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Preparing for Climate Change as a Finance Director

I remember enjoying the early Tom Clancy novels. In 1994, I heard that his latest novel, Debt of Honor, involved a commercial airliner crashing into the Capitol. I was so offended by the improbability of that happening that I stopped reading his novels. I used to read Scientific American until an issue in 2013 predicted that California’s Central Valley could become a lake due to intense rain. Again, I was struck with the absurdity of the proposition that I stopped reading SA only to recently discover that climate scientists see severe flooding as probable. In January 2020, I was working on a study for a large Southern California city when the city staff decided to cancel in-person meetings due to some novel virus. I told them that it wouldn’t last more than a couple of weeks. That was my third strike. I don’t know your batting average, but mine stinks in the ability to imagine what’s possible.

I remember when a city’s direction was decided by a dominant city manager. Those days are long gone. We’re now in the age of consensus and consensus building. The finance team is an important partner in that process. If anyone doubts that, ask them who makes sure they’re paid.

To help you in your role as a consensus builder, I wanted to share the cautionary tale of my experience pooh-poohing unlikely events in order to encourage you to think outside the box. With weather patterns subject to violent swings because of climate change, we could have a drought in the Summer and be in a flood plain in Winter. An article by UCLA climate scientists in 2018 projects that “…the state will experience a much greater number of extremely wet and extremely dry weather seasons — especially wet — by the end of the century. The authors also predict that there will be a major increase in the likelihood of severe flooding events, and that there will be many more quick changes from one weather extreme to the other.”

Okay, so your question is, “What does this have to do with me? I collect revenues and pay bills. Isn’t this a public works problem?” Well, let’s identify a few areas where your “safe” area could be affected.

Water Utility Finances. I discussed in other articles about the need for a flexible water rate structure to address consumption decreases due to mandated water rationing. What about when there is so much rain that it also impacts consumption. And, check to see if your sewer rates are tied to water rates!

Flooding. It’s hard to motivate city councils to think about floods when we’re focused on a drought. But this might be the best time to study the city’s storm drain capacity. Has debris been cleared from the flood channels? Is our auxiliary power generator sufficiently above where there might be flooding? You can force a seat at the decision table when you explain that you can’t do payroll if the power is down and the generator is flooded. We did adequately when Covid forced many to work at home, but what happens if the internet is down and the streets are flooded. Where’s Tom Clancy when we need an answer?

Data Processing. What is your contingency plan if the storm has cut your access to the internet? Do you have a “sisterly” city that will provide data processing if you are down? Do you have multiple cities in case the nearest one is also flooded? How will you get accounting information to them? Do you have the capacity to do checks manually if all other options fail?

Purchase Orders. Do you have a manual P.O. system that can be used if your maintenance staff needs equipment and parts when your fancy computerized accounting system is down?

The Other “Big One.” A “flood” event is very similar to an “earthquake” event. However, you should be aware of the demands of each – a generator anchored to the ground might be okay in an earthquake but could be flooded or washed away in a severe storm.

The topic of disaster probability and preparation would be great for discussing at CSMFO training events.

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1 comentario

19 oct 2021

Hi Rick,

Good article. San Clemente's water rate structure has that flexibility, but in a bad policy way.

Part I costs - All labor and replacement costs are charged out by meter size. Something like 80% of the meters are 1" (most of the residential) so we all pay the same for these costs. It's based upon the argument that we all create the same demand on the physical system and labor costs. So that part is funded even if the City does not sell one drop of water.

Par II costs - Water usage, with a small minimum. The water costs are a small part of the Part I & II costs (like 15% to …

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