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A Climate Change Industry Business Segment Review

EBI Report 4800: Climate Change Adaptation & Resilience Markets Part of the EBI Report 4000 Series on The Climate Change Industry May 2016 A publication of Environmental Business International, Inc. 4452 Park Blvd. #306 San Diego CA 92116 619-295-7685 www.ebionline.org

Climate Change Adaptation Industry EBI Report 4800

© 2017 EBI Inc. All rights reserved. www.ebionline.org 1-2

Table of Contents

1 CLIMATE CHANGE ADAPTATION............................................................................ 1-8

1.1 Acknowledgements..................................................................................................... 1-8 1.1.1 Authors and Sources ............................................................................................... 1-8 1.1.2 EBI’s Market Research Method ............................................................................. 1-8 1.1.3 Survey Instruments ................................................................................................. 1-9 1.1.4 Disclaimer............................................................................................................. 1-10 1.1.5 Copyright .............................................................................................................. 1-10

1.2 Overview of the Climate Change Industry................................................................ 1-11 1.2.1 Climate Change Industry Definition and Context ................................................ 1-11 1.2.2 Definition of the Climate Change Industry........................................................... 1-14 1.2.3 Definition of the Environmental Industry............................................................. 1-17 1.2.4 The Climate Change Industry ............................................................................... 1-20 1.2.5 Business Overview of the Climate Change Industry ............................................ 1-28 1.2.6 Economic Comparison with Environmental Industry .......................................... 1-32 1.2.7 Conclusion ............................................................................................................ 1-35

1.3 Defining the Climate Change Adaptation Industry................................................... 1-36 1.3.1 Defining the Climate Change Adaptation Industry .............................................. 1-36 1.3.2 Climate Change Adaptation Business Context..................................................... 1-36 1.3.3 Climate Change Adaptation Segments and Market Sizes..................................... 1-40

1.4 Stage Set for the Climate Change Adaptation Industry back in 2012....................... 1-47 1.4.1 2013: Cost of Catastrophic Weather Events ......................................................... 1-47 1.4.2 “Risky Business” Highlights Regional Impact of Climate Change...................... 1-48 1.4.3 UNEP’s Emissions Gap Report ............................................................................ 1-49 1.4.4 Climate Data Snapshot: Year 2012....................................................................... 1-49 1.4.5 Climate Change: Global Security Threat.............................................................. 1-51 1.4.6 Governments and Communities Prepare for Climate Change.............................. 1-55 1.4.7 Obama Executive Order 13653 ............................................................................ 1-56 1.4.8 Private Sector Prepares for Climate Change......................................................... 1-59 1.4.9 More Companies Institutionalize Climate Change Plans ..................................... 1-62 1.4.10 Investors Prepare for Climate Change.............................................................. 1-64 1.4.11 Insurance Industry Backs Proactive Measures to Lessen Climate Risk ........... 1-69 1.4.12 Opportunities in Climate Change Adaptation .................................................. 1-71 1.4.13 Climate Adaptation Research Needs ................................................................ 1-73 1.4.14 Client Profile & Market Driver: World Bank................................................... 1-74 1.4.15 Market Driver: Clean Power Plan .................................................................... 1-77 1.4.16 Client Profile: USAID Takes on Climate Change............................................ 1-79 1.4.17 Policy Driver: Climate Change and National Security..................................... 1-84 1.4.18 Adaptation & Resilience Market Snapshot: Healthcare ................................... 1-87

1.5 Trends in the Climate Change Adaptation Industry (2016) ...................................... 1-91 1.5.1 Market Profile: Transportation Agencies ............................................................. 1-91 1.5.2 Adaptation & Resilience Market Snapshot: Airports ........................................... 1-94 1.5.3 Client Profile: Power Utilities .............................................................................. 1-99 1.5.4 Market Driver: Impact of Paris Accord .............................................................. 1-107 1.5.5 Trump Effect on Energy Markets ....................................................................... 1-114 1.5.6 Adaptation Veteran Joyce Coffee Shares Strategic Insights............................... 1-120



1.5.7 Client Profile: Institutional Market: College/Prison/Healthcare......................... 1-123

1.6 Trends in the Climate Change Adaptation Industry (2015) .................................... 1-128 1.6.1 Market Estimate Models..................................................................................... 1-128 1.6.2 Local Governments put Adaptation on Their (Long) To-do Lists...................... 1-129 1.6.3 Market Profile: NGOs, Foundations and Federal Agencies ............................... 1-138 1.6.4 The Nature Conservancy .................................................................................... 1-141 1.6.5 Client Profile: Water Utilities ............................................................................. 1-146 1.6.6 Profile: Green Power Labs.................................................................................. 1-154 1.6.7 Profile: Planet Labs............................................................................................. 1-157 1.6.8 Profile: Research Into Action ............................................................................. 1-160 1.6.9 Profile: American Security Project ..................................................................... 1-163

1.7 Trends in the Climate Change Adaptation Industry (2014) .................................... 1-165 1.7.1 Climate Change Adaptation Business Gains Momentum................................... 1-165 1.7.2 Profile: Professional Service Firms: PwC, Deloitte, CSC .................................. 1-169 1.7.3 Adaptation & Climate Risk Services Reach $120-150 Million.......................... 1-170 1.7.4 Synergies Between Mitigation and Adaptation .................................................. 1-173 1.7.5 First-Tier Clients: Government, Water and Power Utilities ............................... 1-174 1.7.6 Oil & Gas Industry Considers Climate Change Adaptation ............................... 1-177 1.7.7 Water Treatment & Re-use Business in the Oil Industry ................................... 1-177 1.7.8 Consultants’ Perspective on Oil & Gas .............................................................. 1-178 1.7.9 Electric Power Industry Focuses on Adaptation................................................. 1-184 1.7.10 Q&A: Marstel-Day......................................................................................... 1-189

1.8 Trends in the Climate Change Adaptation Industry (2012) .................................... 1-192 1.8.1 Climate Change Adaptation Market Takes Shape in the USA........................... 1-192 1.8.2 Market is Small, But Extreme Weather Portends Long-Term Growth .............. 1-195 1.8.3 Adaptation, Disaster Preparedness and International Development................... 1-197 1.8.4 Heat & Water Expose Vulnerability of Conventional Power Generation .......... 1-198 1.8.5 Decentralized Water Treatment a Solution for New Property............................ 1-198 1.8.6 Climate Fixing & Geo-Engineering.................................................................... 1-199

1.9 Natural Capital and Ecosystem Services................................................................. 1-200 1.9.1 Green and Hybrid Structures for Coastal Resilience (2015) .............................. 1-200 1.9.2 Squashing the Hydrograph with Green Infrastructue (2015).............................. 1-204 1.9.3 Coastal Wetlands Restoration: Carbon Storage.................................................. 1-208 1.9.4 Ecosystem Services Gain Respect ...................................................................... 1-211 1.9.5 URS Fields Growing Demand for Ecosystem Value Assessments .................... 1-213 1.9.6 ESA Evaluates Adaptive Mitigation Strategies .................................................. 1-215 1.9.7 Natural Capital Project: Working With the Private Sector................................. 1-216 1.9.8 Industrial Economics Inc. – Q&A ...................................................................... 1-217

1.10 Niche Market: Sea Level Rise ................................................................................ 1-220 1.10.1 Moffatt and Nichol Takes on SLR for Many Clients (2015) ......................... 1-220 1.10.2 Profile: Arup (2015) ....................................................................................... 1-223 1.10.3 AquaFence Gains Traction in Flood Product Market..................................... 1-228 1.10.4 Preparing Coastal Settlements for Sea Level Rise ......................................... 1-231 1.10.5 Changing Attitudes to Sea Level Rise............................................................ 1-234 1.10.6 Small Businesses Adapt to Rising Sea Level ................................................. 1-235 1.10.7 LIDAR Technology........................................................................................ 1-236 1.10.8 CH2M Hill, AECOM and Arcadis on Adaptation Contracts ......................... 1-237 1.10.9 Profile: Stantec Canada .................................................................................. 1-239



1.10.10 Profile: Dewberry (2015) ............................................................................... 1-239 1.10.11 Profile: Dewberry ........................................................................................... 1-242 1.10.12 Legal Issues of Sea Level Rise....................................................................... 1-243 1.10.13 Adaptation Scenario: New York .................................................................... 1-244 1.10.14 Army Corps Directives for Adaptation Planning ........................................... 1-245 1.10.15 Profile: CH2M SLR Practice.......................................................................... 1-246 1.10.16 Client Profile: Port Authorities....................................................................... 1-249

1.11 Company and Practice Profiles ............................................................................... 1-257 1.11.1 Specialist Consultants Lead the Way in Climate Risk Analysis .................... 1-257 1.11.2 Q&A: Ecology and Environment ................................................................... 1-259 1.11.3 Q&A: Ernst Basler + Partner.......................................................................... 1-264 1.11.4 Q&A/Profile: Acclimatise.............................................................................. 1-266 1.11.5 Profile: Atmospheric and Environmental Research ....................................... 1-271 1.11.6 Q&A: Atmospheric and Environmental Research ......................................... 1-272 1.11.7 Profile: Climate Risk (AdaptWater Software) ............................................... 1-273 1.11.8 Profile: Climate Service Center (Germany) ................................................... 1-275 1.11.9 Profile: Climate Risk Analysis (Germany)..................................................... 1-277 1.11.10 Profile: Dewberry ........................................................................................... 1-278 1.11.11 Q&A: Envision - Rating System for Sustainable Infrastructure .................... 1-280

1.12 Adaptation Practice Profiles.................................................................................... 1-283 1.12.1 Profile: Milone & MacBroom (2015) ............................................................ 1-283 1.12.2 Q&A: Stantec ................................................................................................. 1-286 1.12.3 Q&A: Irbaris .................................................................................................. 1-289 1.12.4 Q&A: AECOM .............................................................................................. 1-293 1.12.5 Profile: GHD (Australia) ................................................................................ 1-300 1.12.6 Profile: Atkins N.A. ....................................................................................... 1-303 1.12.7 Profile: Stratus Consulting ............................................................................. 1-304 1.12.8 Profile: MWH Global..................................................................................... 1-306 1.12.9 Q&A: WSP Group: Climate Risk Analysis and Adaptation in 2015 ............. 1-307 1.12.10 Q&A: WSP Group: Adaptation in the Supply Chain..................................... 1-311

1.13 Segment Report: Water Resource Management ..................................................... 1-316 1.13.1 Profile: Stanley Consultants (2015) ............................................................... 1-316 1.13.2 Q&A: Ford Consulting................................................................................... 1-319 1.13.3 Water Strategy in the Western States ............................................................. 1-320 1.13.4 Profile: El Paso Water Utilities ...................................................................... 1-325 1.13.5 Profile: Denver Water .................................................................................... 1-326 1.13.6 Profile: So Cal: West Basin Municipal Water District................................... 1-327 1.13.7 Profile: American Water ................................................................................ 1-328 1.13.8 Profile: Black & Veatch ................................................................................. 1-331 1.13.9 Profile: Climate Risk (AdaptWater)............................................................... 1-335 1.13.10 Utility Profile: Metropolitan Water District ................................................... 1-338 1.13.11 Profile: CH2M Hill......................................................................................... 1-340 1.13.12 Profile: CH2M HILL (Halcrow Group) ......................................................... 1-342 1.13.13 Q&A: CH2M HILL on Climate Risk Worldwide.......................................... 1-345 1.13.14 Profile: RAND................................................................................................ 1-350 1.13.15 Profile: HDR .................................................................................................. 1-352 1.13.16 Profile: Stantec ............................................................................................... 1-354 1.13.17 Profile: Golder................................................................................................ 1-356 1.13.18 Profile: Malcolm Pirnie (Water Div. of ARCADIS)...................................... 1-358



1.13.19 Profile: Ryerson Master Associates ............................................................... 1-360 1.13.20 Profile: Tetra Tech.......................................................................................... 1-362 1.13.21 Profile: URS ................................................................................................... 1-364 1.13.22 Profile: WaterSmart Software ........................................................................ 1-366 1.13.23 Profile: Nitsch Engineering ............................................................................ 1-367

1.14 Climate Change Adaptation Consulting Practices .................................................. 1-370 1.14.1 Global Climate Change Adaptation Partnership ............................................ 1-370 1.14.2 ICF International ............................................................................................ 1-370 1.14.3 Acclimatise..................................................................................................... 1-378 1.14.4 Cascadia Consulting Group (CA & WA)....................................................... 1-379 1.14.5 Dewberry (2014) ............................................................................................ 1-379 1.14.6 Stratus Consulting .......................................................................................... 1-380 1.14.7 Abt Associates-Stratus Consulting................................................................. 1-381 1.14.8 Internat Energy Solutions Canada.................................................................. 1-381 1.14.9 URS Corp. ...................................................................................................... 1-382 1.14.10 ARCADIS ...................................................................................................... 1-383 1.14.11 Mott MacDonald ............................................................................................ 1-383 1.14.12 PwC ................................................................................................................ 1-385 1.14.13 Halcrow Group Ltd - a CH2M HILL company.............................................. 1-386 1.14.14 AECOM: Sample Projects.............................................................................. 1-387 1.14.15 Michael Baker ................................................................................................ 1-389 1.14.16 Stantec 2017 ................................................................................................... 1-393 1.14.17 Amec Foster Wheeler: Growing Weather Services for Transport ................. 1-396 1.14.18 Atkins & Energy Innovation .......................................................................... 1-400 1.14.19 R.V. Anderson Associates.............................................................................. 1-405 1.14.20 Fluor ............................................................................................................... 1-407 1.14.21 Client Profile: American Electric Power........................................................ 1-410 1.14.22 California Environmental Associates ............................................................. 1-413 1.14.23 Fernleaf Interactive ........................................................................................ 1-415 1.14.24 Institutional Client: Asian Development Bank............................................... 1-417

1.15 Appendix: CCA Resource Materials....................................................................... 1-421 1.15.1 Example of State and City Planning for Climate Change Adaptation ........... 1-421 1.15.2 Issues for water resource managers................................................................ 1-422 1.15.3 U.S. Global Change Research Program Findings .......................................... 1-423 1.15.4 Climate Risk and Adaptation Practices .......................................................... 1-424

Table of Figures Figure 1-1 Nine Segments of the Climate Change Industry..................................................... 1-11 Figure 1-2 Climate Change Industry Segment Descriptions .................................................... 1-14 Figure 1-3 Climate Change Industry: Segment Quantification Sub-Segments ........................ 1-16 Figure 1-4 Environmental Industry Segments.......................................................................... 1-19 Figure 1-5 The $248-Billion U.S. Climate Change Industry in 2012 ...................................... 1-20 Figure 1-6 The $288-Billion U.S. Climate Change Industry in 2014 ...................................... 1-21 Figure 1-7 The U.S. Climate Change Industry: 2006-2013 ($bil)............................................ 1-21 Figure 1-8 The U.S. Climate Change Industry 2006-2013 (% growth) ................................... 1-22 Figure 1-9 Global CO2 Emissions (% of total) ........................................................................ 1-23 Figure 1-10 Global CO2 emissions in 2007 (Mt CO2 and % of total)..................................... 1-23 Figure 1-11 The $1,290-Billion Global Climate Change Industry in 2012.............................. 1-24



Figure 1-12 The $1,440-Billion Global Climate Change Industry in 2014.............................. 1-25 Figure 1-13 The Global Climate Change Industry 2006-2013 ($bil) ....................................... 1-25 Figure 1-14 The Global Climate Change Industry 2006-2013 (% growth).............................. 1-26 Figure 1-15 The Global Climate Change Industry: 2013-2014 ($bil) ...................................... 1-27 Figure 1-16 The US Climate Change Industry: 2013-2015 ($bil)............................................ 1-27 Figure 1-17 Global Climate Change Industry 2005-2014 ($bil) ................................................ 1-28 Figure 1-18 Global Climate Change Industry 2008-2014 ($bil) ................................................ 1-28 Figure 1-19 USA vs. Global Climate Change Industry in 2013 ($bil) ....................................... 1-29 Figure 1-20 Ranking of Market Drivers in Climate Change Consulting.................................. 1-30 Figure 1-21 Ranking of Market Drivers in Wind Energy ........................................................ 1-31 Figure 1-22 Ranking of Market Drivers in Green Building ..................................................... 1-31 Figure 1-23 U.S. Environmental Industry vs. GDP Growth 1970-2016 .................................. 1-32 Figure 1-24 U.S. Climate Change Industry vs. U.S. GDP Growth 2005-2015 ........................ 1-33 Figure 1-25 Global Climate Change Industry vs. Global GDP Growth 2007-2014................. 1-33 Figure 1-26 U.S. Environmental Industry as a Percentage of GDP 1970-2013 ($bil) ............. 1-34 Figure 1-27 U.S. Climate Change Industry as a Percentage of GDP 2005-2013 ($bil) ........... 1-34 Figure 1-28 Climate Change Adaptation Industry Segments ................................................... 1-36 Figure 1-29 Forecast: The Global Climate Change Adaptation Industry 2004-2020............... 1-37 Figure 1-30 Climate Change Adaptation Industry Segments ................................................... 1-38 Figure 1-31 U.S. Climate Risk Assessment & Analysis: Project Revenue Estimates 2008..... 1-40 Figure 1-32 U.S. Climate Adaptation Planning: Project Revenue Estimates in 2008.............. 1-40 Figure 1-33 U.S. Climate Risk Assessment & Analysis: Project Revenue Estimates in 2012 1-41 Figure 1-34 U.S. Climate Adaptation Planning: Project Revenue Estimates in 2012............... 1-41 Figure 1-35 U.S. Climate Risk Assessment & Analysis: Project Revenue Estimates in 2015 1-41 Figure 1-36 U.S. Climate Adaptation Planning: Project Revenue Estimates in 2012............... 1-42 Figure 1-37 USA Disaster Risk Reduction Project Model in 2011.......................................... 1-42 Figure 1-38 U.S. Disaster Preparedness and Response Planning: Project Revenue Estimates in 2011............................................................................................................................................ 1-42 Figure 1-39 Global Climate Change Adaptation Industry (Est. 2012 in $mil) ........................ 1-43 Figure 1-40 Global Climate Change Adaptation Industry (Est. 2014 in $mil) ........................ 1-43 Figure 1-41 Projected Global Climate Change Adaptation Industry (Est. 2020 in $mil) ........ 1-44 Figure 1-42 Projected Size of the U.S. Climate Change Adaptation Industry 2008-2020 ....... 1-44 Figure 1-43 Climate Change Adaptation: Client Prospects in 2012......................................... 1-45 Figure 1-44 Climate Change Adaptation Services by Client (2014-2018e).............................. 1-45 Figure 1-45 Rating of Clients Areas by Demand for Climate Change Resilience & Adaptation Services in 2014-2016 ................................................................................................................ 1-46 Figure 1-46 Rating of USA Geographic Areas by Demand for Climate Change Risk Assessment & Adaptation Services................................................................................................................ 1-46 Figure 1-47 Rating of Global Geographic Areas by Demand for Climate Change Risk Assessment & Adaptation Services............................................................................................ 1-47 Figure 1-48 Top 10 Warmest Years (1880-2013) .................................................................... 1-49 Figure 1-49 Billion-Dollar U.S. Weather Disasters, 2012 ........................................................ 1-50 Figure 1-50 Top 10 Warmest Years Globally (1880-2012) ...................................................... 1-51 Figure 1-51 Top 10 Global Weather/Climate Events for 2012 ................................................ 1-51 Figure 1-52 Global Losses and Insured losses from Natural Catastrophes ($bil) .................... 1-53 Figure 1-53 Projected Effects of Climate Change – Pew Center on Global Climate Change.... 1-54 Figure 1-54 Climate Change Adaptation Funding and Technical Assistance from Federal Agencies ..................................................................................................................................... 1-56 Figure 1-55 Potential Effects of Climate Change on Selected Sectors ...................................... 1-66



Figure 1-56 Results from the Carbon Disclosure Project: Examples of Business Action to Address Physical Effects of Climate Change/Businesses That Have Actively Taken Steps to Adapt To Climate Change .......................................................................................................................... 1-68 Figure 1-57 Results from the Carbon Disclosure Project: Examples of Business Action to Address Physical Effects of Climate Change/Differences in Approach to Physical Effects Within a Sector.................................................................................................................................................... 1-69 Figure 1-58 Number of Natural Catastrophes Worldwide 1980-2011 ..................................... 1-71 Figure 1-59 Adaptation: A World of Emerging Opportunities ................................................ 1-72 Figure 1-60 Firms that have already generated growth/revenue from climate change opportunities............................................................................................................................... 1-72 Figure 1-61 Capitalizing on the New Adaptation Marketplace................................................. 1-73 Figure 1-62 USA Climate Change Adaptation Industry (2014-2020e)................................... 1-128 Figure 1-63 Climate Change Adaptation Services by Client (2014-2018e)............................ 1-129 Figure 1-64 USA Climate Change Adaptation Industry: Project Revenue Estimates 2015.... 1-129 Figure 1-65 Preparing Communities for a Changing Climate (2015) ..................................... 1-137 Figure 1-66 Climate Change Adaptation and EIA .................................................................. 1-137 Figure 1-67 Principles for Municipal Adaptation Strategies (2015) ....................................... 1-141 Figure 1-68 New York City Sea Level Rise Projections (2015) ............................................. 1-145 Figure 1-69 Top 25 U.S. Climate Change Adaptation Services Firms .................................. 1-170 Figure 1-70 Rating of Geographic Areas by Demand for Climate Risk Assessment & Adaptation Services .................................................................................................................................... 1-171 Figure 1-71 Rating of Client Areas by Demand for Climate Change Resilience & Adaptation Services in 2014-2016 .............................................................................................................. 1-172 Figure 1-72 Typical Fee For Consulting Projects Focused on Climate Risk Assessment and Adaptation ................................................................................................................................ 1-172 Figure 1-73 U.S. Climate Change Adaptation Industry 2008-2012 ($mil) ............................ 1-175 Figure 1-74 U.S. Climate Change Adaptation Project Revenue Estimates in 2008............... 1-176 Figure 1-75 Top 20 Investor & State Owned Entities and Attributed CO2 and CH3 Emissions. 1-183 Figure 1-76 Climate Change Adaptation: Client Prospect Ratings in 2012........................... 1-194 Figure 1-77 The $520-million U.S. CCA & Disaster Services Market by Client in 2012 ..... 1-195 Figure 1-78 Climate Change Adaptation Services by Client (USA market in $mil) ............. 1-195 Figure 1-79 Corporate Applications of Ecosystem Services Approaches.............................. 1-220 Figure 1-80 Twelve Indicators of a Resilient City .................................................................. 1-227 Figure 1-81 Arup’s Revenue by Region (£ 1,000s, FY ending March 31, 2014) ................... 1-228 Figure 1-82 Deployable Flood Barriers, Pros and Cons.......................................................... 1-230 Figure 1-83 Ranking of the World's Cities Most Exposed To Coastal Flooding Today and in the Future by Population in the 2070s............................................................................................ 1-232 Figure 1-84 Ranking of the World's Cities Most Exposed To Coastal Flooding Today andiIn the Future by Assets in the 2070s................................................................................................... 1-233 Figure 1-85 Existing Potable Reuse Systems .......................................................................... 1-324 Figure 1-86 Impact of Sea Level Rise on Ocean and Coastal Resources............................... 1-335