7.6.1 General perspectives
Challenges to adapt to variations and changes in environmental conditions have been a part of every phase of human history, and human societies have generally been highly adaptable (Ausubel and Langford, 1997). Adaptations may be anticipatory or reactive, self-induced and decentralised or dependent on centrally-initiated policy changes and social collaboration, gradual and evolutionary or rooted in abrupt changes in settlement patterns or economic activity. Historically, adaptations to climate change have probably been most salient in coastal areas vulnerable to storms and flooding, such as the Netherlands, and in arid areas needing water supplies; but human settlements and activities exist in the most extreme environments on earth, which shows that the capacity to adapt to known conditions, given economic and human resources and access to knowledge, is considerable.
Adaptation strategies vary widely depending on the exposure of a place or sector to dimensions of climate change, its sensitivity to such changes, and its capacities to cope with the changes (Chapter 17). Some of the strategies are multi-sectoral, such as improving climate and weather forecasting at a local scale, emergency preparedness and public education. One example of cross-cutting adaptation is improving information and institutions for emergency preparedness. Systematic disaster preparedness at community level has helped reduce death tolls; for instance, new warning systems and evacuation procedures in Andhra Pradesh, India, reduced deaths from coastal tropical cyclones by 90%, comparing 1979 with 1977 (Winchester, 2000), and poor societies in other parts of the Bay of Bengal area have undertaken practical measures to reduce flood risks due to high levels of awareness and motivation among local communities. However, the effectiveness of such systems in reaching marginal populations, and their responses to such warnings, is uneven; and the timing of decisions to adapt affects the likely benefits.
Other strategies are focused on a sector, such as water, energy, tourism and health (see Chapters 3 and 8). Some are geographically focused, such as coastal area and floodplain adaptations, which can involve such initiatives as changing land uses in highly vulnerable areas and protecting critical areas. Adaptation, in fact, tends very often to be context-specific, within larger market and policy structures (Adger et al., 2005a), although it generally takes place within the larger context of globalisation (Benson and Clay, 2003; Sperling and Szekely, 2005).
There is a considerable literature on adaptations to climate variation and on vulnerabilities to extreme events, especially in developed countries; but research on potentials and costs of adaptation by industry, settlement and society to climate change is still in an early stage (Chapter 17). One challenge is that it is still difficult to project changes in particular places and sectors with much precision, whether by downscaling global climate models or by extrapolating from past experience with climate variation. Uncertainty about the distribution and timing of climate-change impacts at the local level makes judgments about the scale and timing of adaptation actions very difficult. Where there are co-benefits between climate-change adaptation and other economic or social objectives, there will be reasons for early action. In other cases, limits on predictability tend to delay adaptation (Wright and Erickson, 2003). In addition, there is little scientific basis as yet for assessing possible limits of adaptation, especially differences among locations and systems. In particular, the knowledge base about costs of adaptation is less well developed than the knowledge base about possible adaptation benefits. At least in some cases, costs might exceed actual benefits.
The extent to which potential vulnerabilities of industry are likely to motivate adaptation will depend to a large extent on the flexibility of business and on its capacity to adapt. In general, those industries with longer-lived capital assets (e.g., energy), fixed or weather-dependent resources (mining, food and agriculture), and extended supply chains (e.g., the retail-distribution industry) are likely to be more vulnerable to climate-change impacts. But many of these industries, especially in the industrialised world, are likely to have the technological and economic resources necessary both to recover from the impacts of extreme events (partly by sharing and spreading risk or by moving to safer locations), and to adapt over the longer term to more gradual changes. It is also clear that many other economic and social factors are likely to play a more important role in influencing innovation and change in industry than climate change. For many businesses, climate risk management can be integrated into overall business strategy and operations where it will be regarded as one among many issues that demand attention, to the degree that such adaptation is supported by investors and shareholders.
There is now considerable evidence emerging in Europe, North America and Japan that the construction and transportation sectors are paying attention to climate-change impacts and the need for adaptation (Lis0 et al., 2003; Shimoda, 2003; Salagnac, 2004; Chapter 17, Section 17.2.2). As one example, the US$1 billion 12.9 km Confederation Bridge between New Brunswick and Prince Edward Island in Canada, which opened in 1997, was built one metre higher to accommodate anticipated sea-level rise over its 100-year lifespan (McKenzie and Parlee, 2003). A range of technical advice is now available to planners, architects and engineers on climate impacts risk assessment (Willows and Connell, 2003), including specialised advice on options for responding to these risks (Lancaster et al., 2004). A few early estimates of possible costs of adaptation measures are beginning to be available; for instance, O'Connell and Hargreaves (2004) show that measures to reduce wind damage, flood risk and indoor heat would add about 5% to the cost of a typical new house in New Zealand.
Business adaptations will be in response to both direct impacts (involving direct observations of risks and opportunities as a result of changing climatic conditions) and indirect impacts (including changing regulatory pressures and consumer demand) as illustrated in Table 7.2. Adaptations can also take a wide variety of forms. They may include changes in business processes, technologies or business models (Hertin et al., 2003), or changes in the location of activities. Many of these adaptations represent incremental adjustments to current business activities (Berkhout et al., 2006). For instance, techniques already exist for adapting buildings in response to greater risks of ground movement (deeper foundations), higher temperatures (passive and active cooling) and driving rain (building techniques and cladding technologies). Frequently these adaptations are relatively low-cost and represent best practice (ACIA, 2004). For more structural adaptations - such as choice of location for industrial facilities - planning guidance, government policy and risk management by insurers will play major roles.
Awareness, capabilities and access to resources that facilitate adaptation are likely to be much less widely available in less developed contexts, where industrial production often takes place in areas vulnerable to flooding, coastal erosion and land slips. Production is also more likely to be tied to natural resources affected by changing climates. Potentials for adaptation to climate change in informal sectors in developing countries depend largely on the context: e.g., the impacts involved, the sensitivity of the industrial activity to those impacts, and the resources available for coping. Examples of adaptive strategies could include relocating away from risk-prone locations, diversifying production activities, and reducing stresses associated with other operating conditions to add general resiliency. Informal industry employs minimal capital and few fixed assets, so that it usually adapts relatively quickly to gradual changes. But adaptations that are substantial may call for an awareness of threats and responses to them that go beyond historical experience, a willingness to depart from traditional activity patterns, and access to financial resources not normally available to some small producers.
The energy sector can adapt to climate-change vulnerabilities and impacts by anticipating possible impacts and taking steps to increase its resilience, e.g., by diversifying energy supply sources, expanding its linkages with other regions, and investing in technological change to further expand its portfolio of options (Hewer, 2006; Chapter 12, Section 12.5.8). This sector has impressive investment resources and experience with risk management, and it has the potential to be a leader in industrial adaptation initiatives, whether related to reducing risks associated with extreme events or coping with more gradual changes such as in water availability. On the other hand, many energy sector strategies involve high capital costs, and social acceptance of climate-change response alternatives that might imply higher energy prices could be limited. Adaptation prospects are likely to depend considerably on the availability of information about possible climate-change effects to inform decisions about adaptive management.
Concerns about vulnerabilities and impacts for services are likewise concentrated on sectors especially sensitive to climate variation, such as recreation and tourism; and adaptations are also likely to be associated with changes in costs/prices, applications of technology, and attention to risk financing. For instance, wholesale and retail trades are likely to adapt by increasing or reducing space cooling and/or heating, by changing storage and distribution systems to reduce vulnerabilities, and by changing the consumer goods and services offered in particular locations. Some of these adaptations, although by no means all of them, could increase prices of goods and services to consumers.
Where climate change affects comparative advantages for regions in the global economy, trade patterns are likely to adapt largely through market mechanisms as the changes unfold rather than through strategies to reduce risk in anticipation of changes (Figure 7.2). In a general sense, there will be 'winners' and 'losers' as a result, potentially affecting economic growth and employment in both kinds of cases, which suggests the possible value of anticipatory planning and policy discourse. In many cases, building robust ties with the globalising economy could be a useful response to possible climate changes for places and societies built around small-scale social interactions and enterprises, because those ties could open up a wider range of possible alternatives for adaptation.
The short time-scales at which most commercial services operate allow great flexibility for adapting to climate change. Within the retail industry, it is likely that commerce will capitalise on long-term trends in consumer behaviour and lifestyle, relating to climate change through an expansion of markets for cooling equipment, and facilities and goods for outdoor recreation in temperate climates. Large injections of capital may be required to relocate commercial premises from low-lying areas vulnerable to flooding. In addition, technological investment will be required to reduce carbon emissions while maintaining competitive prowess in the global market. The most vulnerable are communities (particularly in developing countries) whose economy is based on the production and distribution of a restricted range of climate-sensitive commodities. For these communities, economic diversification should be a key response to reduce vulnerability.
The tourism sector may in some cases be able to adapt to long-term trends in climate change, such as increasing temperatures, at a cost, for instance by investing in snow-making equipment (see Chapter 14, Section 14.4.7), beach enhancement (see Chapter 6, Sections 6.5.2 and 22.214.171.124), or additional air-conditioning. The sustainability of some adaptation processes may be questionable: air-conditioning because of its energy use, snowmaking for its pressure on water resources or its costs (O'Brien et al., 2004). However, climate change is not likely to be linear, and the frequency and intensity of extreme climatic events, which affect not only the reality of risks, but also the subjective risk-perception of tourists, might become a far greater problem for the tourist industry. There are three categories of adaptation processes: technological, managerial and behavioural. While tourism providers tend to focus on the first two (preserving tourism assets, diversifying supply), tourists might rather change behaviour: they might visit new, suitable locations (for example snow-safe ski resorts at higher altitudes or in other regions) or they might travel during other periods of the year (for example, they might visit a site in spring instead of summer to avoid extreme temperatures). Awareness, adaptive capacities and strategies are likely to vary according to the wealth and the education of different categories of tourists and also among other stakeholders. For example, large tour operators should be able to adapt to changes in tourist destinations, as they are familiar with strategic planning, do not own the infrastructures and can, to some extent, shape demand through marketing.
Perhaps of even greater importance is the role of mobility in future tourism. Increasing prices for fuel and the need to reduce emissions might have substantial effects on transport availability and costs. For instance, the price of air transport, now the means of transport of 42% of all international tourists, is expected to rise in stabilisation scenarios (Gossling and Hall, 2005). This might call for adaptation in terms of leisure lifestyles, such as the substitution of long-distance travel by vacationing at home or nearby (Dubois and Ceron, 2005).
It also seems likely that tourism based on natural environments will see the most substantial changes due to climate change, including changes in economic costs (Gossling and Hall, 2005) and changes in travel flows. Tropical island nations and low-lying coastal areas may be especially vulnerable, as they might be affected by sea-level rise, changes in storm tracks and intensities (Chapter 16; Chapter 4, Section 4.2), changes in perceived climate-related risks, and changes in transport costs, all resulting in concomitant detrimental effects for their often tourism-based economies. In any of these cases, the implications are most notable for areas in which tourism represents a relatively large share of the local or regional economy, and these are areas where adaptation might represent a relatively significant need and a relatively significant cost.
The insurance sector has an important role to play in adaptation (Mills, 2004) as it is in the business of calculating risk costs and has begun to explore how risks can be expected to change into the future (Association of British Insurers, 2002). By communicating risk information to individual stakeholders, as through insurance pricing signals, insurers can help inform appropriate adaptive behaviours, although regulated markets or flat-rated insurance systems obstruct the transmission of the information required to motivate adaptation. Through reductions in premiums charged, insurance can also reward actions taken to reduce risk, such as by fitting hurricane shutters on a building or by the construction of local flood defences.
Where new risks are emerging, or known risks are increasing, new insurance coverages have been designed to help spread losses. Examples include the creation of weather derivatives, crop insurance and expanded property insurance coverage.
Generally, it is recognised that 'ex-ante' (before the fact) funding mechanisms in the form of insurance should be more beneficial for the affected community and the whole country's economy than ex-post (after the fact) mechanisms by means of credit, government subsidies or private donations. Only the exante approach offers the surety of payments as well as the potential to influence the level of risk, through linking insurance prices and conditions with government policy on hazard mitigation, implementation, and supervision of building codes etc., thus reducing a country's financial vulnerability and giving improved prospects for investment and economic growth (Gurenko, 2004). However, in developing countries there are questions about the viability of such approaches, concerning who in a poor country is able to afford an ex-ante premium and how real reductions in risk can be achieved in a society with relatively low risk literacy (Linnerooth-Bayer et al., 2005). Other potential sources of developing country adaptation funding are discussed by Bouwer and Aerts (2006).
Besides incentivising adaptation, the insurance industry itself will need to adapt to stay financially healthy. The main threat is a combination of very high loss events in a short time period (as almost happened in September 2005 with Hurricane Rita heading for the city of Houston after Hurricane Katrina had hit New Orleans). Trends that contribute to increasing the robustness of the sector include better risk management, greater diversification, better risk and capital auditing, greater integration of insurance with other financial services, and improved tools to transfer risks out of the insurance market into the capital markets through catastrophe risk securitisations (European Environment Agency, 2004), which have seen significant increases in value issued since 2004.
The key vulnerability of the current system of risk-bearing concerns the non-availability or withdrawal of private insurance cover, in particular related to flood risk. However, the threat of withdrawal can itself be a spur for adaptation. Following the October-November 2000 floods in England and Wales, the Association of British Insurers negotiated an increased allocation of government expenditure on flood defences and a stakeholder role in decisions around future development in floodplains, by threatening to withdraw flood insurance from locations at greatest risk (Association of British Insurers, 2002). With expectations for rising levels of flood risk in developed countries, political pressures demand that if private insurance is withdrawn, state-backed alternatives should be created leading to increased liabilities for governments. Without such a backstop more significant adaptive measures may be triggered. In the northern Bahaman islands of Abaco and Grand Bahama (hit by three major hurricanes and their associated storm surges between 1999 and 2004), in 2005 flood insurance was withdrawn for some residential developments, ending the ability to raise a bank-loan mortgage. Without a state-backed alternative, houses became abandoned as their value collapsed (Woon and Rose, 2004). Meanwhile, builders have begun to construct new houses in the Bahamian coastal floodplain on concrete stilts, bringing some properties back into the domain of insurability. Similar adaptive outcomes can be expected in other coastal regions affected by increasing flood risk.
The most general form of adaptation by infrastructures vulnerable to impacts of climate change is investment in increased resilience, for instance in new sources of water supply for urban areas. Most fields of infrastructure management, including water, sanitation, transportation and energy management, incorporate vulnerabilities to changing trends of supply and demand, and risks of disturbances in their normal planning.
In a situation where climate change, observed or projected, indicates a need for different patterns or priorities in infrastructure planning and investment, common strategies are likely to include increases in reserve margins and other types of backup capacity, attention to system designs that allow adaptation and modification without major redesign and that can handle more extreme conditions for operation. In many cases an issue is tradeoffs between capital costs and operating expenditures.
With regard to infrastructure where adaptation requires long lead times, such as water supply, there is evidence that adaptation to climate change is already taking place. An example would be the planning of British water companies mentioned in Section 126.96.36.199.1 above, undertaken at the behest of the UK Environment Agency (Environment Agency, 2004). Another would be the decision taken in 2004 to install a desalination plant to supplement the dwindling flows available for water supply for the city of Perth, Australia (Chapter 11, Section 11.6).
The infrastructure whose adaptation is especially important for the reduction of key vulnerabilities is that installed for flood protection. For example, London (UK) is protected from major flooding by a combination of tidal defences, including the Thames Barrier, and river defences upstream of the Barrier. The current standard for the tidal defences is about a 2000 to 1 chance of flooding in any year or 0.05% risk of flooding, and this is anticipated to decline to its original design standard of a 1000 to 1 chance, or 0.1% risk of flooding, as sea level rises, by 2030. The defences are being reviewed, in the light of expected climate changes. Preliminary estimates of the cost of providing a 0.1% standard through to the year 2100 show that a major investment in London's flood defence infrastructure of the order of UK£4 billion will be required within the next 40 years (London Climate Change Partnership, 2004). The capacity of storm drainage systems will also need to be increased to prevent local flooding by increasingly intense storms (UK Water Industry Research, 2004).
Adaptation strategies for human settlements, large and small, include assuring effective governance, increasing the resilience of physical and linkage infrastructures, changing settlement locations over a period of time, changing settlement form, reducing heat-island effects, reducing emissions and industry effluents as well as improving waste handling, providing financial mechanisms for increasing resiliency, targeting assistance programmes for especially impacted segments of the population, and adopting sustainable community development practices (Wilbanks et al., 2005). The choice of strategies from among the options depends in part on their relationships with other social and ecological processes (O'Brien and Leichenko, 2000) and the general level of economic development, but recent research indicates that adaptation can make a significant difference; for instance, the New York climate impact assessment projects significant increases in heat-related deaths (Rosenzweig and Solecki, 2001a), based on historical relationships, while the Boston CLIMB assessment (Kirshen et al., 2007) projects that heat-related deaths will decline because of adaptation over the coming century.
The recent case study of London demonstrates that climate change could bring opportunities as well as challenges, depending on socio-economic conditions, institutional settings, and cultural and consumer values (London Climate Change Partnership, 2004). One of the opportunities, especially in growing settlements, is to work towards a more sustainable city and to improve the quality of life for residents (Box 7.5). This can be achieved by making sure that urban planning takes into account the construction density, the distribution and impact of heat emissions, transportation patterns, and green spaces that can reduce not only heat-island effects.
Models have been established to predict the impact of urban thermal property manipulation strategies resulting from albedo and vegetation changes (Akbari et al., 1997) and urban form manipulation (Emmanuel, 2005). The diurnal air temperature inside urban wooded sites and the cooling effect of trees on urban streets and courtyards, and of groves and lawns, has been extensively quantified in Tel-Aviv, Israel (Shashua-Bar and Hoffman, 2002, 2004). For the Los Angeles region, several studies (Taha, 1996; Taha et al., 1997) projected the effects of increasing citywide albedo levels on mitigating the regional heat island (California's South Coast Air Basin, or SoCAB). A doubling of the surface albedo or a doubling of vegetative cover were each projected to reduce air temperature by approximately 2°C. Moreover, the study area was projected to experience a decrease in ozone concentration.
Other adaptive responses by settlements to concerns about climate change tend to focus on institutional development, often including improved structures for co-ordination between individual settlements and other parties, such as enhanced
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