Maplecroft, a global risk and strategic consulting firm based in Bath, United Kingdom, whose work includes analyzing key political, economic, social and environmental risks impacting global business and investors ranked the Philippines in 10th place in its new Climate Change Vulnerability Index, along with other countries with high population growth such as strategically emerging economies Bangladesh (ranked 2nd), Vietnam (23rd), Indonesia (27th), and India (28th).
These countries are among 30 that Maplecroft rated as "extreme risks."
The top 10 are Haiti, Bangladesh, Sierra Leone, Zimbabwe, Madagascar, Cambodia, Mozambique, DR Congo, Malawi and the Philippines.
Of these, Bangladesh and the Philippines are among the world’s fastest growing economies with growth rates of 6.6 and 5% per annum, respectively.
The CCVI includes subnational maps and analyses of climate change vulnerability and the adaptive capacity to combat climate change in 193 countries. It features an improved methodology analyzing the exposure of populations to climate related natural hazards and sensitivity of countries in terms of population concentration, development, natural resources, agricultural dependency and conflict.
Maplecroft also identified and rated as "extreme risks" six of the world's fastest growing cities, including the major Asian economic centers of Calcutta, Manila, Jakarta, Dhaka and Chittagong, and Addis Ababa.
It rated Guandong, Mumbai, Delhi, Chennai, Karachi and Lagos as "high risk".
Population growth in all these cities, combined with poor government effectiveness, corruption, poverty and other socio-economic factors, increase the risks to residents and business, Maplecroft said.
Infrastructure will struggle to adapt to large population increases in the future, making disaster responses less effective, even as disasters may become more frequent. This has implications for buildings, transportation routes, water and energy supply and the health of the residents, it added.
“Cities such as Manila, Jakarta and Calcutta are vital centers of economic growth in key emerging markets, but heat waves, flooding, water shortages and increasingly severe and frequent storm events may well increase as climate changes takes hold,” said Dr. Charlie Beldon, principal environmental analyst at Maplecroft, in a statement.
"The impacts of this could have far reaching consequences, not only for local populations, but on business, national economies and on the balance sheets of investors around the world, particularly as the economic importance of these nations is set to dramatically increase," he added.
Climate change and population growth form the two greatest challenges facing the world over the next century. The UN’s State of the World’s Population Report 2011 revealed that the world’s population has now reached 7 billion.
Most exposed to flooding, typhoons
“The expansion of population must be met with an equal expansion of infrastructure and civic amenities. As these megacities grow, more people are forced to live on exposed land, often on flood plains or other marginal land," Beldon said. “It is therefore the poorest citizens that will be most exposed to the effects of climate change, and the least able to cope with the effects.”
The Maplecroft research also identified Manila as “extremely vulnerable” to the effects of climate change due to a combination of exposure to hazards, poor socio-economic factors and a low capacity to adapt.
Manila is predicted to grow by 2.23 million residents between 2010 and 2020, an increase of nearly 20%. It is particularly at risk of flooding and typhoon activity, having the highest exposure to these events out of the twenty growth cities.
Maplecroft urged the government to prioritize improvements to Manila’s capacity to adapt to the effects of climate change.
"Although climatic risks may increase for all cities, the impacts of this will be felt more keenly in cities like Manila which are naturally exposed to more of these hazards and have burgeoning population. Urban sprawl onto flood plains as well as the loss of urban green spaces could see large areas of cities at risk from flooding leading to considerable infrastructure damage and health risks," it said.
Maplecroft also noted that the Philippines' resilience to natural hazards has been severely tested in recent years, with severe floods affecting Luzon and the National Capital Region. It said that that in the last 20 years, the Philippines recorded at least 274 natural disasters.
Highest financial risk
In its 2nd Natural Hazards Risk Atlas, Maplecroft identified the Philippines, Myanmar, India and Vietnam as among the 10 countries facing the highest financial risk from natural hazards due to the high exposure of their cities and trading hubs to flooding, earthquakes and tropical cyclones.
Rounding off the top 10 are Bangladesh, Dominican Republic, India, Honduras and Haiti.
Aside from having the greatest proportion of their economic output exposed to natural hazards, these countries also demonstrate poor capability to recover from a significant event, thus exposing investments in these countries to risk of supply chain and market disruptions, Maplecroft said.
This could exacerbate other risks like society unrest, food security, corruption and the rule of law even leading to increased political risk, it added.
According to Maplecroft, high levels of economic exposure, coupled with weak resilience, means the fallout from a large natural disaster would likely be felt keenest in these countries.
"The resulting impacts in the Asian growth economies of Bangladesh, the Philippines, Myanmar, India and Viet Nam would not only include disruptions to their domestic economies, but also to the operations and supply chains of many of the world’s largest corporations who invest in these locations because of their significant growth opportunities."
“High exposure to natural hazards in these countries are compounded by a lack of resilience to combat the effects of a disaster should one emerge,” Helen Hodge, head of Maps and Indices at Maplecroft, said in a statement. “Given the exposure of key financial and manufacturing centers, the occurrence of a major event would be very likely to have significant impacts on the total economic output of these countries, as well as foreign business.”
Maplecroft noted that the impacts in these countries are heightened by their fragile economies and it could take them years to bounce back from an event on the scale of last year’s Japan earthquake and tsunami.
A year after the fourth largest earthquake ever recorded, the Japanese economy has returned to the economic output levels and growth forecasts prior to the disaster.
The Natural Hazards Risk Atlas has been developed by Maplecroft to help companies assess and compare natural hazards risks across 197 countries and builds on research undertaken by Maplecroft with UN OCHA. It includes 29 risk indices and interactive maps that measure physical exposure to 12 different natural hazards, in addition to calculating overall economic exposure and socio-economic resilience to large events.
Maplecroft said Japan, China, Taiwan and Mexico have the highest economic exposure to natural hazards in absolute terms.
Economic losses for 2011 are estimated at US $380 billion by Munich Re, with the March 2011 earthquake and tsunami in Japan accounting for approximately 55 percent of the total.
However, major economies such as Japan have the capacity to recover relatively quickly from natural disasters due to entrenched resilience factors including: economic strength, strong governance, established infrastructures, disaster preparedness and tight building regulations -- factors that are, according to Maplecroft, largely ineffective in many of the emerging growth economies.
“As the global influence of emerging economies increases; the importance of their inherent natural hazard exposure will have wider and deeper global implications,” Hodge said. “The test for emerging and developing economies is to build a stronger capacity to meet the challenge of hazard prone environments. Failure to do so will risk their ambitious economic growth when the inevitable natural hazards strike.”
"This presents an exciting opportunity for business to contribute to reducing risk and thus to enhance their own security in the future economic growth environment. As the middle classes grow in these emerging economies the appetite for insurance will also grow, incentivising stronger disaster preparedness," Maplecroft CEO Alyson Warhurst said.-Interaksyon (October 04, 2012 6:39PM)
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