Climate risks and adaptation in Asian coastal megacities: A synthesis

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Figure 2.5 ■ Possible Relationships between Flood Duration and Land Value LossLoss of land values10.90.80.70.60.50.40.30.20.1Linear relationship betweenpercentage of time the area isflooded and % loss of land valueQuadratic relationship betweenpercentage of time the area isflooded and % loss of land value0 0.01 0.06 0.11 0.16 0.21 0.26 0.31 0.36 0.41 0.46 0.51 0.56 0.61 0.66 0.71 0.76 0.81 0.86 0.91 0.96(Days of flood/365)Source: ADB (2010).drainage systems, energy infrastructure, hospitaland schools). An estimation of how the impacts ofclimate change may affect the value of the land stockin HCMC thus provides a first-order approximationof the economic costs of climate change for the city.The first step in the analysis was to determineland prices. Land price data was aggregated bydistrict and an average land price determined foreach district. The administratively determinedprice for land is published by HCMC People’sCommittee annually, as required under the 2004Land Law. These prices are used to determine thelevel of compensation for state appropriations ofland and for taxation purposes. In principle, theseadministrative prices are based upon the potentialproductive value of the land, rather than marketprices (although following the 2004 Land Law, theadministrative price for land has moved closer toland market values). These are current land prices,not 2050. These are also not market prices.The area subject to flooding both in extremeevents and regular flooding was then determinedunder future scenarios using the HydroGIS modeling.Once the average land price and floodingextent and duration were estimated, the relationshipbetween the flooding and the decline in theeconomic value of the flooded land was determinedto allow the calculation of the cost of flooding dueto climate change. The study assumes that there issome positive relationship between the duration ofthe flooding and the loss in land value: that is, thelonger the period of flooding, the greater the loss inland value. However, the precise nature of that relationshipbetween the economic value of land andthe number of days in any given year that an area isflooded is not known, and must be assumed.In the HCMC report, two types of relationshiphave been assumed: The loss of land value is directlyproportional to the proportion of time the land isinundated; this is the linear relationship in Figure 2.5.For example, if the land is flooded for 182 days peryear, (about half of the time), this assumption yieldsan estimated loss of 50 percent of the land value. Aproportional relationship would overestimate theloss in land value. Indeed, if land is flooded only afew days a year, we might suppose that this wouldhave a limited impact on the value of the land, if any.On the other hand, the proportion of the loss of landvalue may increase at an increasing rate as the lengthof time the land is flooded increases, reaching 100percent of land value lost when the land is floodedfor 100 percent of the time (the quadratic relationshipis shown in Figure 2.5). The quadratic relationshipis considered to represent a more realistic relationshipbetween flood duration and land value loss assmall periods of flooding (e.g. for one or two days)are unlikely to influence land value much, whereaslonger term flooding (e.g. for 300 days a year) islikely to reduce the value to near zero.The GDP approachThe second approach to estimating the costs ofclimate change is to calculate costs on the basis ofexpected losses in production (proxied by GDP) dueto climate-change-induced flooding. Like land, GDP18 | Climate Risks and Adaptation in Asian Coastal Megacities: A Synthesis Report
measures capture a number of important values (levelof economic development, extent of industrial activities,transportation system, water supply, drainage,etc). To calculate costs using this method, a numberof important assumptions were integrated into theanalysis: Areas subject to flooding lose all theirproductivity for the duration of the flood. The GDPproduced in a particular area is directly proportionateto population (i.e. if an area accounts for 1 percent ofthe population it will also account for 1 percent of theGDP). GDP is produced evenly over time (i.e. with1/365th of annual GDP being produced everyday).Based on GSO statistics, GDP growth will average11.5 percent between 2006–10; 8.7 percent between2011–25; and 8 percent between 2026–50. Populationgrowth will take place in line with the high estimatediscussed in chapter 4. Future values are discountedat an annual rate of 10 percent. 26Given these assumptions and the informationon flooding derived from the HydroGIS models, anestimation of the costs due to flooding is relativelystraightforward. For each district and for each yearuntil 2050, the following calculation was performed:Annual costof flooding=Number of days the district is flooded xnumber of people affected x GDP/capita/dayThe annual cost of flooding was calculatedfor each year between 2006 and 2050, and the discountedcosts summed for the whole period. TheHCMC study presents results from both the landvalues and GDP measures. The differences in theresults and approaches are discussed in chapter 4.Assumptions aboutthe Future of Cities inEstimating Damage CostsCities in 2050 are likely to be vastly different fromtoday’s cities. Understanding how different is ahuge task and there is no attempt to model economicgrowth and link it to urban development. Instead,existing data and official plans and projections areused to understand and develop GIS-based maps.Further, in assessing damage costs, each city studymade assumptions about population size and distribution,poverty, economic growth and city-specificgross domestic product, urbanization, flood andtransportation infrastructure, and spontaneousadaptation and migration. Where possible, theybuilt on existing plans and studies undertaken bycity governments related to urban growth, publicutilities and transportation networks, and so forth.Population in 2050 is estimated based on the bestavailable local projections for each city. The populationdistribution within each city in 2050 buildson available estimates of population density anddistribution and some understanding of futurepopulation dynamics. Economic growth and povertyprojected in 2050 varies across the case studies.These assumptions are made explicit in the followingchapters with respect to each city.Human spontaneous adaptation to the possibilityof increased flooding is considered but is notfully incorporated into the studies. This is partlybecause of the difficulties in predicting adaptationbehavior and partly because populations, whilelikely to respond to incremental change, may nothave a measured response to the type of extremeevents considered in this study. 27 The case studiesdo take into account human migration in identifyingpopulation distribution in 2050. In general, populationsexposed to flooding are likely to continue tobe exposed to flooding except in cases where thereis improved flood infrastructure put into place.Assumptions about pricesGiven difficulties in estimating future prices, allthe three case studies largely keep the real value ofgoods and services unchanged. The Bangkok studyestimates the costs of damage in 2008 using current26Because in the case of land, the land value already representsthe discounted future income stream capitalized inland value, so there is no need for discounting when usingland values to estimate the cost of climate change in the previousanalysis.27Yohe et al. (1995), for example, argue that if permanentinundation is expected due to SLR, it might be appropriatein cost-benefit analyses to treat the value of inundatedbuildings as zero or very low. If there is full information andefficient adaptation, economic agents can be expected to letthese buildings fully depreciate before they are inundated.In our study, we do not assume full information. Nonetheless,rational households who can afford to move are likelyto move away from flood-prone areas, which may be thenpopulated by poorer communities.Methodologies for Downscaling, Hydrological Mapping, and Assessing Damage Costs | 19
Page 4 and 5: © 2010 The International Bank for
Page 7 and 8: Figure 4.6 Damage Costs Associated
Page 9: AcknowledgmentsThis synthesis repor
Page 13 and 14: Executive SummaryIntroduction and R
Page 15 and 16: For each city, complex hydrometeoro
Page 17 and 18: infrastructure but a high emission
Page 19: these include strategies that focus
Page 23 and 24: policy implications have broader re
Page 25: 2Methodologies forDownscaling, Hydr
Page 28 and 29: Table 2.1 ■ Climate Change Foreca
Page 30 and 31: Return periods considered 18In this
Page 32 and 33: Figure 2.2 ■ Manila Rainfall-Runo
Page 34 and 35: Figure 2.3 ■ Estimation of Damage
Page 36 and 37: sion and distribution lines, and en
Page 40 and 41: prices and the same prices are appl
Page 43 and 44: 3Estimating Flood Impactsand Vulner
Page 45 and 46: Table 3.2 ■ Bangkok Monthly Avera
Page 47 and 48: Estimation of storm surge in the ca
Page 49 and 50: Climate Change Impact and Adaptatio
Page 51 and 52: Figure 3.5a ■ Affected Condensed
Page 53 and 54: Manila’s current climate—Tropic
Page 55 and 56: Table 3.6 ■ Manila Climate Change
Page 57 and 58: Figure 3.10 ■ Areas of High Popul
Page 59 and 60: is also a key economic and financia
Page 61 and 62: Box 3.3 ■ HCMC in 2050Future land
Page 63 and 64: original swamp land on which the ci
Page 65 and 66: from 68 percent to 71 percent; that
Page 67 and 68: Table 3.15 ■ Districts Affected b
Page 69 and 70: Table 3.16 ■ Effects of Flooding
Page 71 and 72: 4Assessing Damage Costsand Prioriti
Page 73 and 74: Table 4.2 ■ Summary of Flood and
Page 75 and 76: uilt outside the cities and are not
Page 77 and 78: ■■■■■■For the eastern p
Page 79 and 80: Table 4.6 ■ Flood Damage Costs Wi
Page 81 and 82: Table 4.8 ■ Flood Damage Costs in
Page 83 and 84: Figure 4.5 ■ Loss Exceedance Curv
Page 85 and 86: Box 4.3 ■ Increased Time Costs an
Page 87 and 88: Table 4.11 ■ Adaptation Investmen
Page 89 and 90:
Marikina River areas through a dam,
Page 91 and 92:
Table 4.14 ■ Present Value of the
Page 93 and 94:
of reducing vulnerability of the po
Page 95 and 96:
5Conclusions andPolicy Implications
Page 97 and 98:
open land use is expected to be flo
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hydrometeorological data, yielding
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BibliographyAllen, M. R., and W. J.
Page 103:
Reduction: Inventory and Prospect.
Page 106 and 107:
a paper commissioned by JICA (Sugiy
Page 108 and 109:
mercial and industrial establishmen
Page 110 and 111:
ADB. The selection and prioritizati
Page 113 and 114:
AnnexCAdaptation to IncreasedFloodi
Page 115:
of people and institutions to manag
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THE WORLD BANK1818 H Street, NWWash
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Climate risks and adaptation in Asian coastal megacities: A synthesis

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