CATALOGUING THE SCENARIO OF GLOBAL PHYSICAL RISK

INTRODUCTION

The Gross Domestic Climate Risk (GDCR) report is brought out by The Cross Dependency Initiative (XDI) is the 1st physical climate risk analysis which compares over 2,600 regions (state, province & territories) around the world with interlinkages between physical climate risk and built environment. The Cross Dependency Initiative (XDI) is Sydney – based consulting firm which specialises in physical climate risk analysis for government, utilities and private sector globally and is part of The Climate Risk Group,?a global organisation that specialises in climate risk analysis for regions, banks & companies.

The GDCR analysis focuses on the extent of capital value at risk from extreme weather and climate change over 2,600 regions, represented by vulnerability and exposure of built environment.

It provide the highlight on the importance of pricing physical climate risk in financial markets given the amount of capital investment represented by assets at risk in the provinces identified, vulnerability of global supply chains and the need for climate resilience to inform investment.?

Countries with most provinces/states in top 100 list: China (26), U.S. (18), India (14).

Asia

# Asia dominates the list of provinces at risk by Aggregated Damage Ratio (ADR), with two – third in top 100.

Countries of Asian with most provinces in top 100: China (29); India (14); Indonesia (07); Vietnam (06); Pakistan (03), etc.

# Provinces of Asia (66) in top 100 provinces (based on ADR for 2050): Jiangsu in China (1); Shandong in China (2); Hebei in China (3); Guangdong in China (4); Henan in China (5); Zhejiang in China (6); Anhui in China (7); Hunan in China (8); ?Shanghai in China (9); Liaoning in China (11); Jiangxi in China (12); Hubei in China (13); Tianjin in China (14); Heilongjiang in China (15); Sichuan in China (16); Guangxi in China (17); Punjab in Pakistan (18); Nei Mongol in China (21); Bihar in India (22); Jawa Timur in Indonesia (23); Jawa Barat in Indonesia (24); Uttar Pradesh in India (25); Shanxi in China (26); Jilin in China (27); Assam in India (28); Yunnan in China (29); Shaanxi in China (30); Jawa Tengah in Indonesia (31); Rajasthan in India (32); Fujian in China (34); Tamil Nadu in India (36); Guizhou in China (37); Maharashtra in India (38); Sindh in Pakistan (39); Gansu in China (41); Beijing in China (42); Aichi in Japan (43); Gujarat in India (44); Punjab in India (48); Chongqing in China (49); Kerala in India (50); Madhya Pradesh in India (52); Xinjiang Uyghur in China (57); West Bengal in India (60); Perak in Malaysia (61); Haryana in India (62); Karnataka in India (65); Gyeonggi – do in South Korea (66); Sumatra Utara in Indonesia (67); Long An in Vietnam (76); Thai Binh in Vietnam (77); Lebap in Turkmenistan (79); Sulawesi Selatan in Indonesia (80); Hainan in China (81); Tien Giang in Vietnam (82); Sumatra Selatan in Indonesia (84); Fukuoka in Japan (85); Andhra Pradesh in India (86); Ben Tre in Vietnam (89); Jakarta Raya in Indonesia (91); Ho Chi Minh in Vietnam (92); Khyber Pakhtunkhwa in Pakistan (93); Taiwan (94); Buxoro in Uzbekistan (96); Nam Dinh in Vietnam (97); Ningxia Hui in China (98)

# Globally, based on ADR for 2050, 29 Chinese provinces such as Jiangsu, Shandong, Hebei, Guangdong & Henan are ranked highest. This is because these provinces are large, they host extensive industrial, trade, residential & commercial development & are exposed to coastal sea level rise & riverine & surface flooding.

# After China, India (14) has highest number of states which includes both states having some of highest industrial development and highly populous states such as Bihar, Uttar Pradesh, Assam, Rajasthan, Tamil Nadu, Maharashtra, Gujarat, Punjab & Kerala.

# Some of the top physical risk for whole Asia: Sea level rise, flooding, coastal inundation, etc.

North America

# States of North America (19) in top 100 provinces (based on ADR for 2050): Florida in U.S. (10); California in U.S. (19); Texas in U.S. (20); Louisiana in U.S. (35);?New York in U.S. (46); Illinois in U.S. (53); Pennsylvania in U.S. (55); Michigan in U.S. (59); Ohio in U.S. (63); Missouri in U.S. (68); New Jersey in U.S. (69); Wisconsin in U.S. (71); Minnesota in U.S. (73); North Carolina in U.S. (78); Arizona in U.S. (87); Indiana in U.S. (88); Washington in U.S. (95), Virginia in U.S. (99); Ontario in Canada (100).

# Some of the top physical risk for whole Asia: Sea level rise, flood, wildfire, coastal inundation, hurricanes, etc.

Europe

# Provinces of Europe (04) in top 100 provinces (based on ADR for 2050): Niedersachsen in Germany (56), Vlaanderen in Belgium (64), Krasnodar in Russia (72) & Veneto in Italy (74).

# Notable European cities in high ranking states?for ADR for 2050 include Milan (Italy), Venice (Italy), Antwerp (Belgium), Hanover (Germany) & Lille (France).

# Some of the top physical risk for whole Europe: Flooding, forest fires, coastal inundation, etc.

Africa

# Provinces of Africa (01) in top 100 provinces (based on ADR for 2050): Al Buhayrah in Egypt (58).

Oceania

# Provinces of Oceania (03) in top 100 provinces (based on ADR for 2050): Victoria in Australia (70); New South Wales in Australia (75); Queensland in Australia (83).

Latin America and Caribbean

# Provinces of Latin America and Caribbean (07) in top 100 provinces (based on ADR for 2050): Sao Paulo in Brazil (33); Buenos Aires in Argentina (40); Santa Catarina in Brazil (45); Minas Gerais in Brazil (47); Rio Grande do Sul in Brazil (51); Rio de Janerio in Brazil (54); Parana in Brazil (90).

DAMAGE RATIO & AGGREGATE DAMAGE RATIO (ADR)

Damage Ratio (DR) is an expression of annual average loss from extreme weather damage to a property as a fraction of the replacement cost of that property. It is expressed as a ratio to enable comparability of physical risk unaffected by exchange rates, inflation and other variables.

There are 2 – types DR: (1) Aggregated Damage Ratio (AD) and, (2) Average Damage Ratio.

Aggregated Damage Ratio (ADR) looks at total amount of damage to built environment in a particular province.?DRs are aggregated and normalised to give insight into the extent of risk to the built environment as a whole, so that states with more stock exposed can be identified.

Average Damage Ratio provides insight into states and provinces that may have fewer properties but which may be subjected to greater or more widespread damage, so the proportion of damage is higher.

ABOUT PHYSICAL RISKS

• They arise from direct impacts of climate – related hazards, such as droughts, floods, storms, etc.
• They cause significant and quantifiable economic damage, disrupt supply chains and trade, and leave communities facing substantial costs for clean – up and re – development.
• The Taskforce on Climate - related Financial Disclosure (TCFD) further categories the physical risk into: ?

1. Acute risks: Severe, short – term impacts (cyclones, tropical storms, etc.)
2. Chronic risks: More gradual, longer – term impacts (rising temperatures, sea levels, etc.).