Existential Coastal Threats: 8 Things You Must Know

By Debra Tan 24 November, 2020

Rapid SLR will happen sooner; yet, we are still making wrong capital decisions. CWR's Tan explains

Coastal threats are geo-locational risks with a tendency to cluster yet we are still driving investments to vulnerable locations despite clear concentrated financial risks - stupid right?
We do this because of an incomplete APAC risk snapshot that left out chronic SLR risks; factoring them in will warrant recalibration across valuations from terminal value to sovereign risk re-ratings
Permanent SLR also changes all vulnerable asset valuations from 'freehold' to 'leasehold'; unconvinced? Check out 8 things you need to know + our survivial guide

To survive imminent and existential coastal threats, we must start preparing for them now. Instead we are far from prepared & still making stupid decisions…

Coastal threats albeit rising seas or storm surges from typhoons/hurricanes are geo-locational risks with a tendency to cluster. But despite clear concentrated financial risks, we are still driving investments to vulnerable locations. What’s worse is that we are still investing in carbon intensive industries which only act to exacerbate their vulnerability. Stupid right?

We are still driving investments into vulnerable locations as have yet to account for chronic SLR risks…

We do this because we have not yet accounted for a huge chunk of chronic SLR risks and so we have an incomplete APAC risk snapshot that perpetuates wrong investment decisions. Significant & chronic looming tail risks warrant recalibration across valuations from terminal values, sovereign risk re-ratings and so on. As it is, we already have a few countries/territories on our watchlist.

…permanent SLR overhang changes all vulnerable asset valuations from “freehold” into “leasehold”

You know the permanent SLR overhang also changes all vulnerable asset valuations from “freehold” into “leasehold”, yet a blanket downward revision of all such assets have yet to happen. This is finance 101; not natural capital accounting. This big chunk of chronic risks is not even mispriced, they are completely missing and you wonder why finance, corporates & investors are not making the right capital decisions.

Worse still, the longer we wait, the wider the valuation gaps become as coastal threats only increase. And there may not be a chance to sell down later as there’ll be fewer buyers as coastal threats become increasingly obvious. So preparations to switch from a hard to soft landing need to start now. Don’t believe us, Swire Properties has just sold their real estate assets in Miami that are vulnerable to coastal threats.

I said in my last rant on sea level rise that it was time to be FOMO – find out what SLR experts say. Since you are unlikely to have read any of the research since then, do at least read the 8 things you absolutely must know about our rising seas; then decide if you want to dive into the series of reports we have just released.

Here are eight short excerpts from our our “Changing Risk Landscapes” report …

1. Vanishing ice from Switzerland to Himalayas = SLR + freshwater threats. Vanishing ice from Switzerland to Himalayas eventually end up flowing into the ocean contributing to SLR. Mountain glaciers already face accelerated glacial melt as many mountain regions are already warmer, but beyond SLR, they also bring threats to our freshwater. See when ice will vanish in Switzerland in our report;

2. Our oceans are taking the heat = steric SLR + oxygen production at risk; Oceans have warmed at an alarming rate – the heat absorbed is equivalent to dropping five Hiroshima bombs per second in the ocean for the last 25 years. So the warmer our oceans get, the higher the seas rise due to thermal expansion. And it’s not just rising seas, warming oceans will also affect oxygen production. Get the latest on ocean threats in our report;

3. Greenland & Antarctica melting 6x faster = rapid SLR from MISI & MICI. Rapid ice melt is happening right now. 6.4trn tonnes of ice have been lost from 1992 to 2018 – for perspective, this is equivalent to 39x the coal tonnage produced in the same period. Loss of marine buttressing ice-sheets could lead to rapid melt. Find out more about Marine Ice Sheet and Ice Cliff Instability (MISI & MICI) in our report. Don’t know what these are – they are explained in our report;

4. On the brink! Know key tipping points to avoid locking-in 10m+ of SLR 5. Glacier melt and associated SLR will be locked-in when we reach various temperature tipping points. Although 8m of SLR may occur beyond 2100, we have already locked-in this in at today’s temperatures. As we will likely reach 1.5°C as early as 2030, plausible SLR by 2100 can be as high as 3m. Check out the tipping point graphics in our report;

5. Scary feedback loops! Arctic ice loss + permafrost thaw = rapid SLR.  Warming Arctic temperatures and Siberian wildfires are accelerating permafrost thaw. The loss of Arctic sea ice for longer periods over the summer also means that warm sunlight is not reflected back but instead absorbed by the ocean. Both these cause negative feedback loops and accelerate warming – we will have to make even deeper cuts, See how much these could emit in the report;

6. IPCC SLR estimates are conservative = get on top of latest projections! A large chunk of high-end SLR estimates are missing from IPCC scenarios so ice experts say they may not provide the full picture. Their conservative nature do not help with no-regret adaptation planning. We give you the lowdown including charts on the various SLR ranges for various time frames in our report;

7. SLR does not rise evenly = APAC SLR is higher than global average.  We have used global mean sea levels in our CWR APACCT 20 Index but SLR differs regionally. So make sure you use the right set when building scenarios – we show you exactly how in our report; and

8. SLR + storm surge & subsidence = exacerbate risks + bring forward impacts.  Storm surge from typhoons and subsidence make SLR worst. Not only are risks exacerbated. they are also brought forward. Storm tides can already be 5m+ today and will be 10m+ by 2100 for Hong Kong. Parts of Jakarta, Manila and Bangkok are sinking materially and will see rising seas sooner. See our report for when and how much; plus how to build storm tide scenarios for the future!

Don’t sink, dive into these 8 things now!

After this, if you, like we are convinced that rapid SLR will happen sooner rather than later, then do check out the CWR Coastal Capital Threat Series. Start with Waterproofing APAC to Avoid Atlantis – it is the executive summary of the entire series of reports and is full of infographics plus need-to-know facts about the new risk landscape.

Get over your FOMO & read our SLR report Series

It is essentially CWR’s survival guide to avoiding Atlantis. Like any good survival guide, it walks you through 3-steps to waterproof APAC replete with next steps and to-do lists for asset owners, asset managers and banks; central banks and regulators; and governments.

NO its not over the top doom & gloom … The last time we were 0.5°C-1°C warmer than the pre-industrial period, it was during the Last Interglacial Period when SLR was as high as 9.3m; and the last time our world faced similar CO2 concentrations (400ppm+) our seas were 25m higher. So get on top of these existential risks NOW !! See our executive summary … or deep dive into  our report Changing Risk Landscapes: Coastal Threats to Central Banks. 


CWR Coastal Capital Threat Series

Further Reading

  • Future SLR Projections & Biggest Worries – In this follow up interview, HKU’s Dr. Nicole Khan shares her biggest concerns on how future SLR projections are rising higher & faster than thought & shares the best approach for building realistic scenarios
  • Sea Level Rise – What The Science Tells Us – What’s the latest on sea level rise projections? HKU’s Dr. Nicole Khan shares key findings from her survey of 100+ sea level experts, as well as talks risks to Hong Kong and what we should take away from COVID-19
  • It’s Time To Prioritise Sea Level Rise – CWR’s Debra Tan says it’s time to be FOMO about our rising seas. From emission accelerants to accelerated impacts she runs through three reasons to rethink our attitudes towards sea level rise – it’s a big deal, sea level rise is worse than you think. This time, even she’s depressed
  • Thirsty And Underwater: Rising Risks In Greater Bay Area – How will water & climate risks, including rising sea levels & droughts, threaten the already water-stressed Greater Bay Area (GBA)? CWR’s Tan & Mirando explain in their latest CLSA report and highlight companies’ failure in climate risk disclosures
  • It Happened – Central Banks And Water Risks – Half a dozen new reports by the NGFS means that CWR has achieved a key milestone in embedding water risks in finance. Debra Tan and Dharisha Mirando expand on these game-changing moves by the central banks. The credit evolution has started

Debra Tan
Author: Debra Tan
Debra heads the CWR team and has steered the CWR brand from idea to a leader in the water risk conversation globally. Reports she has written for and with financial institutions analyzing the impact of water risks on the Power, Mining, Agricultural and Textiles industries have been considered groundbreaking and instrumental in understanding not just China’s but future global water challenges. One of these led the fashion industry to nominate CWR as a finalist for the Global Leadership Awards in Sustainable Apparel; another is helping to build consensus toward water risk valuation. Debra is a prolific speaker on water risk delivering keynotes, participating in panel discussions at water prize seminars, numerous investor & industry conferences as well as G2G and academic forums. Before venturing into “water”, she worked in finance, spending over a decade as a chartered accountant and investment banker specializing in M&A and strategic advisory. Debra left banking to pursue her interest in photography and also ran and organized philanthropic and luxury holidays for a small but global private members travel network She has lived and worked in Beijing, HK, KL, London, New York and Singapore and spends her spare time exploring glaciers in Asia.
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