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Dr. David Kelly talks Miami, Climate Change and Hospitality

Climate change impacts the economy in both direct and indirect ways. Currently Southern Florida is feeling the heat from environmental factors such as rising sea levels. Recently, hospitality brands like Marriott International, Benchmark Hotels, Ennismore and Starbucks have launched plastic free initiatives. So has the city of Miami.

In prep for our upcoming Miami Confab, we wanted to touch base with one of our speakers on this topic. Dr. David L. Kelly is a professor of economics, director of the sustainable business research cluster, and director of the master of science degree in sustainable business at the University of Miami. He has published widely on adaptation to climate change, the effects of economic growth on the environment and more.  Here’s David’s insight on just how serious these issues are, what businesses can do to both mitigate and adapt, and his advice for developers of both hotels and restaurants.

INDIE Q+A

What are the main impacts you’re seeing on the economy both locally and nationally? What is the relationship between these drastic environmental changes and the economy?

  1. We are beginning to see some effects on real estate prices in low lying coastal areas. The rate of increase in prices is slower than at higher elevations.
  2. There is a lot of spending going on now to make low lying areas more resilient to sea level rise (e.g. Miami Beach has spent $0.5B on such fortifications, Miami has announced about $0.2B in spending). These include pumping stations, raising roads, etc. These are a cost in the sense that, the absence of sea level rise, the money could be spent on other things.
  3.  The impact of natural disasters like hurricanes has been significant.  Hurricane Irma caused $65B in damages. Aside from the lost property, shutting down a city for even a few days has a significant economic impact in terms of lost revenue to tourism and other industries. Many restaurants operate on very thin margins, for example. Closing down a restaurant for a week can be the difference between survival and bankruptcy.

Other than sea-level rise, there are a number of impacts we’re seeing that are a bit less obvious. Can you speak a bit on this?

One of the big ones I like to talk about is the impact on labor hours worked and labor productivity. Extreme heat days has an underappreciated effect on outdoor workers. They are less productive and require more frequent breaks, for example. Even indoor workers suffer more sick days as a function of viruses which spread more easily.  In the recently released National Climate Assessment Report, the effect on labor hours and productivity is in fact the largest economic impact. This affects workers across the country but especially in South FL. Tourism, agriculture, and construction are all industries with a lot of outdoor work and are therefore affected in particular.

When it comes to hotels, what practices are you seeing that are most effective in mitigating various impacts of climate change?

I use the term “mitigation” to mean actions that reduce emissions and therefore climate change.  “Adaptation” are steps that are taken to reduce the impact of climate change (e.g. fortifying coastal structures).  Some people use these two terms synonymously so I will answer both.

Regarding mitigation (reducing emissions): I have seen a lot of interest from hotels on smart thermostats which guests can control from their smart phones. The idea is to promote to the guest to reduce emissions by reducing cooling if the guest is going to be gone the entire day. That being said, the largest (and most cost effective) gains come from retrofitting buildings for things like more efficient A/Cs and more insulation.  Many hotels seem reluctant because of the capital expenditure, but these improvements can definitely pay for the themselves.

Regarding adaptations (taking steps to reduce the impact of climate change): Many hotels are in areas vulnerable to storms and sea level rise. Taking steps to fortify such structures is expensive, but I am seeing some steps taken. One less expensive step is creating emergency plans for hotel employees. Anticipating a hurricane or similar disaster, hotels are making plans so that employees can be accounted for post disaster, that they have access to help if necessary, and that they are given the necessary time to organize their affairs prior to the disaster. This is a difficult balancing act, as post disaster the hotel is often a refuge for local residents. Finally, I think it is important to pressure local governments to invest in pumping stations and other methods of flood control. Much of the damage from sea level rise will actually be in the form of increased flooding.

According to the National Climate Assessment, over 5,790 square miles and more than $1 trillion of property and structures are at risk from sea level rise of two feet above the current level. About half of those vulnerable structures are in Florida. What does this timeline look like and how can developers best equip their properties?

Well, here there is a bit of less-bad news hidden in the National Climate Assessment. In particular, even though over $1T of property is indeed at risk, this can be reduced by 90% through adaptation. The main adaptation strategies are:

  • beach nourishment,
  • property elevation,
  • armoring the shoreline
  • abandoning properties.

Of course abandoning properties is not a great solution, but there are still quite a bit of gains possible from the other three methods. This also points to the importance of working with local governments to promote shoreline fortifications.

University of Miami is launching a Masters degree in sustainable business, which you’re the Director of. What does the relationship between sustainable business practices and the economy look like? Are there direct benefits?

Absolutely! Whenever the firm reduces resource (e.g. energy) use, there are immediate direct benefits in that the resource is conserved for future use and pollution is reduced.  Firm profits increase since the firm has to pay less for resources. At the end of the day, the economy is driven by advances in productivity, which can be thought of as producing the same goods with less resources or more goods with the same resources. Beyond the direct benefits, firms also benefit reputationally. Socially responsible investors are also increasingly driving firms to act more sustainably. These benefits aside, many firms at the end of the day want to promote the social good for its own sake.

What advice would you give an independent hotelier or restaurateur on how to implement sustainable business practices? How would you advise guests to help businesses on this initiative?

I think it is important most of all to remember that each firm can contribute in their own way, consistent with their vision/strategy. Many hotels help promote/conserve local ecosystems for example. Combine this with renting bicycles or otherwise promoting tours of the local ecosystem and you can see how the sustainability effort is consistent with the strategy of the hotel to be a particular type of tourism destination. A hotel based in a city might instead might promote city walks and have walking maps available, while at the same time running clean up events along the walk. Even a restaurant can organize local clean up or similar events consistent with promoting the restaurant as a place for fresh, sustainably sourced food.

The other advice I would give is to make sure guests know about the hotel/restaurant’s efforts. If you have taken steps to reduce A/C usage by adding insulation, promote that. The number of people for which these things are important is surprisingly large.

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