“Each of the last three decades has been successively warmer – the atmosphere and oceans are warmer, the amount of snow and ice has diminished, the global mean sea level is higher, and the concentration of greenhouse gases has increased.”
Yup, we’re to blame for warming our planet and changing our weather patterns
In September this year, the Intergovernmental Panel on Climate Change (IPCC) released a highly significant press release. The release cited the IPCC’s latest research report that concludes, based on new scientific evidence, that it is ‘extremely likely’ that human influence is the dominant cause of the observed global warming since the mid-20th century.
Warming in the climate system is unequivocal, says the IPCC, and since 1950 many changes have been observed throughout the climate system that are unprecedented over decades to millennia. Each of the last three decades has been successively warmer – the atmosphere and oceans are warmer, the amount of snow and ice has diminished, the global mean sea level is higher, and the concentration of greenhouse gases has increased.
The continued emissions of greenhouse gases is set to cause further warming, says the IPCC, and changes in all components of the climate system. So what is in store for us on the climate front … more frequent and longer lasting heat waves with currently wet regions receiving more rainfall and dry regions receiving less (although there will be exceptions).
The IPCC notes that limiting climate change will require ‘substantial and sustained reductions’ of emissions.
What are the implications for business in South Africa?
Water scarcity and economic growth
South Africa is a semi-arid country with one of the lowest water resources per capita. Climate change is anticipated to exacerbate this. Water availability and economic growth are inextricably linked and hence inadequate water availability will impede economic growth, social upliftment and job creation. In addition, as a result of an ageing municipal infrastructure, South Africa has non-revenue water of 36.8% nationally, meaning more than a third of our water ‘disappears’ due to infrastructural deficiencies. This requires reprioritisation of financial resources to ensure that the requisite capital expenditure and skill are directed towards upgrades and improvements in the water supply infrastructure.
On a macro level, what is needed is a critical re-evaluation of the appropriateness of a resource intensive economy.
Pricing of environmental externalities
Global warming has contributed to the acknowledgement that our current economic and accounting models have inadequately ‘priced in’ environmental externalities, such as water and air pollution, biodiversity losses and environmental integrity. As we approach ecological ‘tipping points’, the need to include ‘resource economics’ or the concept of ecological accounting become more pronounced, and necessitate significant changes in how we measure our ‘ecological solvency’, with increased costs for ‘ecological creditor’ organisations.
Resource constrained economy vs a shift towards renewables?
‘Business as usual’ thinking has lulled us into the belief of indefinite economic growth. The unsoundness of this is clear when we realise that economic growth is underpinned by finite natural resources – and hence economic growth per definition must also be finite. As demand outstrips supply this will, ceteris paribus, result in increases in the prices of natural resources, coupled with pricing trends embraced by the polluter pays principles, of which carbon taxes, fuel levies and emission charges are but the tip of the iceberg. An aggressive repricing of many natural resources we use, such as water, is on the cards. Our water is cheap by international standards. The upward pressure on water prices may become a reality far sooner than we think.
Even if you disagree and argue that the finite natural resources will not constrain indefinite economic growth, as the shift towards renewable energy sources will more than offset the reduced supply of non-renewable energy sources, this will result in technological obsolescence in certain industries (the example of ‘clean coal’ as an oxymoron springs to mind). The shift will push the emerging scope for new technologies in renewables. But is our economy and governmental policy agile enough to ensure this materialises as an economic reality?
Jorgen Randers, a leading economist and professor of climate strategy at the BI Norwegian Business School, attributes our current predicament on the very two tenets that shape our society: capitalism and democracy. He argues that both are plagued by his phase ‘short-termism’. What is needed now is the commitment to make the right decision, even if it costs more in the short term but with long-term benefits to our children and grandchildren. However, capitalism will not allow this, as profitability is the yardstick by which everything is measured, and politicians who would be brave enough to advocate this, will find themselves duly ‘unelected’, he argues.
We, as business, should be bold enough to embrace what is necessary to safeguard our future and see global warming as a business challenge as opposed to a scientific obstacle.
Organisation for Economic Co-operation and Development, OECD economic surveys: South Africa 2013, available at http://www.treasury.gov.za/publications/other/OECD%20Economic%20Surveys%20South%20Africa%202013.pdf.
F C van Zyl, H Keuris et al, Draft National Water Resource Strategy 2, September 2012, Department of Water Affairs, available at http://www.dwa.gov.za/nwrs/LinkClick.aspx?fileticket=M8NprZjscYw%3d&tabid=72&mid=435.
M Muller et al, Water security in South Africa, Development Bank of Southern Africa: Development Planning Division, Working Paper Series No 12, Midrand: DBSA, 2009, available at http://www.dbsa.org/Research/DPD%20Working%20papers%20documents/DPD%20No12.pdf?AspxAutoDetectCookieSupport=1.
Treasury, Water and sanitation, 2011, available at http://www.treasury.gov.za/publications/igfr/2011/lg/11.%20Water%202011%20LGBER%20-%20Final%20-%209%20Sept%202011.pdf,
The rich are choosing a bleak future for humanity, The Green Times, 18 March 2013, available at http://www.thegreentimes.co.za/stories/global-warming/item/1942-the-rich-are-choosing-a-bleak-future-for-humanity.
Marguerite Bond-Smith HDip (Tax), LLB, LLM (Environmental Law) is an environmental researcher and advisor