San Francisco Chronicle
Struck by two hurricanes enhanced by climate change, our urge is to rapidly assist, fix and rebuild. A more thoughtful response should also address what exactly should be fixed, and how and where to rebuild in a more resilient fashion. This not only relates to the effects of the recent storms in Texas and Florida; it is also true of the wildfires burning across California and the Western United States.
Even though we call these 1-in-100-year or even 1-in-500-year events, climate change is increasing the damage and loss they produce, making significant losses a 1-in-5-year or 1-in-10-year-type occurrence.
The typical response — quick rebuilds — is attractive to construction companies looking for work and banks providing short-term construction loans. Politicians and communities like them because they make for good short-term (but non-recurring) jobs and economic stimulus. However, it is taxpayers who will foot much of the bill. We should be asking ourselves how we can be smarter about rebuilding.
Communities should be rethinking their flood and/or fire hazard zones, but many are putting their heads in the sand by leaving in place zoning maps that are already out of date. That can mean insurers simply refuse to offer coverage in these areas, as they may not be permitted to charge prices that reflect their true risk. That leaves taxpayers on the hook and begs the question of whether we can afford “same-as-before” rebuilds for what are increasingly becoming more than once-in-a-lifetime natural disasters.
Better building codes, zoning ordinances and infrastructure are only part of the solution. Other approaches include restoring wetlands, increasing water-absorbing parkland and decreasing paving, adding green roofs, increasing the use of distributed energy resources and microgrids, and developing public-private partnerships to re-evaluate the building process.
Ultimately, those who own and invest in the underlying land, buildings and the businesses that operate there will bear the costs of disruption and rebuilding. They should be revaluing their asset holdings and investments accordingly. But to date, too few owners and investors are doing so.
One reason is, with evolving weather patterns associated with climate change, we lack adequate assessment tools to quantify these new risks. Another is that so much of our investment world is more focused on quarterly earnings than on the long-term viability of the property generating those earnings. Investors should be remediating high-risk assets and/or replacing them with more resilient ones.
Elected officials and taxpayers will play an integral role in whether investors shift from short-term thinking to long-term sustainability.
If long-term investors believe that elected officials and taxpayers will bail them out, they will not change their behavior. For many elected officials, the easy way out is to ignore the risk and then yell for assistance after a foreseeable crisis. This is neither a thoughtful nor an economically sustainable approach. And it is one taxpayers should not stand for.
Forward-thinking governors and mayors should change the paradigm. They should tell businesses and homeowners: “I’m looking after the community’s public infrastructure, and I expect you to do the same for yours. If you do, then I’ll be happy to support you in rebuilding for true once-in-a-lifetime disasters, but if you don’t, I will not pay for irresponsible repeats.”
The U.S. Climate Alliance is in an ideal position to begin sending this message to communities and long-term investors, such as state and city pension funds, whose assets are at increased risk. Together the alliance and large institutional investors can drive the market toward investing in more resilient infrastructure, lowering the cost of future rebuilds, enhancing the value of the underlying real property assets, and protecting the jobs that sit on top of those assets.
Thoughtful investors will incorporate resilience criteria in choosing investments, be they in land and buildings, and energy, water and transportation infrastructure. It’s just smart business.
Let’s make sure that as we rebuild, we are doing so in a manner that creates construction jobs and makes our communities better and safer places to live. Statistically, every $1 spent on mitigation saves $4 of losses. Even as we race to assist those in need, let’s be smarter in helping us all rethink the rebuilding process.
Stephan Dolezalek and Martin Lagod are long-term investors in renewable energy and sustainable technologies and co-founders of Resourcient, which looks for innovative ways to create sustainable prosperity. To comment, submit your letter to the editor at SFChronicle.com/letters.