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Climate change has the power to affect the way in which businesses operate in the long term, raising risks and challenges that have to be managed. Although there is continued debate in some countries on the causes of climate change, it is generally accepted the impacts are real and far reaching. In order to prepare for the impacts, businesses need to develop sustainable risk management strategies to protect their long term assets and business strategies.
Two key areas in which climate change can affect business operations are:
- Increasing exposure to natural hazards
- Changing availability of natural resources
For example, businesses and utilities with coastal assets will face particular challenges. Rising sea levels and associated storm surge incursion, erosion and the increasing scale of coastal storms will affect coastal infrastructure. Changes in rainfall patterns in some areas will affect water supplies and the availability of water for towns, agriculture and the environment. It may also affect the environmental viability of waste discharges to water as well as abstractions.
One challenge for businesses in preparing for climate change is that its effects cannot be defined by exact numbers or certainties. Taking a risk-based approach to climate change is a pragmatic strategy, as it focuses on the scale of the risk, and the acceptability of the consequences.
Climate change adaptation toolkit
SKM has developed a ‘climate change adaptation toolkit’ for use with our clients. Essentially this is a project management tool that can be used to facilitate the identification and minimisation of climate change impacts on individuals, businesses, infrastructure and society.
One of the critical success factors of such an approach is to consider climate change in the early stages of a project plan. It would typically be better to build adaptation to climate change into design than to retrofit later, but it is also more cost effective to plan now for any retrofitting required later.
The following matrix illustrates how decision making can be influenced depending on the risk to a project of natural hazards increasing and natural resource availability changing.
Adaptation Matrix
If climate change effects are recognised as an issue, businesses can use the adaptation matrix to determine if they need to adapt now or later. A range of questions to consider have been developed based on hazard identification and resource assumptions, for example:
- Will our structure or plan need to change to adapt to an increased hazard?
- Will the amendment increase the cost significantly and, if so, can the adaptation features be retro-fitted later?
- Can we engineer our processes or structures to use less or more sustainable / renewable resources? Are there alternatives?
- Will our expected outcome (or the asset itself) be adversely affected by an average change in heat or by heatwaves?
- Will our asset, or resources it is relying on such as groundwater, be adversely affected by sea level rise, or by higher tidal storm surges?
- Will increased rainfall affect the stability of the slope our structure is on?
- How will we cope with future drought?
The questions can be used to identify the significant project-specific climate change risks and assist in delivering projects that will continue to be effective and profitable in the future.
However, assessing climate change effects can be complex, depending on the data available. Therefore, the toolkit adopts a 2 stage approach to quantify the risks, focusing on the scale and acceptability of the likely consequences.
The initial risk assessment at the project start-up would consider the hazard probability and consequence of changing resource availability. Anything other than low probability or low consequence would warrant further analysis within the project.
When warranted by the initial assessment, a more detailed sustainability assessment can be undertaken. A comprehensive list of questions relating to climate change vulnerability, hazards and changes in resource availability is used. Results may be presented using spatial tools.
A climate change risk workshop can also be undertaken to provide a rigorous analysis of the issues, and to determine appropriate responses. This level of assessment allows a high level of creative input into identifying, assessing and managing climate change risks.
It is recognised that climate change does not affect all business in the same way; therefore this generic approach can be modified to suit particular industries and locations. It can also be modified to assist local authorities with land use planning, particularly by combining with spatial data management tools. Used in conjunction with expert knowledge this climate change adaptation toolkit is an effective tool for facilitating discussion of potential climate change risks for long term project sustainability.
If you would like more background data on climate change impacts and their effects on infrastructure the Ministry for the Environment (New Zealand) and the Australian Department of Climate Change websites have detail on regional effects.
Conclusion
At present, industry is focused on mitigating the causes of climate change and there is generally insufficient focus on the scale and timing of its potential impacts. The effects of climate change are already evident. It is important for businesses to begin planning now for a future with climate change.
© Sinclair Knight Merz
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Who does this affect?
Organisations dealing with the effects of climate change, particularly public utilities.
What do I need to do?
Explore the options for analysing and managing the risk of climate change.
Author: Sarah Sinclair
Sarah is a Sustainability Practitioner and Senior Environmental Consultant in SKM’s Auckland office.
© Sinclair Knight Merz
Requests to re-publish achieve articles should be made here