Climate-change naysayers claim that shifting from fossil fuels to alternative energies is unnecessary or too costly for economies. Yet, the cost of climate change is clearly evident. Manufacturers are considering moving from Thailand and other countries threatened by flooding and other forces related to climate change, according to Pavin Chachavalpongpun, associate professor at the Centre for Southeast Asian Studies, Kyoto University, in the second and final article of this two-part YaleGlobal series.
As the monsoon hits Thailand, farmers are not alone in watching the rolling clouds, but also factory owners and workers. Unlike the farmers who hope for the rains to flood seedling plots, workers worry that devastating floods might follow and drown factories. The floods of 2011 inundated 250 factories, putting 200,000 people out of work and disrupting global supply chains of electronics and auto parts.
The 2011 floods disrupted operations at 250 foreign factories in Thailand and led to price hikes of hard drives, auto parts and other electronics worldwide. Concern about climate change could spur new production and supply-chain strategies: increasing inventories, diversifying plant locations, placing locations close to market and avoiding locales prone to flooding or other climate conditions that could disrupt manufacturing.
Before the massive floods, “Thailand was an attractive investment destination in the first place, with a well-developed infrastructure, a free-enterprise economy, generally pro-investment policies and strong export industries,” Pavin notes. Thai politicians compounded the disruptions by refusing to cooperate on policies to prevent flooding. So in selecting factory locations, investors and businesses could seek competitive advantage and avoid countries with climate woes and political infighting. – YaleGlobal