Small Business Boomers

Global Warming - Impact on Small Business

by jim on January 29th, 2007

Wither you believe in the science of global warming or not it is already having an impact on your business.  It has become part of the environment in which businesses large and small function.  You can’t change that.  You don’t have to agree with the science, but you must account for it in the way you do business.

Insurance

People in the property insurance industry have worked the probability that global warming is occurring into the actuarial formulas they use to insurance rates.  Maybe most importantly the people they go to for re-insurance all around the world have made similar calculations.  As a consequence the property insurance rates in all costal areas in the world have risen substantially.

You know this if your business is within 50 miles on an ocean coastline.  Directly, it means that the value of any property in the coast areas will be depressed.  Indirectly, it means that the cost of any products or services from those areas will be higher.

People who live in these areas will need higher salaries in order to sustain their standard of living.  Companies will have to pay more to attract them to these locations or alternatively move from the high cost areas.

Petroleum and Alternate Fuels

Governments world over will enact some sort of price increase on current carbon based fuels, either by a tax or some market action.  This will be an additional cost which will cause people to seek alternate energy technology for transportation.  If you deal with petroleum products you will have to adjust.

Alternative fuels provided by the processing of grains, grasses and other plant material in some ways are an approach to reduce green house gasses.  If you keep up with futures markets you can already see a spike in the price of corn.  This in turn will drive up the price of food.  How big a dislocation this will be will depend on the extent to which we go down the ethanol road.

Automotive and Transportation

I saved the best for last.  Hybrid and all electric technologies are appearing in the fleet of American cars in increasingly rapid numbers.  Already these types of autos have higher resale values than internal combustion ones.  They also depreciate more slowly.  These are facts of the market.

Depending on your business this technological shift will have an impact.  If you are in the car repair business you will have to re-train and re-tool.  If your clients come to you by car this may have an impact depending on the distance they must travel to reach your place of business.

Public transportation will improve.  That will mean that locations near transportation routes will be more expensive and profitable than those that are not.

You can say that the impact of global warming will not have an impact on your business in the near future, but you would be wrong.  You may just not see the impact yet.  It may be too small, but it is growing.  The glaciers don’t have to melt and Miami sink under the ocean the market just has to believe that it’s a real possibility.

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