London scoping - ukcip

Issue Main Points
Transport
Insurance Industry and
Finance
Final Report
202
Increased temperatures on the London underground could lead to disruptions to the
network and reduced passenger comfort. This could result in a decline in use of the
underground contributing to congestion elsewhere and also leading to business
disruptions.
Increased temperatures could lead to adverse effects on transport infrastructure e.g. rail
buckling, melting of tarmac on roads, runways etc. This can cause disruption to the
transport network.
More frequent closure of the Thames Barrier and the construction of new barriers may cut
off some areas for docking, affecting shipping businesses. Flooding of docks might
increase under some conditions, depending on the flood management strategy adopted.
Low flows on the River Thames during more frequent dry summers could also affect its
navigability with implications for water based freight transport.
Reduced snow fall should result in less disruption to transport e.g. road, rail and reduced
maintenance costs e.g. reduced need for salting/gritting.
Higher temperatures and drier soils could lead to shrinkage of the clay layer beneath
London. This could lead to increased subsidence of buildings and infrastructure (e.g.
transport networks). According to the Association of British Insurers, their members
already incur costs of nearly £1M a day on average due to subsidence claims.
Underground infrastructure e.g. water pipes and telecommunication and power lines could
also be damaged, resulting in business and service disruption.
Climate induced changes in consumer behaviour are those generally related to
temperature change. During the hot summer of 1995, there was a net cost to the retail
sector in the UK of over £100 million in total. There was a loss to the clothing and footwear
market of over £400 million due to people buying fewer clothes and a small gain for the
market for fruit and vegetables due to changes in eating habits.
Opportunities for designers to provide literally ‘cool’ goods and brands - implications for
design and styling of clothing, fashion, buildings, cars and other consumer items.
Some manufacturing sectors in London that use significant amounts of water e.g. brewing
and the automotive sector could be affected by changes in water resource availability and
any subsequent price adjustment.
Current practice is for insurers to offset underwriting losses from climate change type
events on property against their investment income. An increase in severity/frequency of
these events will result in falling investment returns and higher insurance premiums. A
severe event could trigger selling of assets in order to pay the insurance claims made,
having knock on effects on the macro-economy. This process also involves the business
and financial sectors and so they too could experience adverse impacts from this process.
A growth in greenhouse gas emissions trading schemes presents opportunities for London
as a financial centre to provide trading services. A system for greenhouse gas emissions
trading is beginning to emerge in the UK.
Another sector that may benefit from climate change impacts is the environmental goods
and services sector. This includes a range of products and services including renewable
energy (solar photo-voltaics, water heating, wind energy generation etc), environmental
monitoring, waste management, flood defence and protection, both at the public and
private level, including provision of sustainable urban drainage systems (SUDS).
Relative price changes between virgin raw materials from overseas sources that could be
subject to adverse climate change impacts and more locally sourced recycled material,
could increase the demand for recycled materials by manufacturers.
Unless appropriate responses are made, adverse climate change impacts in London could
affect its attractiveness as a destination for investment in both economic development and
individual organisations and companies. However, the scale of this must be measured
against the level and effectiveness of action being taken in its competitor cities in response
to potential climate change impacts.