Climate risks and adaptation in Asian coastal megacities: A synthesis

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Figure 4.3 ■ Maximum Inundation Area Without and With the Proposed AdaptationSource: Panya Consultants (2009).Box 4.2 ■ Expected Annual Benefits from Adaptation in BangkokAnnual Flood Damage Cost with and without the ProjectFlood damage cost300,000250,000200,000150,000100,00050,000The figure above shows flood damage costs in Bangkok with and withoutan adaption-related infrastructure investment project. A climate changescenario of A1FI is assumed.Expected annual benefits from flood control investments are basedon the probability of floods of different intensity (return period) occurring.Thus, the expected annual cost of flood damage is the area under the floodexceedance curve, which plots the probability of occurrence against costs ofdamage. Thus, the expected annual benefit from a flood protection projectis the difference in the area without and with the project.In the case of Bangkok, the expected annual benefit with aninvestment project for 30-year return period (or a flood infrastructureproject that could handle a 30-year flood), is the sum of areas of A, B,and C. For a 100-year return period, this is the sum of areas of A, B, C,D, and E. In the context of a cost-benefit analysis of flood damages, the discounted value of the damages from a 30-year / 100-year return periodproject is compared to the costs of the project. This allows decision makers to look at net discounted benefits and make a decision on whichinvestment to undertake.Source: Zhang and Bojo (2009).EDCB00.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08 0.09 0.10Probability of ocurrenceWithout Project Without ProjectWithout Projectfor 30-yr Return Period for 100-yr Return PeriodA58 | Climate Risks and Adaptation in Asian Coastal Megacities: A Synthesis Report
Table 4.6 ■ Flood Damage Costs With and Without a 30-year Return Period FloodProtection Project (million THB)Flood Damage CostFlood Damage Cost by ReturnReturn Period (Year) Probability of occurrence Without Project With Project Without Project With Project10 0.100 91,145 45,465 9,115 4,54720 0.050 123,308 59,337 6,165 2,96730 0.033 148,412 71,811 4,947 2,39450 0.020 148,412 148,412 2,968 2,968100 0.010 243,902 243,902 2,439 2,439Source: Panya Consultants (2009).billion THB ($132 to $177 million) for investmentsthat would protect against floods of 30-and 100-year return periods respectively. These benefits areestimated for the case of an A1FI climate scenario.The viability of these investments was determinedby estimating the net present value (NPV) ofbenefits for two scenarios. A base case considered thereal value of annual benefits to be constant throughoutthe analysis period. The second case incorporatedgrowth in the real value of infrastructure damage ; itwas assumed that damages (or benefits from floodcontrol) would grow at an average rate of 3 percentper year. Discount rates of 8 percent, 10 percent, and12 percent were used to estimate the NPV. 50Investments to reduce the impacts of a1-in-100-year flood economically viable forBangkokTable 4.7 presents the results of the NPV calculationsassuming that there is 3 percent growth in the realvalue of damage costs. The results indicate that theflood protection was economically feasible for bothfloods of 30- and 100-year return periods if the opportunitycost of capital is not more than 10 percent.From this preliminary evaluation and with theunderstanding that Thailand uses a discount rateof 8 percent for public investments, the Bangkokstudy proposes that flood infrastructure shouldbe designed to protect against a 100-year returnperiod flood as it provides a higher net return(NPV=13.4 billion THB, or $0.4 billion). Such aninvestment will be economically efficient givenan A1FI climate change scenario. However, if adiscount rate of 10 percent is applied, Bangkokshould opt for the adaptation project aimed at a30-year return period.50The period of analysis was 38 years (2012–50), of which thefirst 8 years are for studying, designing, and construction,and 30 years is the economic benefit period of the project.Table 4.7 ■ Net Present Value of Adaptation Measures to Provide Protection Againsta 1-in-30 and 1-in-100-year Flood (million THB)Designed Flood Protection Improvement Project forDescription30-Year Return Period100-Year Return PeriodDiscount Rate (%) 8 10 12 8 10 12Present Value of Costs (million Baht) 24,950 21,578 18,831 35,117 30,276 26,349Present Value of Benefits (million Baht) 36,354 25,439 18,286 48,521 33,954 24,406Net Present Value (NPV) (million Baht) 11,404 3,862 –545 13,405 3,678 –1,944Benefit-Cost Ratio (B/C Ratio) 1.46 1.18 0.97 1.38 1.12 0.93Source: Panya Consultants (2009).Assessing Damage Costs and Prioritizing Adaptation Options | 59
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© 2010 The International Bank for
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Figure 4.6 Damage Costs Associated
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AcknowledgmentsThis synthesis repor
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Executive SummaryIntroduction and R
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For each city, complex hydrometeoro
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infrastructure but a high emission
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these include strategies that focus
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policy implications have broader re
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2Methodologies forDownscaling, Hydr
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Page 43 and 44: 3Estimating Flood Impactsand Vulner
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Page 49 and 50: Climate Change Impact and Adaptatio
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Page 55 and 56: Table 3.6 ■ Manila Climate Change
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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
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Page 73 and 74: Table 4.2 ■ Summary of Flood and
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Page 101 and 102: BibliographyAllen, M. R., and W. J.
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Climate risks and adaptation in Asian coastal megacities: A synthesis

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