3 Industries Most Likely to Be Affected by Climate Change

Whether you're worried about it or not, climate change can't be ignored. Find out whether your business will feel the effects.
May 20, 2014

Melting ice caps and rising sea waters. Droughts. Wildfires. Massive flooding.

The National Climate Assessment report released on May 6, detailing how climate change has been affecting the United States and how extreme weather conditions are going to be more common, reads a little like a disaster movie.

Climate change has proven to be controversial, not just in politics but among business owners as well. Rodger Roeser, owner of The Eisen Agency, a marketing firm in Cincinnati, doesn't mince words when addressing the topic: "This entire concept of 'climate change' is ridiculous."

Which doesn't mean to say that Roeser won't do his part for the environment. According to Roeser, he's all for recycling and being energy efficient. "That's called being responsible," he explains.

But he thinks the government punishes corporations and companies through "regulations and fiat rather than legislation," he says. 

The Downside of Mother Nature

There are plenty of entrepreneurs and executives, however, who see climate change as a valid business problem. For instance, earlier this year, when The New York Times asked Coca-Cola about supply chain snags with sugar cane, sugar beets and citrus for its fruit juices, Jeffrey Seabright, the company's vice president for environment and water resources, responded: "Increased droughts, more unpredictable variability, 100-year floods every two years. When we look at our most essential ingredients, we see those events as threats."

If you see climate change as a threat to your life and livelihood, you might be interested to learn whether it will directly affect your business. Here are a few industries that appear to be particularly negatively affected by the effects of climate change.

Businesses that depend on water.

Since so many businesses rely on water in some way or another, it may sound as if we're casting a wide net over every company in existence. But think more specifically of the recreational boating industry or companies that depend on commercial shipping in rivers and lakes. Jerry Koncel, an associate editor for Great Lakes Boating, says he's already seeing problems in his industry.

"The winter and summer of 2012 was a drought with low precipitation and record high temperatures," Koncel says, "and this caused low water levels on the Great Lakes. As a result, many marinas and harbors were forced to either move their docks further out into the harbors so the water depth was deep enough for boating or they had to dredge their harbors, which is even much more expensive."

Koncel notes that the marinas and harbors of the Great Lakes region have requested financial help for dredging from the federal and state government, but so far, only Michigan has passed an emergency dredging bill, allocating $21 million to the activity.

Tourism. If you want to look at the bright side of things, the National Climate Assessment Report points out, "In Maine, coastal tourism could increase due to the warmer summer months, with more people visiting the state's 22 beaches."

However, the report also notes that some of Florida's top tourist attractions, particularly the Everglades and the Florida Keys, are being threatened by rising sea levels, with "estimated revenue losses of $9 billion by 2025 and $40 billion by the 2050s."

Steve Silberberg says his company has already been affected by climate change. Silberberg runs Fitpacking, a weight-loss backpacking adventure vacation business. Silberberg say climate change has forced him to change his business model. His problems are due to heat—and a bug.

"Because of a warming climate, the mountain pine beetle can now complete two breeding cycles in a season in the Rocky Mountains," Silberberg says, explaining that the abundance of beetles is leading to widespread deforestation. "When trees die, rain and melting snow cause much more erosion and devastating floods than they once did, because root systems can't keep the soil stable."

Why is that negatively affecting Silberberg's business? Silberberg says he's pretty certain that this year is the last year for a while that he'll be taking clients to the Rocky Mountains, due to a lack of trees. It is, he says, "a prime destination and one of our bestsellers, so not being able to hike there will affect the bottom line in the business."

He adds that he's faced the same deforestation problem in the Black Hills, which stretch across part of South Dakota and Wyoming, and at Mt. Rushmore in Keystone, South Dakota.

Commodity-based businesses.

If you have a business that depends on a commodity, like food, a mineral or oil, you've probably already noticed a change in the way you have to do business. A three-year drought in California, for instance, has helped spur food price increases, according to a recent report from Arizona State University that concluded, among other things, that the price of tomatoes will likely rise 22 to 45 cents this year to cost, on average, $2.84 a pound.

While that may not sound critical, if you own a small sandwich shop, suddenly it matters (the price of lettuce will be even worse, projected to climb anywhere from 31 to 62 cents per head). And if your customers want a cup of coffee with that sandwich, you'll likely have to charge them more for that, too. A drought in Brazil is currently challenging that country's coffee crop, sending futures prices to two-year highs.

Or consider those lower water levels in the Great Lakes. The water shortage, Koncel observes, "caused commercial freighters carrying iron ire to reduce their loads, raising the price for this commodity."

On the flip side, climate change might help other commodity-based businesses. As the National Climate Assessment report points out, "Seasonal ice cover on the Great Lakes has been decreasing, which may allow increased shipping."

Choosing to Change

It's understandable why some small-business owners may want to throw up their hands and not think about climate change. After all, its effects are fairly unpredictable—it looks bad for some industries and regions but good for others—and there are numerous businesses that haven't noticed any effects yet. If your wheelhouse is intellectual capital, you'll probably continue working unscathed for some time to come—unless clients or customers of yours begin to feel the effects of climate change.

But even the smallest businesses that are seemingly unaffected can help buffer themselves from climate change by making their company more energy efficient, says Andrew S. Winston, author of The Big Pivot: Radically Practical Strategies for a Hotter, Scarcer, and More Open World. Winston's book offers up a lot of examples of what big corporations are doing to bring down their energy costs and prepare for climate change, but he says that smaller companies can be making their business models more resilient to a warmer planet, too.

"If you're the owner of a small flower shop, you might focus on better lighting, or heating and cooling, or how your delivery trucks run," Winston says, adding that your state probably has an energy-efficiency program that would help pay for new energy-efficient equipment. That, of course, won't only help the planet—it'll save your company money.

Which is why Winston says, "So much of what we need to do, we want to do, anyway. So in a way, the debate is a little bit of a waste of time."

Evan Hutchinson, a business consultant in Ames, Iowa, who has a meteorology degree, says, "Everyone is asking which businesses will be affected by climate change when we should be asking, 'Which businesses won't?' It's really hard to identify any industry that won't be impacted."

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Photos: Thinkstock, Fitpacking, iStockphoto