Changing Climate Will Cost East Asia: ADB estimates China, Japan, South Korea and Mongolia together to pay $23 billion annually in the years to 2050 to “climate-proof” their infrastructure to cope with changing weather patterns

October 21, 2013, 8:30 AM

Changing Climate Will Cost East Asia

At first glance, the landlocked nation of Mongolia appears particularly well-positioned to withstand rising sea levels and other effects of global climate change. Yet, the changes in climate could still slap the rugged, sparsely populated nation with some of the stiffest unexpected costs in the region. This is one of the findings in a new report from the Manila-headquartered Asian Development Bank. The 197-page report estimates that four Asian nations – China, Japan, South Korea and Mongolia – together can expect to pay $23 billion annually in the years to 2050 to “climate-proof” their infrastructure to cope with changing weather patterns.“Countries in East Asia are exposed to a variety of climate-related natural disasters because of their size and location,” the report said. It cites predictions of an increasingly warmer and wetter region, noting that three of the world’s 10 populations most at-risk in rising seas are in East Asian cities: Shanghai, Guangzhou and Osaka/Kobe.

In absolute dollar terms, the region’s biggest preparatory costs will come from protecting populations against changes in the flow of water, including rising seas, in China, Japan and Korea.

China could face $11 billion in annual spending to boost the capabilities of its infrastructure as weather patterns shift, the bank says, adding that more flooding is a major risk. Just last week, the effects of a typhoon left the southeastern Chinese city of Yuyao with extensive flooding and an angered population that reportedly clashedwith police.

The ADB figures Japan might need to spend $5.6 billion each year in coming decades, while Korea may get a $1.2 billion annual bill. Those numbers are averages based on various scenarios the bank considered, so true costs could be far higher or lower.

The bank predicts that weather-proofing housing will eat up the biggest chunk of costs in the region, but maintaining roads will get more expensive too as changing weather patterns damage them more quickly.

Mongolia’s risks are somewhat different from its more populous neighbors with coastlines. Changing weather patterns are expected to strain its agricultural sector, including livestock, the bank said.

“In Mongolia, continued warming may exacerbate existing natural resource concerns, such as a diminution of water resources and desertification, the latter already affecting 78% of the country which is quite dependent on agriculture,” the ADB says.

Other analysts have also calculated risks to Mongolia from climate change. A United Nations agency’s assessment argues it is “essential to reduce the country’s vulnerability to the adverse impacts of climate change.”

The ADB forecasts climate proofing Mongolia will cost around $150 million annually going forward. The government in Mongolia is aware the country faces challenges.

While that figure is a fraction of the cost faced by other nations in the ADB scenario, the bank argues that expenditures should be considered relative to how much a country would have spent on infrastructure without climate change. In other words, the bank tried to estimate how much each country’s bill will rise.

Considered in this way, Mongolia would face 2.2% more annual spending. But that’s only a baseline scenario, and the ADB says Mongolia could be on the hook for 8.5% more if its top-line estimate comes to pass, resulting in the country needing an extra $560 million a year. That’s the highest percentage in the study of the four nations.

“Mongolia is less (economically) diversified and it is affected more by climate uncertainty, so it may wish to give more weight to the worst climate outcomes when developing its adaptation strategy,” the bank advised.

Given China’s already huge infrastructure-building program, the bank said its estimated 0.6% increase in expenditures appears affordable. The figure is 2.3% for Japan.

Those relatively low percentages are exactly the bank’s point: It argues that East Asian nations can afford to prepare for climate change by building it into their infrastructure programs.

“The average costs of climate proofing infrastructure are relatively modest compared to the total costs of infrastructure in the region,” the report concludes.

 

October 21, 2013, 7:03 AM

Q&A: Could natural disasters and climate change keep people poor?

Top of Form

By R Jai Krishna

Natural disasters that have smacked Southeast Asia recently have killed scores of people and left severe damage in their wake. Recovery has begun, but the dent these events leave on the region’s economies could derail international efforts to eradicate poverty, according to a recent report that looks at how climate change and exposure to severe weather impact different countries.

“As temperatures warm, many of the world’s poorest and most vulnerable citizens will face increased risks associated with more intense or protracted droughts, extreme rainfall and heat waves,” notes the joint report by London-based think-tank the Overseas Development Institute, Met Office and Risk Management Solutions, a software company that helps reinsurers and other financial institutions to quantify and manage catastrophic risks.

The report, “The Geography of Poverty, Disasters and Climate Extremes in 2030,” comes on the heels of several weather-related calamities that have hit South and Southeast Asia with ferocity over the past week.

First was Typhoon Nari, which killed at least 15 people in the Philippines before slamming into Vietnam, where more than 120,000 people were forced to evacuate their homes. Then on Tuesday a 7.2-magnitude earthquake, carrying the force of at least 32 atomic bombs, jolted major tourist destinations in the Philippines. So far at least 170 people have been killed, and the death toll continues climbing.

Other parts of Asia have also witnessed major disasters in recent times, including devastating earthquakes in China, the quake-triggered tsunami in Japan and the most recent, Cyclone Phailin, in India, one of the largest cyclones to ever hit the region.

Without concerted action, the report contends, as many as 325 million people in just 49 countries will remain in extreme poverty, defined as living on less than $2 a day, by 2030.

In Southeast Asia that includes roughly 31 million people – 13.2 million in the Philippines; 4.9 million in Vietnam; 4.8 million in Thailand; 3.4 million in Indonesia; and 1.5 million in Cambodia.  In South Asia, the numbers are even higher: 126.5 million people in India; 57.5 million in Pakistan and 20.9 million in Bangladesh.

The Overseas Development Institute’s head of climate management, Dr. Tom Mitchell, spoke to The Wall Street Journal about the evolving threat of disasters and how, if adequate measure aren’t taken now, they could push millions of people back across the poverty line in emerging economies in South and Southeast Asia.

Edited excerpts to follow:

The Wall Street Journal: What is the focus of your report and how are you relating disasters to poverty alleviation? 

Dr. Mitchell:  There is a big international move over the next 15 years or so to try and eliminate extreme poverty as an extension to the U.N. Millennium Development Goals to be decided in 2015. It is likely to have an end-extreme-poverty index as the primary target. So what we wanted to do with this report was see to what extent those likely to be living in poverty in 2030 based on a “business as usual” [scenario] are also exposed to natural hazards. It is simply kind of overlaying poverty projections with projections of natural hazards.

The reason we wanted to do that is because we have good evidence to suggest that the disasters cause reversals in progress in reducing poverty. They drop people back into poverty if they have escaped, or they might make people newly poor.  With the report, we wanted to look at where the geographic focus of the problem was and with the report we modeled the poverty numbers, we looked at the future geographic distribution of natural hazards, we thought about the impact of climate change and we also saw what capacity the governments [in different countries] have to deal with these problems. We overlaid those and came up with a  set of countries and territories that are still likely to have a high number of people in poverty, be highly exposed to  natural hazards and have the inability to adequately deal with the problem.

The overall focus is very much moving away from just looking at the number of lives saved, or the number of people killed by the disasters, but instead thinking about the kind of impact that they have on people, their incomes, their livelihoods and local businesses.

Does your report essentially mean that climate change and natural disasters can actually push back people into poverty?

The implication is that climate change is causing more extreme events particularly extremes of heat, heavy rainfall, flooding, droughts. There is less information about the extent to which climate change is impacting tropical cyclones but that is because we have lack of evidence around that. But climate change could well be impacting those as well.

Where they intersect and impact people, poor people or people living above the poverty line, then the evidence is that they do drop people into poverty. They destroy crops, they destroy the facilities that people rely on, like health facilities, they make it hard for people to move around because of damages to roads. They could cause people to pull their children out of school, and they can cause malnutrition, things like that.

What measures can governments and international aid agencies take in order to mitigate or reduce the impact?

In order to reduce the way disasters [can lead to] poverty you need to focus on infrastructure resilience – health facilities, schools and roads.  When people are evacuated, you need to make sure that their incomes are supported. When they are [in shelters] we need to provide a means of income.  To scale up the social safety net, you need to focus on protecting natural resources. And there needs to be an extension of insurance schemes and community saving schemes to the poorest.

One of the other key elements, when disasters strike, often governments advertise for contractors to come in and help with the rebuilding. The key element is to make sure that local labor and local businesses are supported in that recovery process, rather than giving big contracts to companies from outside the region, or potentially outside the country. So there are a number of measures that can help reduce the way in which disasters cause poverty.  And this is going to be a key issue for international targets on eliminating extreme poverty by 2030.

What could be the worst-case scenario if these countries miss the warnings and failing to act ahead of time? 

The negative impact, of course, is very high amounts of economic loss. The cost is high both on the state, in terms of lost revenue and assets, but also on households. The impact there is that poverty reduction fails, inequality in terms of income increases, and there is a setback to development progress.

We already know that for every $10 spent on disasters, $9 is spent on relief and rehabilitation, and only $1 on preparing for or reducing the risk.  That really needs to shift and more resources need to go into reducing the risk and preparedness. And those elements also need to focus on the poorest.