Will Climate Change Cost Films Big Bucks?

Debate about measures of prevention, reparation, and preparation for climate change have bounced around world government legislation rooms for quite some time now. With increasing occurrences of extreme weather conditions costing the world economy billions, the rate of debate is picking up.  But just how much is climate change affecting companies in North America?  More specifically, how is it affecting the motion picture industry (MPI)?

We all can assume that a suffering economy is typically bad for the MPI.

Less financial capital = less spending by audiences and big investors= less net profit. The “trickle-up” effect, so to speak.

Below is a list published by Environmental leader of examples of 2014 businesses that have lost millions due to climate change:

  • Gap reporting on experiencing higher material costs for cotton due to changes in precipitation and drought in China;
  • Dr. Pepper Snapple Group discussing the potential of weather, climate changes and availability of water putting $2.5 billion of their cost of sales at risk;
  • Sempra Energy disclosed costs exceeding its $1.1 billion of liability insurance coverage due to wildfires in San Diego;
  • Union Pacific reported an 11 percent decline in corn shipments affecting its freight revenue as a result of droughts in 2012;
  • HP describes a decline in revenue of 7 percent following the 2011 floods in Thailand; and
  • Consolidated Edison discloses costs related to Superstorm Sandy at over $431 million.

Scope of economic impact has extended from the fresh produce market to the manufactured goods, technology, and energy industries. From pre-production, filming, post-production, and even promotion stages, your film company will probably resource goods from all four of these consumables categories.

To put things into perspective, consider this fact: Peter Jackson’s The Hobbit: An Unexpected Journey spent 1.5 million of their production budget on food and catering services alone. Tim Gore, head of food policy and climate change for Oxfam International says the effect of global warming on food prices and food availability will be the most immediate, noticeable sign of changing global circumstances for consumers worldwide.

 New research says there is a 90% chance that 3 billion people will have to “choose between going hungry and moving their families to milder climates because of climate change within 100 years.” Temperatures that expedited the European heat wave in 2003 that killed 57,000 people and caused 10-35% decreases in continental corn and grain yields are expected to become the norm by 2075. Looking at more immediate effects, the United Nations Intergovernmental Panel on Climate Change (IPCC) predicts temperature and rainfall patterns could lead to food price rises of between 3% and 84% by 2050.  

As severe weather begins to increase in frequency within the next 30 years, lost productivity, reparation costs, and irregular migration of people will begin to take a toll on all sectors of the economy.

Perhaps the most financially burdensome impact for the MPI, however, will be increased cost of manufactured materials. As has attracted much attention from sustainability think tanks, the MPI makes use of a lot of “stuff.” Art departments and set props might especially begin to burn large holes in production budget pocketbooks, since those material products tend to draw from a plethora of “upstream” raw materials.  

In the age of globalization, economic interdependence, and cheap foreign labor markets worldwide are hiring abroad for product manufacturing. Thirty years ago, 20% of consumables in America where made on home soil. That ratio has now more than doubled to about 45%. Where bad weather causes setbacks and rises in prices oceans away, chances are the North American economy will suffer some of the repercussions. And, for film, repercussions not just in terms of food, catering services, and manufactured goods; almost every sector of your typical film production budget will be subject to incurring monetary loss due to climate change, from rising prices in direct consumables to transportation fees and disaster driven tax increases.

Without delving too far into the particulars of real future costs, there is, of course, one action path to thoroughly consider first and foremost: what happens for the film business if we make the right moves towards sustainability NOW?  

The World Bank funded Stern Review concludes that early action to reduce the impacts of GHG emissions could cost only two per cent of GDP, while delaying action will result in costs of up to 20% of GDP.

According to the United States Federal Emergency Management Agency, every $1 invested in community climate change resilience or prevention reduces extreme weather damage by $4.

Prevention methods are the most cost effective approach towards dealing with climate change and corresponding economic threats to resource dependent businesses. The faster we can react to, or, for optimists’ sake, even prevent further damage from occurring the less the world economy (and film industry) suffers. The best solution is to take action now! Home by home, company by company.