Category Archives: Weather
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Who knew betting on the weather could make a billion dollars? It just did for The Climate Corporation, which underwrites weather insurance for farmers. Monsanto, broke the news this morning that it was buying Climate for approximately $930 million. The idea is to sell more data and services to the farmers who already buy Monsanto’s seed and chemicals. Climate (formerly known as Weatherbill) has raised $107 million from a plethora of backers since it began fund raising in 2007. Its biggest investors include Khosla Ventures, Google Ventures, Index Ventures and Founders Fund.
Climate’s cofounders were early Google employees who saw a self-service approach to weather insurance, which had previously been sold in custom, over-the-counter negotiations. Clients go to its site and outline what range of temperatures and/or rainfall they want protection from, for a set period of time. In 100 milliseconds Weatherbill crunches forecasts and 30 years of National Weather Service and geological survey data for the user’s location. After adjusting–minutely–for climate change, Weatherbill names a price and acts as the underwriter. Policy holders get their checks automatically if the weather doesn’t go their way. Originally Climate pitched its insurance to any weather-dependent businesses (farmers, housepainters, golf ranges), but it soon realized its biggest market was in agriculture. “It had the most significant opportunity, the most significant product, and had the greatest impact,” cofounder David Friedberg told Forbes in a 2011 post.
Climate was a strategic pickup for Monsanto’s planned move into services and data. In its release this morning, Monsanto says data science could be a $20 billion revenue opportunity beyond its core business of seeds and chemicals. In the announcement today the company estimated that “the majority of farmers have an untapped yield opportunity of up to 30 bushels to 50 bushels in their corn fields… advancements in data science can help further unlock that additional value for the farm.” Monsanto grossed $13.5 billion in revenue in the year ending August 2012. It earned $3.50 a share last year and is expected to report earnings per share of $4.58 when it reports after the close today. The stock’s up 11% this year, short of the Dow’s performance.
Climate brings to Monsanto some impressive data expertise. “Climate Corp developed expertise in agronomy in order to understand how climate variability affects different crops,” Index Ventures partner Neil Rimer gushed about the deal this morning in a blog post. “To price its insurance products, Climate Corp’s platform ingests weather measurements from 2.5 million locations and forecasts from major climate models, and processes this data along with 150 billion soil observations to generate 10 trillion weather simulation data points, requiring it to manage 50 terabytes of live data at any given time. Needless to say, this company has built daunting barriers to entry.”
Over the last few years, much excitement has been generated around the term “impact investing” – an investment approach that intentionally seeks to create both financial return and measurable positive social or environmental impact. Despite the buzz, there is limited consensus among mainstream investors and specialized niche players on what impact investing is, what asset classes are most relevant, how the ecosystem is structured and what constraints the sector faces. As a result, there is widespread confusion regarding what impact investing promises and ultimately delivers.
This report is a result of engaging over 150 mainstream investors, business executives, philanthropic leaders and policy-makers through interviews, workshops and conference calls. The overall objective of the Mainstreaming Impact Investing initiative is to provide an initial assessment of the sector and identify the factors constraining the acceleration of capital into the field of impact investing.
Huge, explosive fires are becoming commonplace, say many experts, because climate change is setting the stage — bringing higher temperatures, widespread drought, earlier snowmelt and spring vegetation growth, and expanded insect and disease infestations.
Scientists and fire experts speaking on a recent conference call organized by the Union of Concerned Scientists say the nation is moving into an era when massive and destructive wildfires of the kind that occurred only sporadically over the last century will now be a regular occurrence. “Within the next few decades we anticipate these [forest] systems being as dry on a regular basis as the major fire years of the last century,” said Anthony Westerling of the University of California, Merced.
“We are now completely certain that there is a climate signal in the observed fire activity,” added Dave Cleaves, climate adviser to the head of the U.S. Forest Service. “Fire, insects, disease and moisture stress are all being linked more closely by climate change.”
Wildfire statistics compiled by the National Interagency Fire Center in Boise, Idaho, offer sobering confirmation. The seven largest fire years since 1960 have all occurred since 2000. In 2006, 2007, and last year, the toll exceeded 9 million acres, an area roughly equivalent to Maryland and Rhode Island combined.
This year’s fire season, while running behind 2012 in terms of acreage lost thus far, is proving particularly destructive and tragic in some places. A year after the Waldo Canyon fire set a new standard for destructiveness in Colorado by burning nearly 350 homes in 2012, this June the Black Forest Firedestroyed more than 500 just a few miles away. And the June 30 Yarnell Hill fire in Arizona killed 19 members of a Hot Shot firefighting crew when they were overrun by flames, the deadliest wildfire in 80 years.
There is no single reason for the recent transition to more frequent and explosive fires, says Oltrogge. For one, too many people are “deciding to build communities where there will be big scary wildfires.” And there is too much fuel built up in forests where frequent low-intensity fires once thinned out underbrush but where decades of man suppressing natural fires has resulted in overcrowded stands of trees now vulnerable to catastrophic fires. Plus, emphasizes Oltrogge, “I can tell you as a matter of fact that climate change is a key contributor to what we’ve been dealing with the last 10 to 12 years.”
That’s hardly an outlier opinion. In congressional testimony two years ago, Thomas Tidwell, the head of the U.S. Forest Service, told lawmakers that his agency faces conditions of higher temperatures, earlier mountain snowmelt, and much longer fire seasons, which “our scientists believe … is due to a change in climate.”
Tidwell again delivered that message yet again to Congress last month. Large fires in excess of 10,000 acres are seven times more common today than four decades ago, Tidwell said. The fire season is two months longer. In 2012, he said, “over 9.3 million acres burned in the United States. The fires of 2012 were massive in size, with 51 fires exceeding 40,000 acres. Of these large fires, 14 exceeded 100,000 acres.”
And that comes with a huge price tag.
The cost of federal firefighting efforts, borne largely by the Forest Service and the Interior Department’s Bureau of Land Management, has also risen dramatically. At the Forest Service, firefighting now often eats up 40 percent of the agency’s annual budget. In a little more than a decade, fire staffing at the Forest Service has more than doubled. During the decade of the 1990s, federal firefighting costs averaged less than $1 billion a year; since 2002, the annual cost has averaged more than $3 billion.
There is little prospect of those costs declining. In fact, a report released last month by Headwaters Economics concluded, “These changes will all contribute to escalating wildfire protection costs for all levels of government.”
Federal efforts to reduce fire risks — through thinning of small trees and underbrush and by setting what are known as ‘prescribed fires’ to cut down on those small fuels that can lead to large catastrophic fires — were accelerated around the year 2000, when spending on what is known as the hazardous fuels reduction program run by the Forest Service and Department of Interior tripled. But spending on fuels reduction since 2011 has declined, and in its budget request this year, the Obama administration has sought a cut of more than 30 percent, the third year in a row it has proposed substantial reductions to Congress. The administration’s request for hazardous fuels reduction for next year is just $297 million.
Wildfire preparedness has taken another hit as a result of automatic budget cuts under sequestration, which cut spending from $500 million last year to $419 million this year. A report released this spring by House Appropriation Committee Democrats found that sequestration would mean the Forest Service would have 500 fewer firefighters this season, and 50-70 fewer fire engines and two fewer aircraft.
Increasingly, lawmakers are calling on the Forest Service and Interior Department to spend more on preventive measures in order to eventually reduce firefighting costs. “You can spend more modest amounts on the front end, with preventive kinds of efforts, or you can spend your time investing substantially more money trying to play catch-up as these infernos rip their way through the West,” said Sen. Ron Wyden (D-Oregon) last month.
Even with stronger financial support, the job of treating forests to reduce wildfire is enormous. The federal government is currently treating about 3 million acres a year, but Tidwell, the chief of the Forest Service, told Congress in June that between 65 and 82 million acres of Forest Service lands “are in need of fuels and forest health treatments — up to 42 percent of the entire system.”
Across all federal land holdings, 231 million acres are at moderate to high risk of damage from wildfires, according to a 2011 Congressional Research Service report. “Since many ecosystems need to be treated on a 10-35 year cycle … current treatment rates are insufficient to address the problem,” the report found.
Attacking the escalating expense of fighting fires is a difficult problem.
This is due in large part to the fact that the federal government, which shoulders most of the firefighting expense, has little power to control Americans’ urge to move into the woods because land use decisions are a local and state responsibility.
A key reason that wildfires have become more destructive, and fighting them more expensive, is that millions of Americans have made a conscious decision to move close to wildlands that are susceptible to fire — known by the infelicitous phrase the wildland-urban interface, or WUI.
“The number of housing units within half a mile of a national forest grew from 484,000 in 1940 to 1.8 million in 2000,” Tidwell testified to Congress last month. Another 1.2 million live within national forest boundaries, a nearly four-fold increase from 1940. Even with all that development near and in the forest, only about one-sixth of the WUI is developed, leaving plenty of room to make the situation worse.
Protecting those structures during fires has become the de facto number two priority of federal firefighting efforts, after protecting human life. According to Headwaters Economics’ recent report, “in a survey of [Forest Service] land managers, some estimated that 50 to 95 percent of firefighting costs were attributable to protection of private property.”
Further complicating the matter is the fact that knowing that federal firefighters will make valiant efforts to save homes “removes incentives for landowners moving into the WUI to take responsibility for their own protection and ensure their homes are constructed and landscaped in ways that reduce wildfire risks” according to a report by the Department of Agriculture’s Inspector General.
Ray Rasker, executive director of Headwaters Economics, said in an interview that a huge part of the problem is the fact that “there is no cost accountability for those who build in the WUI,” whether its individual homeowners or the local government bodies who make the development decisions about sewers, police coverage, roads and other issues.
“There are a lot of questions they ask about okaying a new development,” says Rasker. “But they don’t ask, ‘when we get a bill from the feds are we going to be able to afford our share of the firefighting costs?’” That’s because in most cases, they don’t have to share those fire costs. If they did, said Rasker, it would be much easier for local government to say no to development in the WUI.
“Eighty four percent of this land is still not developed,” Rasker says. “If you think it’s expensive now, you’re in for a big surprise. Fires are twice as big, they are burning twice as long. That’s the cost trajectory we are on.”
Climate change is altering the fundamentals in the West, bringing higher temperatures, earlier snowmelt that extends the fire season, severe and prolonged drought, and insect infestations that kill millions of acres of trees. Combined with scant evidence that policymakers at all levels of government are attacking the problems of fuels and population shifts into the WUI, there seems to be little prospect that the growing extent of wildfires will be stemmed.
A paper released last December by the Forest Service, part of the government’s National Climate Assessment, looked at the effects of climate change on U.S. forest ecosystems. On the subject of fire, it presented a stark and sobering conclusion: by mid-century, wildland fires will be burning twice as much acreage as they do now.
Andrew Breiner contributed the graphics for this piece.
Near Qingdao, China, swimmers continue to enjoy days at the beach despite heaping amounts of green algae that have bloomed and overrun more than 11,000 square miles of seawater, according to a CNN report. This year’s outbreak has more than doubled the previous record, a relatively miniscule 5,000 square miles in 2008.
The cause of these massive blooms remains under debate. Some scientists believe it’s a result of warmer water, while a Los Angeles Times piece suggested it may be increased by nearby farms, golf courses or gardens using fertilizer that washes into the sea.
While the algae isn’t believed to be a threat to humans, the smell has driven some beachgoers away, reports the BBC. It’s a toxic scent that occurs when the blooms are left to rot.
The local government plans to send the green blobs off to be dried and ground up for animal food.
Known as Enteromorpha prolifera, the green algae is bad for the seawater because it consumes a lot of oxygen, suffocating other nearby organisms, according to a Business Insider story. The mess costs tens of millions of dollars to remove on top of the hundreds of millions of dollars in damage it could cause to local fisheries.