Things are hot­ting up

Agri­cul­ture, in­dus­tries and in­sur­ance af­fected the most

Finweek English Edition - - Economic Trends & Analysis - JO­HANN VAN ZYL jo­hannv@fin­week.co.za

DIS­AS­TER AWAITS South Africa and the rest of the world if even only a frac­tion of var­i­ous dis­turb­ing cli­mate fore­casts turn out to be true. That will af­fect not only food pro­duc­tion but also prof­its from in­dus­tries, the mines and even in­sur­ers. That im­plies in­vestors and economists won’t be able to es­cape the di­rect and in­di­rect con­se­quences of cli­mate change (caused largely by global warm­ing and green­house gases) and will have to dis­count the sit­u­a­tion on an on­go­ing ba­sis.

Statis­tics from es­tab­lished in­sti­tu­tions, in­clud­ing the United Na­tions, US space agency Nasa and the In­ter­na­tional Food and Agri­cul­tural Or­gan­i­sa­tion, con­firm the process has passed the point of no re­turn: 1998 was the hottest year on record; 70 large nat­u­ral dis­as­ters in the Nineties re­sulted in losses of at least US$100bn; and the ma­jor nat­u­ral dis­as­ters of the Nineties were 141,4% more nu­mer­ous than the 29 of the Eight­ies and 337,5% more than only 16 se­vere ones in the Sev­en­ties.

SA’s most se­ri­ous prob­lem due to cli­mate changes, the 2003 UN re­port shows, will be a se­ri­ous short­age of wa­ter (SA is the world’s 31st dri­est coun­try). To date, ac­cord­ing to a re­cent HSRC sur­vey, South Africans haven’t paid much at­ten­tion to the con­se­quences of cli­mate change. Though 72% of the re­spon­dents were fairly well in­formed about the causes of cli­mate change, and with 44% now more con­cerned about it than a year ago, SA’s level of con­cern is lower than that of sev­eral other coun­tries, in­clud­ing In­dia, Brazil, Rus­sia and China.

Ac­cord­ing to ear­lier pre­dic­tions, SA could start ex­pe­ri­enc­ing a scarcity of wa­ter as early as 2015, with se­ri­ous short­ages from 2020.

WWF San­lam Liv­ing Wa­ters Part­ner­ship head Deon Nel warns that due to wa­ter short­ages, it’s very likely SA will have to start pre­par­ing it­self for wa­ter shed­ding if guar­an­teed wa­ter pro­vi­sion isn’t given ur­gent at­ten­tion. Says Nel: “Cur­rently, more than 98% of the coun­try’s avail­able wa­ter has been al­lo­cated. With lim­ited op­tions for new dams, the in­creas­ing de­mand for wa­ter as a re­sult of eco­nomic growth and con­cerns about

Gov­ern­ment

and busi­ness are now un­doubt­edly tak­ing more no­tice of the con­se­quences of a wa­ter short­age.

cli­mate change, we’ll now have to think very in­no­va­tively about the man­age­ment of our wa­ter sup­plies.”

Com­pa­nies whose turnover and prof­its are di­rectly de­pen­dent on avail­able wa­ter, such as SA Brew­eries, have al­ready be­come in­volved in WWF and Gov­ern­ment ini­tia­tives to ward off a pos­si­ble wa­ter dis­as­ter. A fully quan­ti­ta­tive, wa­ter-neu­tral scheme – prob­a­bly the world’s first – was in­tro­duced at SAB’s New­lands brew­ery a few days ago. Wa­ter neu­tral­ity is a scheme that al­lows par­tic­i­pants, in­clud­ing SAB, to jus­tify their wa­ter con­sump­tion by be­com­ing in­volved in a three-step process to limit and then sup­ple­ment wa­ter con­sump­tion, and then ob­tain­ing “cred­its” for that in the process.

Nel says in­volve­ment in erad­i­cat­ing in­va­sive plants, part of SA’s Work­ing for Wa­ter project, will dra­mat­i­cally im­prove avail­able wa­ter. “SA loses more than 3 300m kilo­litres of wa­ter ev­ery year – the equiv­a­lent of 26 large dams – as a re­sult of those plants. Com­pa­nies can re­duce that dras­ti­cally by their in­volve­ment.”

The min­ing sec­tor also re­alises the prob­lems it will face if wa­ter ra­tioning is in­tro­duced. That led di­rectly to the es­tab­lish­ment of a chair for busi­ness and cli­mate change (ECBCC) by Exxaro, in con­junc­tion with Unisa’s Cen­tre for Cor­po­rate Cit­i­zen­ship, a few months ago.

ECBCC pro­gramme man­ager Hen­nie Stoff­berg says the pur­pose of the chair is to aid SA’s busi­ness com­mu­nity in adapt­ing to the con­se­quences of cli­mate change as soon as pos­si­ble and to man­age it prop­erly.

The ef­fect on SA’s in­sur­ance in­dus­try is also giv­ing cause for con­cern. San­tam con­se­quently re­cently launched a se­ries of en­vi­ron­men­tal ini­tia­tives in con­junc­tion with Gov­ern­ment and busi­ness part­ners for new re­search into cli­mate change, to bet­ter un­der­stand the phe­nom­e­non and to de­ter­mine and man­age the risks.

Ac­cord­ing to San­tam’s man­ager for in­te­grated sus­tain­abil­ity, Ray-Ann Sedres, it’s al­ready ap­proved a busi­ness plan and ap­pointed a task team to man­age the con­se­quences of cli­mate change.

As if all that wasn’t enough, the Wildlife Con­ser­va­tion So­ci­ety has just warned that a “deadly dozen” dis­eases – in­clud­ing cholera, bird flu, sleep­ing sickness, yel­low fever and TB – will flour­ish as a re­sult of cli­mate change. The In­ter­na­tional Panel on Cli­mate Change also warns the ex­pected in­creases in tem­per­a­ture will make ice­bergs melt quicker, caus­ing flood­ing of coastal set­tle­ments and the ex­ter­mi­na­tion of an­i­mals, such as po­lar bears. Hardly much to look for­ward to.

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