Surviving Rising Seas – 20 APAC Cities: Who’s Ahead & Who’s Behind?
By Debra Tan, Ronald Leung 24 November, 2020
>100mn residents could be submerged in just 20 APAC cities. See who are most at risk with our latest CWR APACCT 20 Index
Forget about a metre of sea level rise, grim news from our polar region from accelerated ice melt & permafrost thaw plus Siberian wildfires mean that sea level rise could be as high as 3m by 2100. So which cities in Asia Pacific (APAC) are more/less at risk from coastal threats & storm surges?
Are any safe? After all, besides Beijing, Kuala Lumpur, Vientiane & Phnom Penh, all other APAC capitals are coastal, as are major economic hubs such as Aichi, Shanghai, Shenzhen, Osaka and Guangzhou.
>100mn residents in just 20 cities could be submerged by SLR
Given that over 100mn residents in just 20 cities could be submerged by sea level rise locked-in by our current climate pathway, are governments doing anything to ensure the survival of their cities to rising seas? The CWR APACCT 20 Index provides answers with a real risk snapshot of APAC coastal capital threats.
CWR APACCT 20 Index – a real risk snapshot of regional coastal capitals & key cities …
The CWR APACCT 20 Index benchmarks absolute & relative chronic tail risks from coastal threats for 20 APAC capitals and key cities for two scenarios – one at 1.5°C that we will lock-in and another at 4°C (our current climate pathway) that we must try to avoid.
With our 20 cities index, you can gauge the risk spread of your portfolio…
…100+ financial professionals input on it’s development
So yes, you can now gauge the risk spread of your portfolio against our index rankings of 20 cities for 1.5°C & 4°C with & without government adaptation efforts which can alleviate physical threats ahead. Finally, a real risk snapshot for the region that is free!
The 20 capitals and cities assessed in our index are Aichi/Nagoya, Auckland, Bangkok, Guangzhou, Ho Chi Minh, Hong Kong, Jakarta, Macao, Manila, Osaka, Seoul, Shanghai, Shenzhen, Singapore, Suzhou, Sydney, Taipei, Tianjin, Tokyo & Yangon.
For each of these cities, we analysed the stacked SLR risks for four climate scenarios (1.5°C, 2°C, 3°C and 4°C) across key indicators (population, land area and key infrastructure assets) for each city. Storm surge threats from typhoons/tropical cyclones/hurricanes, subsidence plus government adaptation actions to reduce physical risks have also been assessed and benchmarked in the index.
We didn’t do this by ourselves. Over 100 finance professionals from chairs/directors of bank boards to research analysts as well as financial industry associations, asset owners and financial regulators have provided feedback on the development of this index helped us with consensus on what to/what not to include; indicator weightings; assessment methodology and so on – if you are interested in who they are and what they wanted … click here.
The results & rankings were unexpected…
We thought those who are more exposed would do more to protect their cities. But interestingly, we have found some no-sense climate strategies – cities which faced more risk are making less adaptation efforts to survive the threats ahead than those that are less at risk.
Surprisingly, some city govts are not acting like they should; compounding vulnerability
Clearly such complacent actions by governments to coastal threats will compound vulnerability, so it pays to find out what these cities are before more allocating capital; or you may want to divest to spread the worrying levels of concentrated financial risks we find clustered in APAC capitals & cities.
For the rest of this article, we run through those that are ahead and those that lag. But do check out the full index rankings and At-a-glance coastal threat assessment for 20 APAC cities by clicking here or on the image below.
See key takeaways & risk rankings for all 20 cities at 1.5°C & 4°C and with/without govt action in the city factsheets
The “Least Threats” vs. “Most Threats” cities – Jakarta & Bangkok in the top 5 “Least Threats” list …
Surprised to see both Jakarta and Bangkok make it to the top 5 “Least Threats” list? Well that’s not because they face no risk, it’s because the other cities face much higher levels of coastal threats due to more imminent storm surges from typhoons.
Since the CWR APACCT 20 Index includes government adaptation action, the ex. Govt Action index reflects just physical risks from coastal threats from SLR, storm surge & subsidence. The top 5 most vulnerable and bottom 5 most vulnerable cities are as follows at 1.5°C and 4°C scenarios:
Points to note are:
- Besides Singapore & Yangon, all other top 5 “Least Threats” cities of Auckland, Sydney, Bangkok and Jakarta are not in the path of typhoons. That said, Singapore and Yangon do not face typhoons like the cities further up north where almost all the bottom 5 or Quartile 4 of our index are located.
- Changes in rankings between 1.5°C and 4°C CWR APACCT 20 Index – ex Govt Action Indices are mainly due to the topography of the city as our index reflects stacked SLR risks for four temperature scenarios. So in the case of the top 5 cities, although rankings are largely the same, Yangon replaced Bangkok which dropped from #4 to #6 because Bangkok is more low lying than Yangon and/or has more key assets that are exposed to coastal threats. Sydney and New Zealand have also swapped positions for the same reason.
- On the other end of the rankings, all cities face significant storm surge risks. Aichi/Nagoya, Osaka, Guangzhou, Hong Kong, Macao, Manila, Suzhou and Shanghai have all experienced more than one T10 or equivalent typhoon in the past 5 years.
- Note that at both 1.5°C and 4°C, key Greater Bay Area cities and Yangtze River Delta cities are vulnerable. Given that these are Guangzhou, Hong Kong, Macao, Shanghai and Suzhou, it is imperative that China leads the region and delivers on its carbon neutrality pledges as this could help us avoid a 4°C path.
- We will likely reach 1.5°C by 2030 and lock-in SLR that will hurt low-lying cities – over a third of Aichi/Nagoya and Ho Chi Minh City and almost half of Macao and Suzhou will be flooded – to see each individual threat assessment – click on the city or access all 20 cities here.
Proactive vs laggard adaptation efforts – cities you expect to protect people & assets are not …
Government adaptation actions can reduce impacts from physical coastal threats. So we benchmarked their performance to find those who are doing the most/least to protect their cities.
Unfortunately, most governments do not disclose all actions being taken to reduce impacts of physical risks, let alone the budget being set aside for it. Also, the exact impacts of government actions to adapt for coastal threats are difficult to quantify as actions are unique across cities. Luckily, with the help of 100+ financial professionals, we reached consensus on key proxy indicators to help benchmark adaptation actions…
Some governments are doing much more than others and we expected Tokyo, Seoul, Sydney and Hong Kong to make it to the Top 5, but they didn’t. Seoul even disappoints as it is in the bottom 5. Interestingly, those that face physically less threats are doing the most. The table shows cities making the most & least efforts to adapt:
We expected Tokyo, Seoul, Sydney & HK to make it to the Top 5, but they didn’t…
Points to note are:
- Singapore (#1) tops the proactive list and deservedly so. It has plans to adapt and will raise critical infrastructure by 5m after factoring in tides. It is factoring in SLR of 2m + tides of 2m + 1m of buffer in case – this means that it is planning for a no-regret scenario of 3m of SLR. PM Lee said Singapore will likely spend north of SGD100bn and that the island nation will bend the knee to climate change (like it did with water) as “Singapore is especially vulnerable to one grave threat, and that is rising sea levels”. The government has also launched a SG$10mn fund to close gaps. SG$10mn five-year programme to fund pioneering research proposals & collaborations to help better understand long-term SLR and its variability, regional patterns, and extreme weather events.
- Jakarta (#2) is taking drastic efforts to move its administrative capital. It is also planning to build a US$40bn giant sea wall & artificial islands to protect the remaining financial and business activities from inundation, which is also sinking. Auckland (#5) also published a coastal inundation risk study and designed a coastal management framework in 2017 despite low typhoon risks.
- Shenzhen (#3) & Shanghai (#4) are building/reinforcing sea walls to protect the cities and are adopting a sponge city approach that aims to collect & process up to 70% of rainwater that could exacerbate flooding. Indeed, both these cities scored so well on this front that their rankings changed drastically at 4°C:
- Taipei (#20) has done the least in protecting its city but among the laggards, Macao (#19) also warrants attention as it is also physically most at-risk in both 1.5°C and 4°C scenarios. Its continuous delay in building coastal defences put the city and its gaming industry at risk. Already in 2017 Super Typhoon Hato cost the city US$1.6bn in economic losses and impacts will only be more deadly in the future.
Hot tip: Due to the lack of information available, we could not score government actions at both 1.5ºC and 4°C but you can check to see if governments are prepared by seeing if they are planning for no-regret scenarios. The worst-case plausible SLR is currently around 3m by 2100 so if they are adapting to that they are on track to protect their cities.
Do check out more in-depth government action analysis vis-à-vis various GDP metrics in our report “Sovereigns at Risk: APAC Capital Threats” – more unexpected behaviour is revealed; plus see who we put on our watchlist.
You may also find the various government case studies in the appendix useful.
Final rankings: actual threats faced = physical threats + government adaptation
Government adaptation efforts should correspond to the physical threat levels faced so our index provides a combined score. The top and bottom quartile at 1.5°C and 4°C are as follows:
Points to note are:
- The rankings among winners remain at both 1.5°C and 4°C. Note that Singapore, Auckland & Jakarta have consistently showed up amongst the top 5 across all three sets of rankings. In short cities that face relatively less threats are taking relatively more action than those that are much more at risk!
- The laggards differ at 1.5°C and 4°C but the ‘usual suspects’ of Aichi/Nagoya, Hong Kong, Macao and Taipei remain present for both scenarios. The latter three have implications for sovereign risk ratings as both the cities of Hong Kong and Macao represent 100% of the territories’ GDP and Taipei contributes 27% of Taiwan’s GDP.
- Further analysis showed Tokyo’s adaptation efforts are especially lackluster given its absolute GDP at risk plus its ability to pay for adaptation. Tokyo’s plus Aichi/Nagoya and Osaka’s performance led us to put Japan on our re-ratings watch-list along with Hong Kong, Macao and Taiwan. For why, see our summary here or access the full report “Sovereigns at Risk: APAC Capital Threats”
Warning! As things are not as they seem, it’s best to take a closer look …
It is evident from our findings that things are not as they seem. Richer cities can be more complacent toward adaptation despite more to lose and those that are very vulnerable are doing less to adapt than those that are not. So make sure you dive into our index rankings and definitely check out our city factsheets, especially if you have assets in these cities.
Once you have figured out your exposure and hotspot be sure to carry out more in-depth scenario analysis. Don’t know how to do this? Don’t worry expensive modelling is not necessary, we run through a step-by-step guide in one entire chapter on “How to build scenarios for SLR tail risks & event-driven storm tides” in our report “Changing Risk Landscapes: Coastal Threats to Central Banks”.
For next steps, check out our 3-step survival guide, “Waterproofing APAC to Avoid Atlantis”
Remember, don’t just use the IPCC’s SLR estimates to plan adaptation as they could hide a large chunk of plausible high-end estimates. As ice experts say “may be misleading and will lead to a poor evaluation of the true risks”. More on various SLR estimates here or hear from a SLR expert
Too much detail too fast? Can’t be bothered to read everything? Then just read the executive summary and our 3-step survival guide – “Waterproofing APAC to Avoid Atlantis”. Next step to-do-lists for central bankers & regulators, asset owners & managers, bankers and governments can also be found there.
Don’t sink, stay afloat with our survival guide.
More On CWR Coastal Capital Threat Series…
- The CWR Survival Guides to Avoiding Atlantis – Sea levels can be 3m by 2100, putting urban real estate equivalent to 22 Singapores underwater in just 20 APAC capitals & cities. With US$5.7trn of annual GDP at stake, get on top of the new risk landscape to survive
- CWR APACCT 20 Index – Finance Sector Input On Methodology – Coastal threat assessment can be complex & daunting, so we did the heavy lifting by creating the index. But we did not do this alone – 100+ finance experts helped. See who they were & how feedback shaped the index
- Sovereigns At Risk: Lots Of Capital In Vulnerable Spots – Clustered nature of rising coastal threats plus lax govt action put APAC sovereigns at risk. CWR’s analysis of GDP, trade, markets & bank loans reveal intense concentration of risks. As no-sense strategies pervade, see who’s in CWR’s watchlist
- Existential Coastal Threats: 8 Things You Must Know – Rapid SLR will happen sooner than we think, yet we are still driving investments to vulnerable locations. CWR’s Debra Tan shares 8 things you need to know about the existential threat from SLR – from glaciers in the mountains to ice sheets in our poles, permafrost + more
- 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
- 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
- No-Sense Climate Strategies: From DSD To HSBC – Hong Kong’s shortsighted & unrealistic climate plans will leave key assets & infrastructure exposed that mean the government, companies, investors and the public are even more exposed. China Water Risk’s Dharisha Mirando & Debra Tan expand
- 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 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
- Capital Threats Remain Post COVID – There is no vaccine for climate & water risks, yet some in the financial sector are still burying their heads. CWR’s Dharisho Mirando reminds us how our capital is at risk & steps we can take to reduce them while going green
Read more from Debra Tan →
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