Box 72 Environmental migration

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Migration, usually temporary and often from rural to urban areas, is a common response to calamities such as floods and famines (Mortimore, 1989), and large numbers of displaced people are a likely consequence of extreme events. Their numbers could increase, and so could the likelihood of their migration becoming permanent, if such events increase in frequency. Yet, disaggregating the causes of migration is highly problematic, not least since individual migrants may have multiple motivations and be displaced by multiple factors (Black, 2001). For example, studies of displacement within Bangladesh and to neighbouring India have drawn obvious links to increased flood hazard as a result of climate change. But such migration also needs to be placed in the context of changing economic opportunities in the two countries and in the emerging mega-city of Dhaka, rising aspirations of the rural poor in Bangladesh, and rules on land inheritance and an ongoing process of land alienation in Bangladesh (Abrar and Azad, 2004).

Estimates of the number of people who may become environmental migrants are, at best, guesswork since (a) migrations in areas impacted by climate change are not one-way and permanent, but multi-directional and often temporary or episodic; (b) the reasons for migration are often multiple and complex, and do not relate straightforwardly to climate variability and change; (c) in many cases migration is a longstanding response to seasonal variability in environmental conditions, it also represents a strategy to accumulate wealth or to seek a route out of poverty, a strategy with benefits for both the receiving and original country or region; (d) there are few reliable censuses or surveys in many key parts of the world on which to base such estimates (e.g., Africa); and (e) there is a lack of agreement on what an environmental migrant is anyway (Unruh et al., 2004; Eakin, 2006).

An argument can also be made that rising ethnic conflicts can be linked to competition over natural resources that are increasingly scarce as a result of climate change, but many other intervening and contributing causes of inter- and intra-group conflict need to be taken into account. For example, major environmentally-influenced conflicts in Africa have more to do with relative abundance of resources, e.g., oil, diamonds, cobalt, and gold, than with scarcity (Fairhead, 2004). This suggests caution in the prediction of such conflicts as a result of climate change.

Economic sectors, settlements and social groups can also be affected by climate change response policies. For instance, certain greenhouse-gas stabilisation strategies can affect economies whose development paths are dependent on abundant local fossil-fuel resources, including economic sectors involved in mining and fuel supply as well as fuel use. In this sense, relationships between climate-change impacts and sustainable development (IPCC Working Group II) are linked with discussions of climate-change mitigation approaches (IPCC Working Group III).

In many cases, the importance of climate-change effects on human systems seems to depend on the geographic (or sectoral) scale of attention (Abler, 2003; Wilbanks, 2003a). At the scale of a large nation or region, at least in most industrialised nations, the economic value of sectors and locations with low levels of vulnerability to climate change greatly exceeds the economic value of sectors and locations with high levels of vulnerability, and the capacity of a complex large economy to absorb climate-related impacts is often considerable. In many cases, therefore, estimates of aggregate damages of climate change (other than major abrupt changes) are often rather small as a percentage of economic production (e.g., Mendelsohn, 2001). On the other hand, at a more detailed scale, from a small region to a small country, many specific localities, sectors and societies can be highly vulnerable, at least to possible low-probability/high-consequence impacts; and potential impacts can amount to very severe damages. It appears that large-regional or national estimates of possible impacts may give a different picture of vulnerabilities than an aggregation of vulnerabilities defined at a small-regional or local scale.

7.4.2 Systems of interest

The specified systems of interest for Chapter 7 are industry, services, utilities/infrastructure, human settlement and social issues. Industry

Industrial sectors are generally thought to be less vulnerable to the impacts of climate change than other sectors, such as agriculture and water services. This is in part because their sensitivity to climatic variability and change is considered to be comparatively lower and, in part, because industry is seen as having a high capacity to adapt in response to changes in climate. The major exceptions are industrial facilities located in climate-sensitive areas (such as coasts and floodplains), industrial sectors dependent on climate-sensitive inputs (such as food processing) and industrial sectors with long-lived capital assets (Ruth et al., 2004).

We define industry as including manufacturing, transport, energy supply and demand, mining, construction and related informal production activities. Other sectors sometimes included in industrial classifications, such as wholesale and retail trade, communications, and real estate and business activities, are included in the categories of services and infrastructure (below). Together, industry and economic services account for more than 95% of GDP in highly-developed economies and between 50 and 80% of GDP in less-developed economies (World Bank,

2006), and they are very often at the heart of the economic base of a location for employment stability and growth.

Industrial activities are, however, vulnerable to direct impacts such as temperature and precipitation changes. For instance, weather-related road accidents translate into annual losses of at least Canadian $1 billion annually in Canada, while more than a quarter of air travel delays in the United States are weather-related (Andrey and Mills, 2003). Buildings are also affected by higher temperatures during hot spells (Livermore, 2005). Moreover, facilities across a range of industrial sectors are often located in areas vulnerable to extreme weather events (including flooding, drought, high winds), as the Hurricane Katrina event clearly demonstrated. Where extreme events threaten linkage infrastructures such as bridges, roads, pipelines or transmission networks, industry can experience substantial economic losses. In other cases, climate change could lead to reductions in the direct vulnerability of industry and infrastructures. For instance, fewer freeze-thaw cycles in temperate regions would lead to less deterioration of road and runway surfaces (Mills and Andrey, 2002). There exist relatively few quantified assessments of these direct impacts, suggesting an important role for new research (Eddowes et al., 2003).

Less direct impacts on industry can also be significant. For instance, sectors dependent on climate-sensitive inputs for their raw materials, such as the food processing and pulp and paper sectors, are likely to experience changes in sources of major inputs. In the longer term, as the impacts of climate change become more pronounced, regional patterns of comparative advantage of industries closely related to climate-sensitive inputs could be affected, influencing regional shifts in production (Easterling et al., 2004). Industrial producers will also be influenced indirectly by regulatory and market changes made in response to climate change. These may influence locational and technology choices, as well affecting costs and demand for goods and services. For instance, increased demand for space cooling may be one result of higher peak summer temperatures (Valor et al., 2001; Giannakopoulos and Psiloglou, 2006). A range of direct (awareness of changing weather-related conditions) and indirect (changing policy, regulation and behaviour) impacts on three different classes of industry is identified in Table 7.2.

In developing countries, besides modern production activities embedded in global supply chains, industry includes a greater proportion of enterprises that are small-scale, traditional and informally organised. Impacts of climate change on these businesses are likely to depend on the determinants identified in the TAR: location in vulnerable areas, dependence on inputs sensitive to climate, and access to resources to support adaptive actions. Many of these activities will be less concerned with climate risks and will have a high capacity to adapt, while others will become more vulnerable to direct and indirect impacts of climate change.

An example of an industrial sector particularly sensitive to climate change is energy (e.g., Hewer, 2006; Chapter 12, Section Climate change is likely to affect both energy use and energy production in many parts of the world. Some of the possible impacts are rather obvious. Where the climate warms due to climate change, less heating will be needed for industrial,

Table 7.2. Direct and indirect climate change impacts on industry.


Direct impacts

Indirect impacts


Built Environment:

Construction, civil engineering

Energy costs

External fabric of buildings Structural integrity Construction process Service infrastructure

Climate-driven standards and regulations Changing consumer awareness and preferences

Consodine, 2000; Graves and Phillipson, 2000; Sanders and Phillipson, 2003; Spence et al., 2004; Brewer, 2005; Kirshen et al., 2006

Infrastructure Industries:

Energy, water, telecommunications, transport (see Section

Structural integrity of infrastructures Operations and capacity Control systems

Changing average and peak demand Rising standards of service

Eddowes et al., 2003; UK Water Industry Research, 2004; Fowler et al, 2005

Natural Resource Intensive Risks to and higher costs of input Industries: resources

Pulp and paper, food processing, Changing regional pattern of production etc.

Supply chain shifts and disruption Changing lifestyles influencing demand

Anon, 2004; Broadmeadow et al., 2005

commercial and residential buildings, and cooling demands will increase (Cartalis et al., 2001), with changes varying by region and by season. Net energy demand at a national scale, however, will be influenced by the structure of energy supply. The main source of energy for cooling is electricity, while coal, oil, gas, biomass and electricity are used for space heating. Regions with substantial requirements for both cooling and heating could find that net annual electricity demands increase while demands for other heating energy sources decline (Hadley et al., 2006). Critical factors for the USA are the relative efficiency of space cooling in summer compared to space heating in winter, and the relative distribution of populations within the U.S. in colder northern or warmer southern regions. Seasonal variation in total demand is also important. In some cases, due to infrastructure limitations, peak demand could go beyond the maximum capacity of the transmission system.

Tol (2002a, b) estimated the effects of climate change on the demand for global energy, extrapolating from a simple country-specific (United Kingdom) model that relates the energy used for heating or cooling to degree days, per capita income, and energy efficiency. According to Tol, by 2100 benefits (reduced heating) will be about 0.75% of gross domestic product (GDP) and damages (increased cooling) will be approximately 0.45%, although it is possible that migration from heating-intensive to cooling-intensive regions could affect such comparisons in some areas.

In addition to demand-side impacts, energy production is also likely to be affected by climate change. Except for impacts of extreme weather events, research evidence is more limited than for energy consumption; but climate change could affect energy production and supply (a) if extreme weather events become more intense, (b) where regions dependent on water supplies for hydropower and/or thermal powerplant cooling face reductions in water supplies, (c) where changed conditions affect facility siting decisions, and (d) where conditions change (positively or negatively) for biomass, windpower or solar energy production.

For instance, the TAR (Chapter 7) concluded that hydropower generation is likely to be impacted because it is sensitive to the amount, timing and geographical pattern of precipitation as well as temperature (rain or snow, timing of melting). Reduced stream flows are expected to jeopardise hydropower production in some areas, whereas greater stream flows, depending on their timing, might be beneficial (Casola et al., 2005; Voisin et al., 2006). According to Breslow and Sailor (2002), climate variability and long term climate change should be considered in siting wind power facilities (also see Hewer, 2006). Extreme weather events could threaten coastal energy infrastructures (e.g., Box 7.4) and electricity transmission and distribution infrastructures. Moreover, soil subsidence caused by the melting of permafrost is a risk to gas and oil pipelines, electrical transmission towers, nuclear-power plants and natural gas processing plants in the Arctic region (Nelson et al., 2001). Structural failures in transportation and industrial infrastructure are becoming more common as a result of permafrost melting in northern Russia, the effects being more serious in the discontinuous permafrost zone (ACIA, 2004).

Policies for reducing greenhouse gas (GHG) emissions are expected to affect the energy sector in many countries. For instance, Kainuma et al. (2004) compared a global reference scenario with six different GHG reduction scenarios. In the reference scenario under which emissions continue to grow, the use of coal increases from 18% in 2000 to 48% in 2100. In aggressive mitigation scenarios, the world's final energy demand drops to nearly one-half of that in the reference scenario in 2100, mainly associated with reducing coal use. Kuik (2003) has found a trade-off between economic efficiency, energy security and carbon dependency for the EU.

7.42.2 Services

Services include a wide variety of human needs, activities and systems, related both to meeting consumer needs and to employment in the service activities themselves. This section includes brief discussions of possible climate-change effects on trade, retail and commercial services, tourism and risk financing/insurance as illustrations of the implications of climate change - not implying that these sectors are the only ones that could be affected, negatively or positively.

7.422.1 Trade

Possible impacts of climate change on inter-regional trade are still rather speculative. Climate change could affect trade by reshaping regional comparative advantage related to (a) general climate-related influences (Figure 7.2), such as on agricultural production, (b) exposure to extreme events combined with a lack of capacity to cope with them, and/or (c) effects of climate-change mitigation policies that might create markets for emission-reduction alternatives. In an era of increased globalisation, small changes in price structures (including transportation costs) could have amplified effects on regional economies and employment. Beyond actual climate-change impacts, a perception of future impacts or regulatory initiatives could also affect investment and trade.

Climate change may also disrupt transport activities that are important to national supplies (and travellers) as well as international trade. For instance, extreme events may temporarily close ports or transport routes and damage infrastructure critical to trade. Increases in the frequency or magnitude of extreme weather events could amplify the costs to transport companies and state authorities from closed roads, train delays and cancellations, and other interruptions of activities (O'Brien et al., 2004). It appears that there could be linkages between climate-change scenarios and international trade scenarios, such as a number of regional and sub-regional free trade agreements, although research on this topic is lacking. Retail and commercial services

Retail and other commercial services have often been neglected in climate-change impact studies. Climate change has the potential to affect every link in the supply chain, including the efficiency of the distribution network, the health and comfort of the workforce (Chapter 8), and patterns of consumption. Many of the services can be more difficult to move than industrial facilities, because their locations are focused on where the people are. In addition, climate-change policies could raise industrial and transportation costs, alter world trade patterns, and necessitate changes in infrastructure and design technology. As one example, distribution networks for commercial activities would be affected in a variety of ways by changing winter road conditions (e.g., ACIA, 2004) and negatively affected by an increase in hazardous weather events. Strong winds can unbalance high-sided vehicles on roads and bridges, and may delay the passage of goods by sea. Transportation routes in

Reduced Comparative Increased Comparative

Regional Advantage Regional Advantage

Figure 7.2. General effects of climate change on international trade: greater net benefits from climate change are likely to show trade benefits, along with environmental in-migration.

Reduced Comparative Increased Comparative

Regional Advantage Regional Advantage

Figure 7.2. General effects of climate change on international trade: greater net benefits from climate change are likely to show trade benefits, along with environmental in-migration.

permafrost zones may be negatively affected by higher temperatures which would shorten the winter-road season (Instanes et al., 2005). Coastal infrastructure and distribution facilities are vulnerable to inundation and flood damage. In contrast, transportation of bulk freight by inland waterways, such as the Rhine, can be disrupted during droughts (Parry,

2000). Further, climate variation creates short-term shifts in patterns of consumption within specific retail markets, such as the clothing and footwear market (Agnew and Palutikof, 1999). However, most impacts entail transfers within the economy (Subak et al., 2000) and are transitory.

Perishable commodities are one of the most climate-sensitive retail markets (Lin and Chen, 2003). It is possible that climate change will alter the sourcing and processing of agricultural produce; and climate-change policies (e.g., a carbon tax or an emissions offset payment) may further alter the geographical distribution of raw materials and product markets. Tourism

A substantial research literature has assessed the consequences of climate change for international tourist flows (e.g., Agnew and Viner, 2001; Hamilton et al., 2005), for the tourist industries of nations (Becken, 2005; Ceron and Dubois, 2005), destinations (Belle and Bramwell, 2005), attractions, such as national parks (Jones and Scott, 2007; Chapter 14, Section 14.4.7), and tourism activities (Perry, 2004; Jones et al., 2006) or sectors of tourism such as ski-tourism (e.g., Elsasser and Burki, 2002; Fukushima et al., 2003; Hamilton et al., 2003).

Likely effects of climate change on tourism vary widely according to location, including both direct and indirect effects. Regarding direct effects, climate change in temperate and high latitude countries seems to mean a poleward shift in conditions favourable to many forms of tourism (Chapter 15). This might, for instance, lead to more domestic tourism in north-west Europe (Chapter 12, Section 12.4.9; Agnew and Viner, 2001; Maddison,

2001) and in the middle latitudes of North America (Chapter 14, Section 14.4.7). If winters turn out to be milder but wet and windy, however, the gains to be expected are less obvious (Ceron, 2000). Areas dependent on the availability of snow are among those most vulnerable to global warming (Chapter 11, Sections 11.4.9; Chapter 12, Section 12.4.9; Chapter 14, Section 14.4.7). In summer, destinations already hot could become uncomfortable (Chapter 12, Section 12.5.9). Tropical destinations might not suffer as much from an increase in temperatures, since tourists might expect warm climates as long as indoor comfort is assured - with implications for greenhouse gas emissions (Gossling and Hall, 2005). For low-lying islands, sea-level rise and increasingly frequent and intense weather extremes might become of great importance in the future (Chapter 16, Section 16.4.2). Extreme climate events, such as tropical storms, could have substantial effects on tourist infrastructure and the economies of small-island states (London, 2004).

Indirect effects include changes in the availability of water and costs of space cooling, but at least as significant could be changes in the landscape of areas of tourist interest, which could be positive or negative (Braun et al.,1999; Uyarra et al., 2005; Chapter 14, Section 14.4.7). Warmer climates open up the possibility of extending exotic environments (such as palm trees in western Europe), which could be considered by some tourists as positive but could lead to a spatial extension and amplification of water- and vector-borne diseases. Droughts and the extension of arid environments (and the effects of extreme weather events) might discourage tourists, although it is not entirely clear what they consider to be unacceptable. In tropical environments, destruction due to extreme weather events (buildings, coral reefs, trees and plants) is a concern, but vegetation and landscape tend to recover relatively quickly with the notable exception of eroded beaches and damaged coral reefs. One indirect factor of considerable importance is energy prices, which affect both the cost of providing comfort in tourist areas and the cost of travelling to them (Becken et al., 2001). This effect can be especially significant for smaller, tourist-oriented countries, often in the developing world; for instance, receipts from international tourism account for 39% of GDP in the Bahamas, but only 2.4% for France (World Tourism Organization, 2003).

The environmental context in which tourism will operate in the future involves considerable uncertainties. The range of possible scenarios is great, and there have been some attempts to link the future of tourist activities to SRES scenarios (Chapter 14, Section 14.4.7; Chapter 11, Section 11.4.9) . In these scenarios, tourist reactions to climate change are assumed to be constant, notwithstanding the fact that these responses are currently not satisfactorily understood.

7 . Insurance

Insurance is a major service sector with the potential to be directly affected by any increase in damages associated with climate change, such as more intense and/or frequent extreme weather events (see Box 7.3). While a number of lines of insurance have some potential to be affected by catastrophe losses, the principal impacts are expected to be on property lines.

As the actuarial analysis of recent loss experience is typically an inadequate guide to catastrophe risk, since the 1990s probabilistic 'catastrophe' modelling software has become employed by insurers for pricing and managing portfolios of property catastrophe risk (Grossi and Kunreuther, 2005). At the start of 2006, the five-year forward-looking activity rate employed in the most widely used Hurricane Catastrophe Model was increased relative to mean historical rates with an acknowledgement that some contribution to this increase is likely to reflect climate change (Muir Wood et al., 2006).

Within the risk market, reinsurers tend to be more pessimistic about catastrophe risk-costs than the insurers who are ceding the risk, and this perspective has been highlighted by statements from reinsurers going back more than a decade warning of the potential impacts of climate change (Swiss Re, 2004; Munich Re, 2005). However, in 2006, insurers also began to communicate directly with their policyholders regarding the rising costs of claims attributed to climate change (Allianz and World Wildlife Fund, 2006; Crichton, 2006).

The specific insurance risk coverages currently available within a country will have been shaped by the impact of past catastrophes. Because of the high concentration of losses where, over the past 50-60 years, there have been catastrophic floods, private sector flood insurance is generally restricted (or even unavailable), so that in many developed countries governments have put in place alternative state-backed flood insurance schemes (Swiss Re, 1998).

In both developed and developing countries, property insurance coverage will expand with economic growth. If overall risk increases under climate change, the insurance industry can be expected to grow in the volume of premium collected, claims paid and, potentially, income (where insurers overcome consumer and regulatory pressures to restrict increases in insurance rates, and where catastrophe loss cost increases are appropriately anticipated and modelled). However, market dislocations are also likely, as in 2006 when, unable for regulatory reasons to pass on higher technical hurricane risk costs, U.S. insurers declined to cover homeowners and businesses at the highest-risk coastal locations, thereby undermining the real estate market and forcing government intervention in structuring some alternative insurance provision (Freer, 2006).

After a decade of rising losses (from both natural and man-made catastrophes), insurance is generally becoming more restrictive in what is covered. Insurance rates in many areas rose after 2001 so that, while the 2004 year was the worst (up to that time) for U.S. catastrophe losses, it was also the most profitable year ever for U.S. insurers (Dyson, 2005). However, the years 2001 to 2005 were not so profitable for reinsurers, although increases in prices saw significant new capital entering the market in 2002 and 2005, while 2006 appeared a benign year for losses.

Where increased risk costs lead insurers to reduce the availability of insurance, there will be impacts on local and regional economies, including housing and industrial activity,

Box 7.3. The impact of recent hurricane losses

The US$15.5 billion insurance loss of Hurricane Andrew in 1992 (US$45 billion adjusted to 2005 values and exposures) remains an exemplar of the consequences on the insurance industry of a catastrophe more severe than had been anticipated, leading to the insolvency of 12 insurance companies and significant market disruption. However, after major adjustments, including the widespread use of catastrophe models, the private insurance market re-expanded its role, so that in the four hurricanes of 2004 (with a total market loss of around US$29 billion from the U.S., Caribbean and Gulf Energy sectors) only one small U.S. insurance company failed, and there was little impact on reinsurance rates, largely because state-backed insurance and reinsurance mechanisms in Florida absorbed a significant proportion of the loss. However, a far greater proportion of the US$60 billion of insured losses from the 2005 hurricanes in Mexico, the energy sector in the Gulf of Mexico and the USA fell onto the international reinsurance market, leading to at least two situations where medium-sized reinsurers could not remain independently viable. Following more than 250,000 flood claims in 2005 related to Hurricanes Katrina, Rita and Wilma, the U.S. federal National Flood Insurance Program would have gone bankrupt without being given the ability to borrow an additional US$20.8 billion from the U.S. Treasury.

unless government expands its risk protection roles. In particular in developed countries, governments are also likely to be the principal funders of risk mitigation measures (e.g., flood defences) that can help ensure that properties remain insurable. In the developing world, the role of insurers and governments in offering risk protection is generally limited (Mills, 2004).

The use of insurance is far lower in developing and newly-developed countries (Enz, 2000), as insurance reflects wealth protection that typically lags a generation behind wealth generation. As highlighted by events such as 2005 Hurricane Stan in Mexico and Guatemala, individuals bear the majority of the risk and manage it through the solidarity of family and other networks, if at all. However, once development is underway, insurance typically expands faster than the growth in GDP. With this in mind there has been a focus on promoting 'micro-insurance' to reduce people's financial vulnerability when linked with the broader agenda of risk reduction (ProVention Consortium, 2004; Abels and Bullen, 2005), sometimes with the first instalment of the premium paid by the non-governmental organisation (NGO), e.g., in an insurance scheme against cyclones offered in eastern Andhra Pradesh and Orissa.

For the finance sector, climate change-related risks are increasingly considered for specific 'susceptible' sectors such as hydroelectric projects, irrigation and agriculture, and tourism (UNEP, 2002). In high carbon-emitting sectors, such as power generation and petrochemicals, future company valuations could also become affected by threatened litigation around climate-change impacts (Kiernan, 2005). Some specialised investment entities, and in particular hedge funds, take positions around climate related risks, via investments in reinsurance and insurance companies, resource prices such as oil and gas with the potential to be affected by Gulf hurricanes, and through participation in alternative risk transfer products, e.g., insurance-linked securities such as catastrophe bonds and weather derivatives (see Jewson et al., 2005).

7.423 Utilities/infrastructure

Infrastructures are systems designed to meet relatively general human needs, often through largely or entirely public utility-type institutions. Infrastructures for industry, settlements and society include both 'physical' (such as water, sanitation, energy, transportation and communication systems) and 'institutional' (such as shelter, health care, food supply, security, and fire services and other forms of emergency protection). In many instances, such 'physical' and 'institutional' infrastructures are linked. For example, in New York City adaptations of the physical water supply systems to possible water supply variability are dependent on changes within the institutions that manage them; conversely, institutions such as health care are dependent to some degree on adjustments in physical infrastructures to maintain effective service delivery (Rosenzweig and Solecki, 2001a).

These infrastructures are vulnerable to climate change in different ways and to different degrees, depending on their state of development, their resilience and their adaptability. In general, floods induce more physical damage, while drought and heatwaves tend to have impacts on infrastructure systems that are more indirect.

Often, the institutional infrastructure is less vulnerable as it embodies less fixed investment and is more readily adapted within the time-scale of climate change. Moreover, the effect of climate change on institutional infrastructure can be small or even result in an improvement in its resilience; for example, it could help to trigger an adaptive response (e.g., Bigio, 2003).

There are many points at which impacts on the different infrastructure sectors interact. For instance, failure of flood defences can interrupt power supplies, which in turn puts water and wastewater pumping stations out of action. On the other hand, this means that measures to protect one sector can also help to safeguard the others. Water supplies

Climate change, in terms of change in the means or variability, could affect water supply systems in a number of ways. It could affect water demand. Increased temperatures and changes in precipitation can contribute to increases in water demand, for drinking, for cooling systems and for garden watering (Kirshen, 2002). If climate change contributes to the failure of small local water sources, such as hand-dug wells, or to inward migration, this may also cause increased demand on regional water supplies. It could also affect water availability. Changes in precipitation patterns may lead to reductions in river flows, falling groundwater tables and, in coastal areas, to saline intrusion in rivers and groundwater, and the loss of meltwater will reduce river flows at key times of year in parts of Asia and Latin America (Chapter 3, Section 3.4.3). Furthermore, climate change could damage the system itself, including erosion of pipelines by unusually heavy rainfall.

Water supplies have a life of many years and so are designed with spare capacity to respond to future growth in demand. Allowance is also made for anticipated variations in demand with the seasons and with the time of day. From the point of view of the impacts of climate change, therefore, most water supply systems are quite able to cope with the relatively small changes in mean temperature and precipitation which are anticipated for many decades, except at the margin where a change in the mean requires a significant change in the design or technology of the water supply system, e.g., where reduced precipitation makes additional reservoirs necessary (Harman et al., 2005) or leads to saline intrusion into the lower reaches of a river. An example is in southern Africa (Ruosteenoja et al., 2003), where the city of Beira in Mozambique is already extending its 50 km pumping main a further 5 km inland to be certain of freshwater.

More dramatic impacts on water supplies are liable to be felt under extremes of weather that could arise as a result of climate change, particularly drought and flooding. Even where water-resource constraints, rather than system capacity, affect water-supply functioning during droughts, this often results from how the resource is allocated rather than absolute insufficiency. Domestic water consumption, which represents only 2% of global abstraction (Shiklomanov, 2000), is dwarfed by the far greater quantities required for agriculture. Water supply systems, such as those for large coastal cities, are often downstream of other major users and so are the first to suffer when rivers dry up. Under Integrated Water Resource Management, such urban areas would receive priority in allocation, because the value of municipal water use is so much greater than agricultural water use, and therefore they can afford to pay a premium price for the water (Dinar et al., 1997).

In many countries, additional investment is likely to be needed to counter increasing water resource constraints due to climate change. For example, Severn-Trent, one of the nine English water companies, has estimated that its output is likely to fall by 180 Megalitres/day (roughly 9% of the total) by 2030 due to climate change, making a new reservoir necessary to maintain the supply to Birmingham (Environment Agency, 2004). However, such changes will only become a major problem where they are rapid compared to the normal rate of water supply expansion, and where systems have insufficient spare capacity, as in many developing countries.

During the last century, mean precipitation in all four seasons of the year has tended to decrease in all the main arid and semi-arid regions of the world, e.g., northern Chile and the Brazilian NorthEast, West Africa and Ethiopia, the drier parts of Southern Africa and Western China (Folland et al., 2001). If these trends continue, water resource limitations will become more severe in precisely those parts of the world where they are already most likely to be critical (Rhode, 1999).

Flooding by rivers and tidal surges can do lasting damage to water supplies. Water supply abstraction and treatment works are sited beside rivers, because it is not technically advisable to pump raw water for long distances. They are therefore often the first items of infrastructure to be affected by floods. While sedimentation tanks and filter beds may be solid enough to suffer only marginal damage, electrical switchgear and pump motors require substantial repairs after floods, which cannot normally be accomplished in less than two weeks. In severe riverine floods with high flow velocities, pipelines may also be damaged, requiring more extensive repair work. Sanitation and urban drainage

Some of the considerations applying to water supply also apply to sewered sanitation and drainage systems, but in general the effect of climate change on sanitation is likely to be less than on water supply. When water supplies cease to function, sewered sanitation also becomes unusable. Sewer outfalls are usually into rivers or the sea, and so they and any sewage treatment works are exposed to damage during floods (PAHO, 1998). In developing countries, sewage treatment works are usually absent (WHO/Unicef, 2000) or involve stabilisation ponds, which are relatively robust. Sea-level rise will affect the functioning of sea outfalls, but the rise is slow enough for the outfalls to be adapted to the changed conditions at modest expense, by pumping if necessary. Storm drainage systems are also unlikely to suffer serious storm damage, but they will be overloaded more often if heavy storms become more frequent, causing local flooding. The main impact of climate change on on-site sanitation systems such as pit latrines is likely to be through flood damage. However, they are more properly considered as part of the housing stock rather than items of community infrastructure. The main significance of sanitation here is that sanitation infrastructures (or the lack of them) are the main determinant of the contamination of urban flood water with faecal material, presenting a substantial threat of enteric disease (Ahern et al., 2005). Transport, power and communications infrastructures

A general increase in temperature and a higher frequency of hot summers are likely to result in an increase in buckled rails and rutted roads, which involve substantial disruption and repair costs (London Climate Change Partnership, 2004). In temperate zones, less salting and gritting will be required, and railway points will freeze less often. Most adaptations to these changes can be made gradually in the course of routine maintenance, for instance by the use of more heat-resistant grades of road metal when resurfacing. Transport infrastructure is more vulnerable to effects of extreme local climatic events than to changes in the mean. For instance, 14% of the annual repair and maintenance budget of the newly-built 760 km Konkan Railway in India is spent repairing damage to track, bridges and cuttings due to extreme weather events such as rain-induced landslides. This amounts to more than Rs. 40 million, or roughly US$1 million annually. In spite of preventive targeting of vulnerable stretches of the line, operations must be suspended for an average of seven days each rainy season because of such damage (Shukla et al., 2005). Parry (2000) provides an assessment of the impact of severe local storms on road transportation, much of which also applies to rail.

Of all the possible impacts on transportation, the greatest in terms of cost is that of flooding. The cost of delays and lost trips would be relatively small compared with damage to the infrastructure and to other property (Kirshen et al., 2006). In the last ten years, there have been four cases when flooding of urban underground rail systems have caused damage worth more than €10 m (US$13m) and numerous cases of lesser damage (Compton et al., 2002)

Infrastructure for power transmission and communications is subject to much the same considerations. It is vulnerable to high winds and ice storms when in the form of suspended overhead cables and cell phone transmission masts, but is reasonably resilient when buried underground, although burial is significantly more expensive. In developing countries, a common cause of death associated with extreme weather events in urban areas is electrocution by fallen power cables (Few et al., 2004). Such infrastructure can usually be repaired at a fraction of the cost of repairing roads, bridges and railway lines, and in much less time, but its disruption can seriously hinder the emergency response to an extreme event. Human settlement

Climate change is almost certain to affect human settlements, large and small, in a variety of significant ways. Settlements are important because they are where most of the world's population live, often in concentrations that imply vulnerabilities to location-specific events and processes and, like industry and certain other sectors of concern, they are distinctive in the presence of physical capital (buildings, infrastructures) that may be slow to change.

Beyond the general perspectives of TAR (see Section 7.1.4), a growing number of case studies of larger settlements indicate that climate change is likely to increase heat stress in summers while reducing cold-weather stresses in winter. It is likely to change precipitation patterns and water availability, to lead to rising sea levels in coastal locations, and to increase risks of extreme weather events, such as severe storms and flooding, although some kinds of extreme events could decrease, such as blizzards and ice storms (see city references below; Klein et al., 2003; London Climate Change Partnership, 2004; Sherbinin et al., 2006).

Extreme weather events associated with climate change pose particular challenges to human settlements, because assets and populations in both developed and developing countries are increasingly located in coastal areas, slopes, ravines and other risk-prone regions (Freeman and Warner, 2001; Bigio, 2003; UN-Habitat, 2003). The population in the near-coastal zone (i.e., within 100 m elevation and 100 km distance of the coast) has been calculated at between 600 million and 1.2 billion; 10% to 23% of the world's population (Adger et al., 2005b; McGranahan et al., 2006). Globally, coastal populations are expected to increase rapidly, while coastal settlements are at increased risk of climate change-influenced sea-level rise (Chapter 6). Informal settlements within urban areas of developing-country cities are especially vulnerable, as they tend to be built on hazardous sites and to be susceptible to floods, landslides and other climate-related disasters (Cross, 2001; UN-Habitat, 2003).

Several recent assessments have considered vulnerabilities of rapidly growing and/or large urban areas to climate change. Examples include cities in the developed and developing world such as Hamilton City, New Zealand (Jollands et al., 2005), London (London Climate Change Partnership, 2004; Holman et al., 2005), New York (Rosenzweig and Solecki, 2001a, b), Boston (Kirshen et al., 2007), Mumbai, Rio de Janeiro, Shanghai (Sherbinin et al., 2006), Krakow (Twardosz, 1996), Caracas (Sanderson, 2000), Cochin (ORNL/CUSAT, 2003), Greater Santa Fe (Clichevsky, 2003), Mexico City, Sao Paolo, Manila, Tokyo (Wisner, 2003), and Seattle (Office of Seattle Auditor, 2005).

Climate change is likely to interact with and possibly exacerbate ongoing environmental change and environmental pressures in settlements. In areas such as the Gulf Coast of the United States, for example, land subsidence is expected to add to apparent sea-level rise. For New York City, sea-level rise will accelerate the inundation of coastal wetlands, threaten vital infrastructure and water supplies, augment summertime energy demand, and affect public health (Rosenzweig and Solecki, 2001a; Knowlton et al., 2004; Kinney et al., 2006). Significant costs of coastal and riverine flooding are possible in the Boston metropolitan area (Kirshen et al., 2006). Climate change, a city's building conditions, and poor sanitation and waste treatment could coalesce to affect the local quality of life and economic activity of such cities as Mumbai, Rio de Janeiro and Shanghai (Sherbinin et al., 2006). In addition, for cities that play leading roles in regional or global economies, such as New York, effects could be felt at the national and international scales via disruptions of business activities linked to other places (Solecki and Rosenzweig, 2007).

Sea-level rise could raise a wide range of issues in coastal areas. Studies in the New York City metropolitan area have projected that climate-change impacts associated with expectations that sea level will rise, could reduce the return period of the flood associated with the 100-year storm to 19 to

68 years on average, by the 2050s, and to 4 to 60 years by the 2080s (Rosenzweig and Solecki, 2001a), jeopardising low-lying buildings and transportation systems. Similar impacts are expected in the eastern Caribbean, Mumbai, Rio de Janeiro and Shanghai, where coastal infrastructure, population and economic activities could be vulnerable to sea-level rise (Lewsey et al., 2004; Sherbinin et al., 2006). Due to a long coastline and extensive low-lying coastal areas, projected sea-level rise in Estonia and the Baltic Sea region could endanger natural ecosystems, cover beach areas high in recreational value, and cause environmental contamination (Kont et al., 2003).

Another body of evidence suggests that human settlements, coastal and otherwise, are affected by climate change-related shifts in precipitation. Concerns include increased flooding potential from more sizeable rain events (Shepherd et al., 2002). Conversely, as suggested by the TAR, any change in climate that reduces precipitation and impairs underground water resource replenishment would be a very serious concern for some human settlements, particularly in arid and semi-arid areas (Rhode, 1999), in settlements with human-induced water scarcity (Romero Lankao, 2006), and in regions dependent on melted snowpack and glaciers (Chapter 1, Box 1.1; Chapter 12, Section 12.4.3; Chapter 13, Section 13.6.2).

A wider range of health implications of climate change also can affect settlements. For example, besides heat stress and respiratory distress from air quality, changes in temperature, precipitation and/or humidity affect environments for water- and vector-borne diseases and create conditions for disease outbreaks (see Chapters 4 and 8). Projections of climate-change impacts in New York City show significant increases in respiratory-related diseases and hospitalisation (Rosenzweig and Solecki, 2001a).

With growing urbanisation and development of modern industry, air quality and haze have become more salient issues in urban areas. Many cities in the world, especially in developing countries, are experiencing air pollution problems, such as Buenos Aires, London, Chongqing, Lanzhou, Mexico City and Sao Paulo. How climate change might interact with these problems is not clear as a general rule, although temperature increases would be expected to aggravate ozone pollution in many cities (e.g., Molina and Molina, 2002; Kinney et al., 2006). A study evaluating the effects of changing global climate on regional ozone of 15 cities in the U.S. finds, for instance, that average summertime daily maximum ozone concentrations could increase by 2.7 parts per billion (ppb) for a 5-year span in the 2020s and 4.2 ppb for a 5-year span in the 2050s. As a result, more people (especially the elderly and young) might be forced to restrict outdoor activities (NRDC, 2004).

Another issue is urban heat island (UHI) effects: higher temperatures occur in urban areas than in outlying rural areas because of diurnal cycles of absorption and later re-radiation of solar energy and (to a much lesser extent) heat generation from built/paved physical structures. The causes of UHI are complex, as is the interaction between atmospheric processes at different scales (Oke, 1982). UHI can affect the climatic comfort of the urban population, potentially related to health, labour productivity and leisure activities; there are also economic effects, such as the additional cost of climate control within buildings, and environmental effects, such as the formation of smog in cities and the degradation of green spaces. Even such small coastal towns as Aveiro in Portugal have been shown to create a heat island (Pinho and Orgaz, 2000). Rosenzweig et al. (2005) found that climate change based on downscaled general circulation model (GCM) projections would exacerbate the New York City UHI by increasing baseline temperatures and reducing local wind speeds.

In sum, settlements are vulnerable to impacts that can be exacerbated by direct climate changes (e.g., severe storms and associated coastal and riverine flooding, especially when combined with sea-level rise, snow storms and freezes, and fire). Yet climate change is not the only stress on human settlements, but rather it coalesces with other stresses, such as scarcity of water or governance structures that are inadequate even in the absence of climate change (Feng et al., 2006; Sherbinin et al., 2006; Solecki and Rosenzweig, 2007). Such phenomena as unmet resource requirements, congestion, poverty, political and economic inequity, and insecurity can be serious enough in some settlements (UN-Habitat, 2003) that any significant additional stress could be the trigger for serious disruptive events and impacts. Other stresses may include institutional and jurisdictional fragmentation, limited revenue streams for public-sector roles, and inflexible patterns of land use (UNISDR, 2004). These types of stress do not take the same form in every city and community, nor are they equally severe everywhere. Many of the places where people live across the world are under pressure from some combination of continuing growth, pervasive inequity, jurisdictional fragmentation, fiscal strains and aging infrastructure (UN-Habitat, 2003).

7.4.25 Social issues

Social system vulnerabilities to impacts of climate variability and change are often related to geographical location. For instance, indigenous societies in polar regions and settlements close to glaciers in Latin America and in Europe are already experiencing threats to their traditional livelihoods (Chapter 12, Section 12.4.3; Chapter 13, Section 13.6.2). Low-lying island nations are also threatened (Chapter 16). Rising temperatures in mountain areas, and in temperate zones needing space-heating during the winter may result in energy cost savings for their populations (Section On the other hand, areas relying on electric fans or air-conditioning may see increased pressures on household budgets as average temperatures rise.

It is increasingly recognised that social impacts associated with climate change will be mainly determined by how the changes interact with economic, social and institutional processes to exacerbate or ameliorate stresses associated with human and ecological systems (Turner et al., 2003b; Adger et al., 2005b; NRC, 2006). As studies undertaken in Latin America, Asia, Africa and the Arctic show, climate change is not the only stress on rural and urban livelihoods. The livelihoods of the Inuit in the Arctic are threatened by multiple stresses (e.g., loss of traditional food sources, growing dependence upon distant fish markets and externally driven values and attitudes). These processes could overtax their adaptive capacity, reduce the role of kinship and family as the centre of social organisation around fishing, and lead to divisions within and between fisher and hunter organisations (Turner et al., 2003b; ACIA, 2004). Rural communities do struggle daily with scarce resources, with insufficient access to commercial markets for their products, and with development policies and other institutional barriers, which frequently limit their ability to cope with extreme climate events (O'Brien et al., 2004; Eakin, 2006). Similarly, in urban settlements, climate change could coalesce with other processes and factors, such as land subsidence due to groundwater withdrawal, the poor condition of many buildings and infrastructures, weak governance structures, and modest income levels, to impact on peoples' livelihoods (Wood and Salway, 2000; Bull-Kamanga et al., 2003; Sherbinin et al., 2006).

The vulnerability of human societies to climate change could vary with economic, social and institutional conditions: particularly socio-economic diversity within urban and rural settlements and their productive sectors, linkage systems and infrastructure (Eakin, 2006; O'Brien et al., 2006). In already-warm areas exposed to further warming, for instance, less-advantaged populations are less likely to have access to air-conditioning in homes and workplaces. Urban neighbourhoods that are well served by health facilities and public utilities, or have additional economic and technical resources, are better equipped to deal with weather extremes than poor and informal settlement areas, and their actions can affect the poor as well (Sherbinin et al., 2006). Relatively-wealthy market-oriented farmers can afford more expensive deep-well pumps. In coastal settlements, large-scale fishing entrepreneurs can afford to relocate or diversify. By contrast, poverty and marginalisation raise serious issues for impacts and responses, including the following:

a. The poor, who make up half of the world's population and earn less than US$2 a day (UN-Habitat, 2003), cannot afford adaptation mechanisms such as air-conditioning, heating or climate-risk insurance (which is unavailable or significantly restricted in most developing countries). The poor depend on water, energy, transportation and other public infrastructures which, when affected by climate-related disasters, are not immediately replaced (Freeman and Warner, 2001). Instead, they base their responses on diversification of their livelihoods or on remittances and other social assets (Klinenberg, 2002; Wolmer and Scoones, 2003; Eakin 2006). In many countries, recent reductions in services and support from central governments have decreased the resources available to provide adequate preparedness and protection (UN-Habitat, 2003; Eakin and Lemos, 2006). This does not necessarily mean that "the poor are lost"; they have other coping mechanisms (see Section 7.6), but climate change might go beyond what traditional coping mechanisms can handle (Wolmer and Scoones, 2003).

b. Especially in developing countries, where more than 90% of the deaths related to natural disasters occur (UNISDR, 2004) and 43% of the urban slums are located (UN-Habitat, 2003), the poor tend to live in informal settlements, with irregular land tenure and self-built substandard houses, lacking adequate water, drainage and other public services and often situated in risk-prone areas (Romero Lankao et al., 2005). Events such as the December 1999 flash floods and landslides in Caracas, killing nearly 30,000, and the 2001 severe flooding in Cape Town, damaging 15,641 informal dwellings, show us that the poor in these countries are the most likely to be killed or harmed by extreme weather-related events (Sherbinin et al., 2006). During 1985 and 1999 the world's wealthiest nations suffered 57.3% of the measured economic losses due to disasters, about 2.5% of their GDP. The world's poorest countries suffered 24.4% of the economic toll of disasters, but this represented 13.4% of their combined GDP (ADRC et al., 2005). c. Impacts of climate change are likely to be felt most acutely not only by the poor, but also by certain segments of the population, such as the elderly, the very young, the powerless, indigenous people, and recent immigrants, particularly if they are linguistically isolated, i.e., those most dependent on public support. Impacts will also differ according to gender (Cannon, 2002; Klinenberg, 2002; Box 7.4). This happens particularly in developing countries, where gendered cultural expectations, such as women undertaking multiple tasks at home, persist (Wood and Salway, 2000), and the ratios of women affected or killed by climate-related disasters to the total population are already higher than in developed nations (ADRC et al., 2005). Government/institutional capacities and resources could also be affected by climate change. Examples from Mexico City, Tokyo, Los Angeles and Manila include requirements for public health care, disaster risk reduction, land-use management, social services to the elderly, public transportation, and even public security, where climate-related stresses are associated with uncoordinated planning, legal barriers, staffing shortages and other institutional constrains (Wisner, 2003; UNISDR, 2004). Where budgets of local or regional governments are affected by increased demands, such effects can lead to calls for either increases in revenue bases or reductions in other government expenditures, which implies a vulnerability of governance systems to climate change (Freeman and Warner, 2001). The disruption of social networks and solidarity by extreme weather events and repeated lower impact events can reduce resilience (Thomas and Twyman, 2005). As sources of stress multiply and magnify in consequence of global climate change, the resilience of already overextended economic, political and administrative institutions will tend to decrease, especially in the most impoverished regions. As Hurricane Katrina has shown, it is likely that if things go wrong people will blame "the Government" (Sherbinin et al., 2006). To avoid such outcomes, governance systems are likely to react to perceptions of growing stresses through regulation and strengthening of emergency management systems (Christie and Hanlon, 2001).

7.4.3 Key vulnerabilities

As a general statement about a wide diversity of circumstances, the major climate-change vulnerabilities of industries, settlements and societies are: 1. vulnerabilities to extreme weather and climate events, particularly if abrupt major climate change should occur, along with possible thresholds associated with more gradual changes;

2. vulnerabilities to climate change as one aspect of a larger multi-stress context: relationships between climate change and thresholds of stress in other regards;

3. vulnerabilities of particular geographical areas such as coastal and riverine areas vulnerable to flooding and continental locations where changes have particular impacts on human livelihoods; most vulnerable are likely to be populations in areas where subsistence is at the margin of viability or near boundaries between major ecological zones, such as tundra thawing in polar regions and shifts in ecosystem boundaries along the margins of the Sahel that may undergo significant shifts in climate;

4. vulnerabilities of particular populations with limited resources for coping with and adapting to climate-change impacts;

5. vulnerabilities of particular economic sectors sensitive to climate conditions, such as tourism, risk financing and agro-industry.

All of these concerns can be linked both with direct effects and indirect effects through inter-connections and linkages, both between systems (such as flooding and health) and between locations.

Most key vulnerabilities are related to (a) climate phenomena that exceed thresholds for adaptation, i.e., extreme weather events and/or abrupt climate change, often related to the magnitude and rate of climate change (see Box 7.4), and (b) limited access to resources (financial, technical, human, institutional) to cope, rooted in issues of development context. Most key vulnerabilities are relatively localised, in terms of geographic location, sectoral focus and segments of the population affected, although the literature to support such detailed findings about potential impacts is very limited. Based on the information summarised in the sections above (Table 7.3), key vulnerabilities of industry, settlement and society include the following, each characterised by a level of confidence.

• Interactions between climate change and urbanisation: most notably in developing countries, where urbanisation is often focused in vulnerable areas (e.g., coastal), especially when mega-cities and rapidly growing mid-sized cities approach possible thresholds of sustainability (very high confidence).

• Interactions between climate change and global economic growth: relevant stresses are linked not only to impacts of climate change on such things as resource supply and waste management but also to impacts of climate change response policies, which could affect development paths by requiring higher cost fuel choices (high confidence).

• Increasingly strong and complex global linkages: climate-change effects cascade through expanding series of international trade, migration and communication patterns to produce a variety of indirect effects, some of which may be unanticipated, especially if the globalised economy becomes less resilient and more interdependent (very high confidence).

• Fixed physical infrastructures that are important in meeting human needs: infrastructures susceptible to damage from extreme weather events or sea-level rise and/or infrastructures already close to being inadequate, where an additional source of stress could push the system over a threshold of failure (high confidence).

Table 7.3. Selected examples of current and projected climate-change impacts on industry, settlement and society and their interaction with other processes.

Climate Driven Evidence for Current Impact/ Phenomena Vulnerability

Other Processes/ Stresses

Projected Future Impact/ Vulnerability

Zones, Groups Affected

a) Changes in extremes

Tropical Flood and wind casualties and cyclones, storm damages; economic losses: surge transport, tourism, infrastructure (e.g., energy, transport), insurance (7.4.2; 7.4.3; Box 7.3; 7.5)

Land use/ population Increased vulnerability in storm-density in flood-prone prone coastal areas; possible areas; flood defences; effects on settlements, health, institutional capacities tourism, economic and transportation systems, buildings and infrastructures

Coastal areas, settlements and activities; regions and populations with limited capacities and resources; fixed infrastructures; insurance sector

Extreme rainfall, Erosion/landslides; land riverine floods flooding; settlements;

transportation systems; infrastructure (7.4.2) (see regional Chapters)

As for tropical cyclones As for tropical cyclones and storm and storm surge, plus surge, plus drainage infrastructure drainage infrastructure

As for tropical cyclones and storm surge, plus flood plains

Heat or cold- Effects on human health; social waves stability; requirements for energy, water and other services (e.g., water or food storage), infrastructures (e.g., energy transportation) (7.2; Box 7.1;;

Drought Water availability, livelihoods;

energy generation; migration,; transportation in water bodies (;;

Building design and internal temperature control; social contexts; institutional capacities

Increased vulnerabilities in some regions and populations; health effects; chang

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