Focus | Risk management and climate change in coastal areas and the economy
Yesterday I had an opportunity to speak to the issue of climate change and the economy at a seminar held by the Enterprise Risk Department of the University of The Bahamas. I was joined on a panel by Dr. Adell Thomas, director of the Centre for Climate Change Resilience at University of The Bahamas and Marcus Laing, a senior architect in the country. Below are some remarks made by me on that occasion.
When we refer to the economy, we refer to the totality of transactions (buying and selling) that take place between us human beings involving the exchange of goods and services. We buy and sell hand towels and haircuts, snappers and smartphones. We broadly categorize these transactions as: (1) production – the making of stuff, (2) consumption – the use of stuff and (3) distribution – the getting of the stuff produced to the people who use them. Where the goods or services exchanged are broadly similar, we call their exchanges markets. So, we have the fish market, the food market and the financial services market.
All economic transactions take place in an enabling environment, either real – as in our physical world or virtual – as in the internet in our recent history. I will come back to this issue of an enabling environment later. Some environments give rise to the economic transaction itself. For example, the environment of the Grand Canyon, to 6.8 million visits in 2018, a 2 million increase over seven years, according to statista.com, creating some $467 million in economic benefits, according to the National Park Service’s website. Meanwhile, almost 10,000 miles from the canyons in Arizona, some 600,000 people annually visit Zambia for safari in its wildlife rich territories, according to Answers.com and contribute upwards of $1.75 billion to that country’s economy, according to trading economics. Not to be outdone, here in The Bahamas, our environment (sun, sand and sea) continues to play a dominant role in attracting millions to our shores. According to the Ministry of Tourism’s website, we welcomed some 6.6 million visitors to our shores last year, 4.9 million of whom came by way of cruises, 1.6 million of whom came by way of air and the balance by way of something they termed “sea landed”.
Our ocean existence and the coastal terrain to which it has given rise, generates a substantial amount of the economic transactions of this country. Our dominant tourism trade and the many ancillary economic activities it induces is driven by the archipelagic, pristine, tropical, coastal aesthetics, clear watered, fishing wonders of our land, matched in sheer physical beauty by few other territories that can be seen from land and space. By virtue of either commercial hotels, or high and not-so-high end residential living, boating and fishing, billions of dollars in economic transactions are driven by our ocean and coast.
Remember I said that economy needs an enabling environment? I believe you will agree that it is impossible to trade on the sun and just as impossible to trade on Pluto with its diametrically different environment. It might be possible to trade on the moon, with its limited gravity, but not as easily as one can do on the earth. Economy requires an enabling environment.
Natural disasters can pose substantial threats to this body of economic activity, as they can devastate environments; something we have seen in the wake of the passage of Hurricane Dorian and other storms in the past. Dorian we are told by the Inter-American Development Bank cost us an estimated $3.2 billion in losses. I don’t know if that included the opportunities lost due to investor rethink and reassessment, but if it did not, then there could be an additional, unknowable amount of loss to consider.
As hurricanes are cyclical, they must not be considered only in the start of a business but in the ongoing operations of the same, as each year a business must consider mitigating against its potential impact.
Climate change, a human effect, represents an existential threat to all our environments and thus our economic way of life and life itself. It can affect coastal areas in a variety of ways. Coasts are sensitive to sea level rise, changes in the frequency and intensity of storms, increases in precipitation, and warmer ocean temperatures.
Economies and populations that benefit directly or indirectly from activity in the coastal zone.
The coastal economy identifies what is at risk from changing environmental conditions in our oceans and along our coasts.
Policy must now incorporate planning benchmarks for use in assessing the potential impacts of projected sea level rise in coastal areas, including flood risk and coastal hazard assessments, development assessment, coastal infrastructure design processes and land use planning exercises.
At this juncture, I feel strained by the pragmatic and practical realities of the political, economic and cultural forces at work in The Bahamas. Politically we are not given to intelligent and strategic planning; economically we are resource constrained due to our unwillingness to accept that our greater fortunes exist by further connection and trade in the global economic space; and culturally, we have given to a modesty and conservativeness that retards innovation and audacity. This notwithstanding, I advise on the following economic paths in response to the existential threat of climate change:
1. Become the John the Baptist of climate change resiliency – our center here at UB might begin that;
2. Partner up with international economic players to boost our prosperity so that we can better afford the resiliency effects we need for our economy and society;
3. Create redundancy plans that include relocation of bodies and businesses in the face and wake of catastrophic events which might include international agreements with other countries, to give effect to the same;
4. Individual Bahamians must make personal changes (financial, behavioral, attitudinal, etc.) that better enable them to adjust and adapt to the new climate change induced norms; and
5. Undertake the kind of fiscal reforms that recognize that lighter is better, and stability is indispensable, which means technology-driven, progressive and enduring – as well as community and people focussed tax and spend policies.
The affects of climate change are being felt by us now, but our generation will not experience the brunt of it. If left unchecked, its devastating effects will be our legacy to generations to come; a legacy of poverty, pain and quite the perpetual possibility of obliteration, the constant threat of which I believe is worse than the reality itself.
• Zhivargo Laing is a Bahamian economic consultant and former Cabinet minister who represented the Marco City constituency in the House of Assembly.
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