Climate change is top risk to SA industries - report
Sacci believes this could have a damaging effect on foreign investment
Climate change is set to disrupt critical local industries, and major cities like Johannesburg and Durban are expected to face similar disasters to the current water crisis in Cape Town.
Already large urban centres like Port Elizabeth and Knysna are penciling in their own Day Zero, and both the mining and agricultural sectors have warned against the effects of climate change on their respective industries.
AgriSA warned that the dry western parts of the country would only get drier and wet eastern parts would get wetter, affecting the types of crops traditionally grown in both areas.
And a scarcity of water would pose “serious risks” to the country’s mining activity, according to the The Chamber of Mines.
Mining, which uses up to 5% of the national water allocation, has already been brought to a halt in certain places due to drought and the industry is heavily reliant on the natural resource.
“Water is one of the most important contributors to the mining process,” said head of environmental at the Chamber of Mines, Stephinah Mudau.
“Projects have been delayed because of water scarcity. But the industry is responding and we are looking at other ways to mine without water or to recycle or reuse the water we have.”The 2018 Allianz Risk Barometer released last month, which uses the insight of more than 1,900 risk management experts to assess risk to businesses globally, showed that climate change is now one of the top 10 risks facing industry in South Africa.
And as a result, the South African Chamber Of Commerce and Industry (Sacci) believes the man-effected changes in weather will have a damaging effect on foreign investment into the country.
“Climate change will disrupt industry and interrupt production cycles,” Sacci CEO Alan Mukoki said.
“This will have the effect of increasing input costs or stop potential investors from pursuing projects in South Africa, due to the shortage of a critical resource such as water.”
Mukoki said other vital industries expected to be affected were food retail, manufacturing and energy.The practical effects of this would be that businesses would cut down on production with the resultant effect of slowing down the economy.
“This on its own will mean lower tax revenues to the fiscus as the three main sources of funding that the government receives are generated largely by the business activity,” said Chamber of Mines CEO, Alan Mukoki.
Cape Town, in the grip of its worst drought in over 100 years, is already a victim of decreased investor confidence, with ratings agency Moody’s warning on Tuesday that the situation would result in a credit negative for the city.
But the CEO of the Western Cape’s investment promotion agency Wesgro, Tim Harris, remained positive and chose instead to reflect on the possibilities should the region survive its current crisis.
“Climate change will be a reality for more and more cities in the coming years,” Harris said.
“[The] ability to avoid a one-in-a-thousand-year crisis would significantly boost the investment case for Cape Town and the Western Cape. A resilient city is an attractive city for investors.”Climate change experts believed that the situation was not all dire, adding that climate change would not be the only contributing factor to any natural emergencies.
A senior researcher in the Climate System Analysis Group at the University of Cape Town, Chris Jack, said that any crisis would arise from a number of “compounding drivers”.
“These crises are seldom a result of just climate change,” Jack said.
“In cities in South Africa and in other developing nations there are vigorous competing infrastructure/development agendas and compromised decisions are almost inevitable ... Whether implicitly, or explicitly, the [City of Cape Town] took a risk against the weather and lost.”
The 2018 Allianz Risk Barometer report indicated that South Africa was not unique in its position and that the urban and economic effect of climate change was a global challenge.
“The impact of a changing climate is an increasing concern for Risk Barometer respondents. It appears as a top 10 risk in 11 countries for the first time. Preparedness and risk mitigation can be the difference between businesses suffering a serious loss from a weather event and a catastrophic one,” the report read.