Navigating hotspots from the Yangtze, GBA to HSBC
by China Water Risk 20 September, 2019
Navigating hotspots from the Yangtze, GBA to HSBC: Singapore is getting serious about climate crisis, setting aside SGD100bn to make the city safe, but what about the rest of Asia? This month we look at what’s being done (if any) to avoid exposure to climate threats. Are the island cities of Hong Kong and Macao on the same page as Singapore? Where is China on protecting its rivers? And what’s Beijing doing to avoid a no-water day zero?
What governments do matter. Their actions can help protect people and assets against climate threats to ensure a future with water, rather than underwater. Regulations are being introduced in spades, especially along the Yangtze, China’s “mother river” where President Xi has declared “we must not allow the ecological environment of the Yangtze River to continue deteriorating in the hands of our generation”. Why? Because the Yangtze is simply too big to fail.
The Yangtze River Economic Belt (YREB), if treated as a country, would be the 3rd largest in the world in terms of both economy (US$5.3trn GDP) and population (565mn). No doubt, the tightening of pollution and water-nomic regulations on this “glo-cal” industrial heartland will have global supply chain repercussions. To avoid regulatory shocks and capitalise on opportunities, get on top of “Yangtze Water Risks, Hotspots & Growth” now – read the full report or check out our summary.
Pollution flows downstream, making development of upstream regions of the river challenging. Eco-compensation, where richer downstream provinces compensate poorer upstream regions to keep the environment pristine or where polluting provinces compensate others for cleaning up, was thus a hot topic at this year’s NPC and CPPCC meetings in March. Hear from the Chinese Academy for Environmental Planning’s Dr Zhanfeng Dong on how to design a YREB-specific scheme as he also highlights what needs improving.
Make no mistake, eco-compensation is big business – China’s Ministry of Finance set aside RMB5bn for eco-compensation in the Yangtze alone!
Protecting source regions of key rivers is also top of the national agenda. For the Yangtze River, a core protection zone, the size of the Czech Republic has been gazetted in its source region. Elsewhere, plans are afoot to protect the water sources of the nation’s capital to avoid no-water day zeros. China’s NDRC recently released the ‘Capital Two Zones’ plan to protect Zhangjiakou, a source region for water stressed Beijing and host for the upcoming 2022 Winter Olympics. Get our take on the plan and how it could affect industry and development in the region.
The cost of water pollution is “underestimated and under-appreciated”, according to newly released World Bank report. It estimates that worsening water quality is reducing economic growth by a third in some countries. With such impact, it is important to be able to see the status of water pollution. You’re in luck – the Institute of Public & Environmental Affairs (IPE) has recently launched the first national water quality map for China called the “Blue City Water Quality Index”. IPE’s senior researcher Sunan Shen introduces the map – find out which cities are best and worst performing.
Closer to home, we recently guest authored a report for CLSA U®, “Thirsty and underwater: Rising risks in the Greater Bay Area (GBA)”. The findings are not encouraging for the real estate, transport, trade and entertainment sectors. While the report is for CLSA’s clients only, we have highlighted some key takeaways in our report review. Not only are the 4 core GBA cities of Guangzhou, Hong Kong, Macao and Shenzhen as dry as the Middle East on a per capita basis, they are also very vulnerable to typhoons and storm surges.
Hong Kong was lucky with last year’s Typhoon Mangkhut. Seeing is believing – check out maps of what’s hit by the surge in Victoria Harbour if Mangkhut had arrived at high tide. The results are sobering.
Are we prepared? It doesn’t look like it. While the Guangdong government is busy with sea walls (it’s in the 13FYP) and saving water (there are provincial caps), Hong Kong and Macao have adopted a more laissez-faire approaches. Worse still, climate strategies that are employed do not make sense. We are worried and have laid out 8 no-sense climate strategies – they span from the Hong Kong and Macao governments to companies like HongKong Land, Hutchison Ports and HSBC. Is the Hong Kong Stock Exchange even compliant with its own rules? Check out our rant.
The risk landscape is changing and challenges ahead are plenty. We need a plan. But the current plan of heading for 3°C-4°C and building resilience for 1.5°C-2°C is clearly planning to fail. So delay no more! Get on top of these hotspots and let’s start making climate strategies that actually make sense!
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