Green Building Takes on Climate Change

In late 2013, a trio of business leaders including Michael Bloomberg, Hank Paulson and investment fund billionaire Tom Steyer teamed up to found the Risky Business Project with a simple mandate:  Determine the potential consequences for the U.S. economy without significant changes in the way we consume and deploy natural resources.

To achieve this goal, the group hired The Rhodium Group to provide an independent analysis of the economic risks from a changing climate.  In June 2014, the Risky Business Project released their first report from Rhodium’s analysis entitled “The Economic Risks of Climate Change to the United States.”

The report is quite sobering, and few industries will be impacted by these changes as much as home building, even though housing reportedly accounts for just 18 percent of greenhouse gas (GHG) emissions. Yet there is still plenty of hope, as the most severe risks can still be avoided by early investments in resilience and immediate action to reduce the emissions which have been found to increase global warming.

In terms of geography, the Risky Business report concludes that the two main impacts of climate change – extreme heat and a rise in sea levels – will likely affect certain regions of the country more than others.

In the states along the Gulf Coast and in the Northeast and Southeast, higher sea levels and stronger storm surges could lead to increasing property losses by 2030 which could total as much as $35 billion each year. For states in the Midwest and Southwest, a larger number of high-temperature days could threaten human health, reduce labor productivity (especially for those working outside in land development and home building) and strain already aging electrical grids.

Yet there will be some areas which will benefit from a warmer climate, such as northern latitude states including North Dakota and Montana. With higher winter temperatures, both frost events and cold-related deaths will decline while the growing season for certain crops will lengthen.

So just what can the building industry do to be resilient and protect its own interests while continuing to house a growing population?

Several years ago, the NAHB conducted its own research into the effects of housing and homebuilding on GHG emissions using data from the Department of Energy, the Census Bureau and other agencies. Similar to the Risky Business Project, the association hired its own researchers and economists to review existing data on density, land-use patterns and vehicle usage.

What they concluded was that given the complexity of building communities, caution is strongly recommended as choices are made about the future due primarily to the law of unintended consequences. Solutions that may seem simple on the surface are actually much more complex, and would involve various trade-offs that could create new problems to solve.

For example, increasing building density alone was shown to have minimal impacts on vehicle miles traveled (VMT) unless it was also paired with providing access to regional transportation centers. In addition, there are also the issues of consumer choice and housing durability which provide a huge reality check: Even if the combination of higher densities, land-use diversity and access to transit was maximized to reduce potential VMTs by 25 to 30 percent, those gains would be slow to achieve given the existing housing stock of 133 million units, up to 60 percent of which are still located in mostly car-dependent suburbs.

As a consequence, the nation’s builders and developers can’t solve this problem alone: they also need cooperation from residents who vote with both their ballots and wallets, and that’s where an “insurance policy” argument could assist.

Back in the late 1980s, when Risky Business Risk Committee member George Shultz was President Reagan’s Secretary of State, he urged Reagan to take action on the scientific controversy of that period: the shrinking ozone layer which protects terrestrial life from harmful solar radiation.

Rather than take a confrontational tone, Shultz’s team instead suggested a type of ‘insurance policy’ in the event that the science was correct. That policy, formally known as the Montreal Protocol on Substances that Deplete the Ozone Layer, was hailed by former U.N. Secretary General Kofi Annan as "perhaps the single most successful international agreement to date.”Eventually ratified by 197 countries, if the international agreement remains in place, the ozone layer is expected to recover by 2050.

While addressing the ozone layer is arguably much easier than general climate change, convincing various parties to cooperate rather than confront is perhaps our best hope for a sustainable planet.