Revised to Reflect the Discussions
at the U.S. Climate Forum

What is the scope of the sector? What issues are included? The scope of this sector includes all activities relating to the economic activity of the nation, including the provision and flow of goods and services within and across the borders of the United States, patterns and levels of employment, patterns and levels of consumption, evolution of resource-intensive and knowledge intensive sectors, trade, manufacturing, business, technology development, media and communications, finance and banking, contruction, insurance, factories and office buildings, trade, laws and regulations, other aspects governing the strength of the economy and economic activity. This component of the assessment will consider how these very dynamic sectors may be affected by the increasing rate and complexity of climate change and variability.

What are overlaps and synergies with other sectors? This sector will have important linkages with all of the other sectors, including:

• Food Availability, where there are linkages relating to agricultural products, chemicals, feedstocks, etc.
• Water Availability, because of the need for water for industrial processing and as a means of transport.
• Human Health, because of the importance of the health care industry and the health of workers.
• Forests, because of the dependence on wood products for construction, publishing, etc.
• Urban Services and Activities, because of the concentration of economic activites in urban areas and the dependence on government.
• Ecosystem Services, because of reliance of ecosystems as natural filters, rivers providing inexpensive transportation corridors, natural areas being the basis for tourism in many regions, etc.

What is the baseline information that is needed about commerce, industry and trade, without climate change? There is extensive information about past economic activity in all sectors. While specific projections may be available out to a few years in advance for many sectors, specific projections by sectors out several decades in advance must be considered highly uncertain due to the dynamic nature of the market and the rapid pace of new technological developments. In lieu of specific projections for particular sectors, general forecasts will need to be used. Because they will necessarily depend on carefully extrapolating past trend, care will need to be taken to investigate the underlying relationships to factors that may change with the climate. To support these analyses, it will be important to examine how economic activity has responded and adjusted in response to past climate variations. Such analyses should be particularly helpful because the dynamic character of the economy means that both adjustments and important impacts may appear relatively rapidly (thus during the periods that climate variations persist).

What assessments already exist on potential consequences of climate change?

• The IPCC SAR included chapters in the WG II report on industry, insurance, and other related sectors that might experience impacts. The WG III report included chapters describing general economic activities. These reports, however, provide little guidance about specific sectors within the United States or the coupling of international and U.S. economic activities.
• The IPCC SAR and Regional Impacts reports include significant materials on impacts and consequences for related sectors.
• Projections for individual sectors and for general economic activity are available reaching out up to about twenty years into the future.

Who are the key groups who should be involved in this sectoral assessment?

• Federal agencies (e.g., Departments of Treasury, Commerce, and Labor; Federal Reserve Banks (and sublevels); etc.)
• Business organizations (e.g., Business Roundtable, Global Climate Coalition, Business Council for Sustainable Development, ...)
• Labor organizations (e.g., AFL-CIO, labor unions, etc.)
• Non-governmental organizations (e.g., RFF, WRI, Cato Institute, CEI, Heritage Foundation, ...)

What are the key current and expected future (non-climatic) stresses on industry, commerce, and trade?

• Public concern over environmental pollutants including greenhouse gases and toxic industrial pollutants.
• Need to maintain stable economies, including employment.
• Impact on foreign competition.
• Time and cost for technological change.
• Damage and interruption to critical infrastructure caused by weather extremes.

How will climate change and variability exacerbate or ameliorate these stressors? What new stressors might be introduced? Impacts are anticipated on such sectors as transportation, insurance and banking, construction, and manufacturing. For example:

• Transportation: Possible effects on river transport (e.g., reduced due to lower water levels); shipping (e.g., possible longer season due to less ice on the Great Lakes); dock facilities (e.g., damage due to sea level rise); winter surface transportation (e.g., improved reliability due to less mountain snow).
• Insurance and Banking: Possible effects on coastal facilities due to sea level rise and increased storm damage; enhanced potential for fires due to drier summer conditions.
• Construction: Possible effects on working hours (e.g., limited hours in the summer, yet possibly longer hours in winter); increased coastal and levee construction to increase protection from sea level rise and higher peak river flows.
• Manufacturing and Other Industry: Possible effects on water costs due to reduced water availability; reduced demand for winter heating oil; increased demand for electricity for air conditioning.

What are the most important information needs? Predictions of seasonal to interannual variations in the climate can help in working short-term business decisions that can improve overall economic efficiency

• Forecasts of long-term trends and changes in climate will be essential to locating new capital facilities and to indicating stresses (e.g., from changes in water availability, and temperature variations) that might be alleviated by redesign of products and manufacturing processes.
• Predictions of changes in the frequency and character of extreme events will assist in financial planning for insurance, loans, choice of locations, etc.
• Predictions of changes being faced in other regions, particularly for sectors heavily involved in trade and international competition.

What coping strategies might be available to reduce climatic and other stresses?

• Redesign of manufacturing processes to reduce water demand might involve measures that reduce water pollution, promote water recycling, etc.
• Building facilities back from low-lying coast lines would protect against sea level rise while not impinging on coastal wetlands and natural preserves.
• Switching to split worker shifts (e.g., 7 to 11, 3 to 7) in outdoor summertime activities might lead to improved work comfort/health and performance.
• Design of buildings and facilities to protect against increasing summer temperatures could improve their overall annual efficiency, reducing energy costs.
• Diverting some water from the Great Lakes to the Mississippi River (while controversial because of effects on the Great Lakes) would sustain river transport, improve summertime water quality, and protect water-sensitive ecosystems and species in the Mississippi basin.
• Switching to electronic communication and away from wood-pulp based methods would help to reduce carbon transfer from forests to the atmosphere.