Climate risks and adaptation in Asian coastal megacities: A synthesis

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Table 4.12 ■ Investment Costs and Net Present Value of Benefits Associated withDifferent Flood Control Projects in Manila (PHP) using a 15 percentdiscount rate (Continued)1/10 Flood 1/30 Flood 1/100 FloodClimate Scenario Investment Cost NPV Investment Cost NPV Investment Cost NPVA1FI A1FI-EX wD NA 14,248,304,696 7,092,797,122 13,640,673,269 12,011,488,435A1FI-EX nD 1,409,166,226 (581,704,127) 11,099,925,438 9,203,568,238 NAA1FI MP wD NA 3,216,390,949 5,509,802,569 139,119,548 10,411,715,022A1FI MP nD NA 68,011,692 7,620,573,684 NASource: Muto et al. (2010).SQ=Status Quo, EX=Existing Infrastructure, B1, A1FI=Climate Change Scenarios, wD=With Marikina Dam, nD=No Dam, NA=not applicable. Costs are 0 in certain cases because it isassumed that these costs are incorporated in the master plan.count rate of 15 percent, which is what is used by thePhilippines National Economic and Developmentauthority to estimate project feasibility. 55Dam construction emerges as aneconomically viable option in both climatechange scenarios, followed by embankmentbuilding in the Pasig-Marikina basinTable 4.12 presents the present value of net benefitsfrom different investments considered. The NPVat12 billion PHP ($269 million) is highest among allthe different scenarios. This suggests that constructingthe Marikina Dam would maximize benefitsrelative to other adaptation options in the case ofan A1FI or B1 scenario. The investments that wouldbe required in this scenario are building the Pasig-Marikina River basin embankment, the MarikinaDam, and some additional embankments along thePasig and Marikina rivers. These investments wouldlargely eliminate floods in this part of Metro Manila.However, given that constructing the dam is adecision that may or may not be taken, it is usefulto consider what alternative options emerge. In thiscase, in an A1FI scenario it is recommended that thePasig Marikina River embankment be built withsome additional components along the Pasig andMarikina rivers, and that storm surge barriers beconstructed. This basically means that investmentsunder the current master plan in the Pasig-MarikinaRiver basin should be prioritized and continued andsome additional investments need to be made forFigure 4.9 ■ Annual Benefits fromAdaptation Investments inMetro ManilaDamage cost (PHP in million)120,000100,00080,00060,00040,00020,00000.00 0.02 0.04 0.06 0.08 0.10ProbabilityExisting infrastructure(EX)1990 master plan level(MP)Source: Based on estimations in Muto et al. (2010).Full adaptationlevelfull adaptation to an A1FI climate. This is what iscurrently being undertaken by the government ofthe Philippines in implementing the Pasig-MarikinaFlood Control Project Phase II to avoid damages fromP30 floods. The recommendations in the context ofa B1 climate change scenario are similar. In sum,the first priority is to control flooding in the Pasig-55It is important to note that the total avoided damages(gross) in chapter 3 do not directly feed into the NPV calculations.This is because there are three geographical areas,and depending on the return period and adaptation investments,only the relevant benefits are considered for eachscenario. (For example, the embankment for Pasig-MarikinaRiver does not affect KAMANAVA coastal area and thereis thus no benefit in that area).68 | Climate Risks and Adaptation in Asian Coastal Megacities: A Synthesis Report
Marikina River areas through a dam, embankments,and storm surge barriers. While adaptation to climatechange would require significant investments, in thecase of Metro Manila, these are investments that arealready planned. Thus, climate change adaptationwould require the government to commit to implementingplans that are currently on the books.Analysis of Damage Costs inHCMCHCMC has a long history of extreme weather events.Between 1997 and 2007, almost all of the districts ofHo Chi Minh City have been directly affected bynatural disasters to some extent. The total value ofdamage to property from natural disasters over thelast 10 years is estimated at over $12.6 million (202billion VND). Most impacts have been concentratedin the predominantly rural Can Gio and Nha Bedistricts. However, with increased levels of floodingand extreme events due to climate change, urbanareas are likely to suffer increasing levels of damage.This is likely to increase costs significantly.The HCMC study used a different approachfrom Bangkok and Manila to estimate the aggregatecosts of climate change impacts to 2050. It does nottake a sectoral approach and estimate in detail thecosts that will be incurred as a result of climatechange. While areas of vulnerability and risks areclear, there has been no attempt to value specificrisks directly. Rather, a first approximation of thelikely costs of climate change is undertaken basedon macro data. Further, the HCMC study estimatesthe present value of flooding from the current periodup to 2050. Thus, it presents cost estimates todaythat reflect repeated flooding over a long period oftime. In contrast, the Manila and Bangkok studiesestimate the costs of specific single events of floodingin different scenarios.As discussed in chapter 2, the HCMC studyuses two approaches to estimate the costs of climatechange: (1) cost estimates based on expected lostland values; and (2) cost estimates based on aggregateGDP loss. To recap briefly, the land valuemethod estimates how climate change may affectthe value of the land stock in HCMC. The first stepin the analysis was to determine land prices. Thearea subject to flooding both in extreme eventsand regular flooding was then determined underfuture scenarios using HydroGIS modeling. Onceaverage land price and flooding extent and durationwere estimated, the relationship between theflooding and the decline in the economic value ofthe flooded land was determined to calculate thecost of flooding due to climate change. The valueof land affected by flooding is assessed assuminglinear and quadratic relationships between floodduration and land values. The second approachused by HCMC is to calculate costs on the basis ofexpected losses in production (proxied by GDP) dueto climate-change-induced flooding. For each districtand for each year (2006 to 2050), the annual costof flooding was calculated and the discounted costssummed for the whole period to find the presentvalue of expected lost GDP. In the following pagesand the rest of this report, an average exchange ratefor 2008 of 1 USD = 16302.25 VND is used to convertVietnamese dong to U.S. dollars.Macro level analyses suggest that there willbe significant costs as a result of climatechangeThe study estimates that the losses in the economicvalue of land affected by 2050 climate change wouldrange from VND 100,358 billion ($6.15 billion) forregular flooding to VND 6,905 billion ($0.42 billion)for extreme flooding, assuming a quadraticrelationship between flood duration and land value(Table 4.13). 56 The HCMC study also reports climatechange costs assuming a linear relationshipbetween flood duration and land values. In thiscontext, the cost of climate change is estimated tobe VND 369,377 billion ($22.7 billion) for regularfloods and VND 111,678 billion ($6.9 billion) forextreme events. The highest costs (using either method)are borne by Binh Chanh district, district 9, Can Gio,and Nha Be district.56In all estimates, the costs of extreme events are muchsmaller than those of regular flooding because (a) floodingdue to extreme events lasts for a smaller number of daysthan that for regular flooding; and (b) the calculation offlooding assumes a return period of 30 years for extremeflooding. The expected value in any given year is therefore1/30th of the cost of an extreme event.Assessing Damage Costs and Prioritizing Adaptation Options | 69
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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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Table 2.1 ■ Climate Change Foreca
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Return periods considered 18In this
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Figure 2.2 ■ Manila Rainfall-Runo
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Figure 2.3 ■ Estimation of Damage
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sion and distribution lines, and en
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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
Page 57 and 58: Figure 3.10 ■ Areas of High Popul
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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 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
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Page 95 and 96: 5Conclusions andPolicy Implications
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Page 101 and 102: BibliographyAllen, M. R., and W. J.
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Page 113 and 114: AnnexCAdaptation to IncreasedFloodi
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Climate risks and adaptation in Asian coastal megacities: A synthesis

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