Book review: Navigating the Adaptive Economy

Adaptive Capability director David McEwen has uncovered a vast ignorance about what climate change really means for the business world.

In the course of promoting his recently released book, Navigating the Adaptive Economy, he has had journalists from many media outlets say: “I had no idea there was this much to it,” when he explains the disruption climate change is causing.

They might be aware of renewable energy and energy efficiency, he says, but they are still not aware of the extent to which climate change is already happening and what the warming climate will mean for many sectors.

“Most people don’t consider climate change to be the threat that it is; it is just seen as a background issue.”

David McEwen

McEwen has looked into both the threats and opportunities currently starting to emerge. Negative impacts such as rising temperatures, for example, will mean both Great Barrier Reef tourism and ski field enterprises may have to change their focus.

On the opportunity front, however, he says the same problem of greater heat will create greater opportunities in the fields of healthcare, managing heat-related illness and insect-borne diseases.

There will be more work for those providing cooling and delivering urban greening.

The mitigation effort will create winners and losers, he says.

Among the industry sectors that are obviously impacted by the mitigation effort, like fossil fuels, not everyone is rushing to adapt their business model.

There’s a “Let’s make hay while we have a social licence” attitude

“There is a lot of short-termism in the resources market at the moment,” he says. “A ‘let’s make hay while we have a social licence’ attitude.”

Beyond fossil fuels, the smart manufacturers that are aware of the need to conserve resources are moving more into the closed loop and cradle-to-cradle space.

The whole issue of materials management is increasingly on the radar.

From the micro to the macro, trends are emerging that will affect our urban fabric and the businesses within it.

McEwen says the shift from fossil fuels to electric vehicles, for example, will mean less work for mechanics, as EVs have far fewer parts that require maintenance or may break down.  Autonomous EVs could also mean a decline in work for smash repairers and less need for insurance.

If the AEVs are shared, then the whole aspect of urban design also changes, he says. Instead of needing so much on-street parking, there could be opportunities for more verge gardens to combat the urban heat island effect.

Not needing so much basement parking for multi-res or commercial buildings can lead to changes in how they are designed.

If people are being dropped off outside buildings in a hotter climate with more extreme weather events, there may also be more demand for shaded porte-cochere spaces outside them.

Some of the city will be at risk; where will the safe parts be?

The question that needs to be asked about all our current cities is, are they in resilient locations in terms of sea level rise and extreme weather events?

Or, McEwen asks, do we need to look at relocating major CBDs and some suburbs to safer places?

The Manly isthmus, for example, may very well become an island. For Sydney overall, where a lot of its appeal is due to the harbour and beaches, if the beaches are eroded over the coming decades and no longer an attraction, what then?

What would replace their amenity to make Sydney appealing? Property values also for those at sea level are likely to take a beating.

McEwen says there needs to be a focus on the right kinds of planning laws and restrictions that will help manage the transition for property owners – without ending up in a scenario where the public purse compensates private land owners for loss of value.

The Gold Coast, where most of the property is virtually at sea level, is also at risk. The beaches sustain the economy, losing them due to sea level rise and coastal erosion would also mean the loss of what makes the city what it is.

Climate change is a slow car crash

“Climate change is a slow car crash for a lot of coastal communities and cities.”

On the bright side, a city safely on the other side of the Great Divide like Orange could turn into a refuge for fleeing Sydneysiders if investments are made in providing jobs and infrastructure and smart solutions found to ensure sufficient water supplies.

For the nation to successfully navigate the overall transition that is upon us, McEwen says education is a vital element to look at.

“Australia is not focused enough on the STEM [science, technology, engineering and mathematics] subjects. We need to get kids interested in fields like healthcare, engineering and innovation.”

We don’t just need renewable energy engineers, we need engineers and industrial designers that can develop the new, sustainable products of the future. We need scientists that can support the effort to feed an every-growing population.

We need more chemical engineers, mechanical, electronic and civil engineers for everything from creating new non-petroleum polymers to designing costal defence systems and extreme-weather resilient places.

“We will need new solutions and to develop new industries.”

McEwen says innovation needs to be driven by thinking about what’s likely to happen as climate change escalates. Ideology needs to be put aside.

In Europe, for example, the Knowledge Innovation Centres (KICs) include a Climate KIC that brings academia, industry and start-up firms together to “turbo-charge” new developments in mitigation and adaptation.

We need to maintain a market-driven economy, he says.

“We also need checks and balances to make sure externalities are priced in.”

The overall message of the book is that with the right planning and tools, businesses can identify the major risks they face and develop what McEwen terms “adaptive capacity”.

In so doing, climate change impacts and threats can become the catalyst for new revenue streams, increased reputation and a more stable path in these times of great and unavoidable disruption.

Disclosure: Willow Aliento assisted in editing Navigating the Adaptive Economy: Managing Business Risk and Opportunity in a Changing Climate.

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