The coastal region of the Gulf of Mexico -- historically America's energy breadbasket -- is subject to $350 billion of cumulative economic losses due to environmental degradation, particularly that caused by climate change, according to a new report sponsored by Entergy Corp., which counts the region as part of its backyard for operations.

"The Gulf Coast is vulnerable to growing environmental risks today with [more than] $350 billion of cumulative expected losses by 2030," the report said. "Economic losses will increase by 50-65% in the 2030 timeframe driven by economic growth and subsidence, as well as the impacts of climate change: wind and storm surge damage from hurricanes drives significant losses in the Gulf Coast today."

The study modeled about 50,000 oil and gas industry structures including 90,000 miles of pipelines, 2,000 offshore platforms and 27,000 wells. Also included was more than 500,000 miles of electric transmission and distribution lines and about 300 power generation facilities.

The report said oil and gas assets are particularly vulnerable to environmental threats, particularly storms. The report's mid-case scenario estimates that 30% of the overall damage projected occurs in the oil and gas sector, driven by offshore assets, which are more vulnerable than those onshore.

Today, on average, the Gulf Coast faces annual losses of about $14 billion due to extreme storms, the report said. The research predicts that over the next 20 years damages could total $350 billion. It predicts that 7% of total capital investment for the Gulf Coast area and 3% of annual gross domestic product will go toward reconstruction activities in the Gulf.

"In the 2030 timeframe, hurricane Katrina/Rita-type years of economic impact may become a once-in-every-generation event as opposed to once every [approximately] 100 years today," the report said. "The impact of severe hurricane in the near term could also have a significant impact on any growth and reinvestment trajectory in the region."

The report concedes that there are many unknowns surrounding potential impacts from climate change. However, despite "...any impacts from climate change, the Gulf Coast will face increasing loss from subsidence and asset growth," it said.

Among the report's recommendations is the unlocking of "barriers to increasing the resilience of industry (e.g., electric utility and oil and gas sectors)."

Overall, "pursuing all potentially attractive actions may involve an investment of approximately $120 billion over the next 20 years, and may lead to $200 billion in averted loss over the lifetime of measures."

The report was prepared with the support of America's Energy Coast and America's Wetlands Foundation.

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