-term spectrum of growth-oriented investment and innovation.

OPPORTUNITIES

Although it is forbidding and uncertain, climate change will definitely present opportunities as well. Adaptation is in its essence a learning process, and thus Californians today and in the future can benefit from climate change by learning more sustainable patterns and practices of living and working. This may at first sound like social ideology, but it is very pragmatic. Humanity has overcome all the critical challenges presented to it over the ages—most of them natural but some self-inflicted—and our societies have emerged stronger and generally more prosperous. Worldwide wars in the last century led to new institutions of multilateral reconciliation and new global economic systems for more effectively