Coastal Flood Peril Study: $3 Trillion Today – $35 Trillion by 2070

An exhaustive study of the threat posed by coastal flooding warns that “as many as 150 million people in the world’s major cities could be reliant on flood defenses by 2070 – more than three times the 40 million people today – as a result of climate change and urban development.”

The report, published under the auspices of the Organization for Economic Co-operation and Development (www.oecd.org), brings together analysis from Risk Management Solutions (RMS), the School of Civil Engineering and the Environment and the Tyndall Centre for Climate Change Research, University of Southampton, and the Centre International de Recherche sur l’Environnement et le Développement et Ecole Nationale de la Météorologie, Météo-France (CIRED).

It presents some alarming conclusions, highlighted as follows:
— Population exposed to coastal flooding in large cities is likely to increase more than threefold to 150 million by the 2070s due to climate change, subsidence and urban development.
— Total property and infrastructure exposure is predicted to increase from US$3 trillion today – 5 percent of current global GDP – to US$35 trillion in the 2070s – 9 percent of the projected global GDP.
— Miami is projected to have the highest property and infrastructure exposure by the 2070s, with more than US$3.5 trillion of exposed assets, followed by Guangzhou in China, with US$3.3 trillion and New York, USA, with US$2.1 trillion.
— Findings highlight the opportunity and a necessity for the insurance industry to promote climate change adaptation measures.

A press bulletin from RMS notes that the “findings are from the first stage of the largest study on urban coastal flood exposure ever undertaken. Over 130 key port cities worldwide are analyzed to investigate the likely impact of climate change alongside subsidence, population growth, and urban economic development. The study focuses on the exposure of people, property and infrastructure to a 1-in-100 year flood event now and in the future, and could have significant public policy implications for where to focus adaptation strategies to climate extremes.”

The conclusions are of special interest to the insurance industry, as they provide real estimates of the possible consequences it faces from the effects of climate change. While politicians debate what to do about it, the industry must address the actualities, and prepare for the future.

“The cities with the highest value of property and infrastructure assets exposed to coastal flooding caused by storm surge and damage from high winds today are primarily in developed countries,” said RMS. “The top ten cities, which contain 60 percent of the total exposure, are from only three wealthy countries (U.S., Japan, and The Netherlands), with Miami ranked as top.”

Dr. Celine Herweijer, principal scientist of future climate at RMS stated: “These findings deliver a clear message to businesses that invest, or are planning to invest, in highly exposed cities to start implementing pro-active risk management strategies that consider how risks will evolve over time. For the insurance industry, there is both an opportunity and a necessity to promote adaptation. Crucially, rising hazard does not have to translate into increased risk if the right measures are taken.”

She added: “Where risk is today privately insured, incentivizing adaptation amongst policy-holders will serve as a double pay-back for insurers. Likewise, as insurers and business expand their business in Asia, public and private investment in adaptation will be critical to sustaining long-term financial stability.”

The study also concludes that “half of the total population exposure to coastal flooding caused by storm surge and damage from high winds is contained in just ten cities.” They are “fairly evenly split between developed and developing countries, with Mumbai having the highest exposure to coastal flood.”

“Population growth and development are clearly key drivers of the increase in exposure, particularly in Asia, but climate change and subsidence acutely magnify the problem,” Dr. Herweijer stressed.

“The concentration of flood exposure in rapidly developing cities urgently underscores the need to integrate climate change implications into both national coastal flood risk management and urban development strategies,” observed Prof. Robert Nicholls, IPCC [International Panel on Climate Change (www.ipcc.ch)], author and director of research at the University of Southampton. “Given the aggregation of people and assets in port cities and their importance to global trade, failure to develop effective adaptation strategies would inevitably have not just local, but international economic consequences.”

In addition the RMS bulletin notes that the “annual probability of a 1-in-100 year event affecting one major city globally is as high as 74 percent and almost 100 percent over five years.”

Stéphane Hallegatte, economist at Météo-France and CIRED stated: “Even being optimistic that flood protection levels will be high everywhere in the future, the large population and asset exposure is likely to translate into regular city-scale disasters across the globe. Adaptation strategies need to be underpinned by solid governance, to help key cities understand and proactively manage current and future flood risk.”

“This report raises crucial policy considerations, and highlights the urgency for climate change mitigation, and risk-informed adaptation strategies at a city level,” added Jan Corfee-Morlot, senior policy advisor on climate change at the OECD. “Mitigation will slow and limit the exacerbating effects of climate change on coastal flood risk, at a minimum bringing precious time for cities to implement adaptation measures.”

Using what time is left looks to be of increasingly critical importance in “putting effective disaster management strategies and protection investments,” RMS noted. As an example, “previous defense projects, like the Thames Barrier in the U.K., have demonstrated that implementing coastal protection infrastructure typically takes at least 30 years.”

The report – Ranking of the world’s cities most exposed to coastal flooding today and in the future – is part of a series planned by the OECD on the theme of Cities and Climate Change. An executive summary is available at: www.rms.com. Further work will look at the effectiveness of flood defense measures and the vulnerability of key cities globally.

The full report, produced as part of the OECD project on Cities and Climate Change, is published on line as an OECD Environment Working Paper “Ranking of the world’s cities most exposed to coastal flooding today and in the future.”

Source: Risk Management Solutions