Taking on climate change: How will businesses in Thailand need to adapt?

Believe it or not, Thailand is categorized as one of the countries in an "extreme risk" category of being affected by the impacts of climate change, and also the main cause of the problem as well. Not only is Thailand ranked among the 16 countries with an extreme risk of being affected by climate change over the next 30 years, but it is also ranked the world's 25th in terms of greenhouse gas emissions. Even more surprisingly, Bangkok releases almost the same level of carbon dioxide (CO2) as London, which is 10 times larger than Bangkok with respect to the size of the economy.

Climate change not only means warmer temperature or so called "global warming", but also more climate variability, such as hotter temperature during summer time, prolonged drought, shorter winters, abnormal rainfall patterns, and various forms of natural disasters which tend to occur more frequently and more severely. Altogether, these have major impacts on Thailand through (1) energy demand and prices (2) agricultural outputs and prices and (3) quantity and quality of tourist destinations and the number of foreign tourists in Thailand. An obvious example is severe coastal erosion and coral bleaching, which affects the tourism destinations that attract almost one third of the total number of foreign tourists in Thailand each year. If left untreated, it is likely that up to 13,000 rais along the Andaman Sea coastal areas may disappear within 5 years. This is also true for Pattaya beach, which may totally disappear as well. In addition, a continuous rise in sea temperature has already led to the most severe coral bleaching in Thailand history.

Climate change is not a distant problem anymore because it is becoming more severe and leading to more rigorous environmental rules and regulations. It is also creating new forms of non-tariff barriers, whether in the form of higher tax rates for products which have higher greenhouse gas emissions than standard, environmental laws that ban import of goods from countries with no greenhouse gas reduction campaigns, and even the implementation of carbon footprints concept. Taken as a whole, these are key challenges and pressure that Thai businesses must hastily adjust to accordingly. Not only businesses, but all of us, will be impacted by climate change. For instance, airline businesses are now facing tougher measures from the EU, which stipulate that all flights to and from Europe must pay for their greenhouse gas emissions. Consequently, they have to buy carbon credits or use EU emission allowances, which will inevitably result in higher prices for air tickets.

However, with challenges come opportunities, both in terms of improving the technology and production processes of existing products as well as launching new products and services. For example, one vegetable oil manufacturer has implemented carbon footprint in its production processes, which not only benefited the company with respect to cost savings, but is also expected to boost market share from about 10% to more than 15%. Or even carbon credit selling of 19 pig farms, which raises additional revenue of almost 60 million baht per year. New business opportunities are also found in responding to the needs of green consumers which have tendency to expand steadily. For example, technological innovation in healthy, frozen food and package adaptation process, which reduce plastic usage by 65%, is expected to increase sales of this particular product by 15%. Or the introduction of environmentally friendly construction materials, which is a segment that has good potential to grow over the long run.

Even though climate change is an important issue that we all must pay attention to, but it should not lead to dogmatic ideological doctrine, that every activity or project having only trivial effects on environment being abolished. Because every activity or project has both pros and cons, the best solution, thus, is to obtain most of the benefits while trying to minimize the negative environmental impacts. Systematic education and a standardized approach towards environmental literacy in our society is a must so that natural resources will be utilized in the most efficient way and conducive to sustainable economic development.

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