Businesses are being urged to carry out more thorough flood risk assessments when choosing where to locate offices and facilities in the wake of a major new report from the Organisation for Economic Co-Operation and Development (OECD) warning that the risk of coastal flooding will soar over the next 50 years.
The report, released earlier this week, argued that a combination of climate change, population growth and urban sprawl meant that up to 150m people in the world's largest coastal cities will be at risk of severe flooding by 2070, more than three times the current number classified as being at risk from once-in-a-hundred-year coastal floods.
It calculated that the financial cost of such floods would also increase more than 10-fold, with $35tr of property and infrastructure assets expected to be exposed to increased coastal flood risk by 2070, compared with just $3tr now.
Miami alone is expected to have $3.5tr of assets at risk by 2070, while Guangzhou, New York, Kolkata, Shanghai and Mumbai were also identified as being at high risk.
Jan Corfee-Morlot, senior policy advisor on climate change for the OECD, said that businesses needed to consider the increased risks when making investment decisions in port cities.
"Any company investing in a port city needs to consider this risk now, particularly if they are involved in property or infrastructure," she warned. " They need to assess if their locations are going to be vulnerable from rising sea levels and changing weather patterns and then, if they are willing to live with increased flood risk, they need to plan now for how they will protect their assets and make them resilient."
She added that those firms that failed to account for the growing risk of coastal floods were not only exposing themselves to potential property damage and business disruption, but could also face increased insurance costs as risk patterns change.
However, despite the availability of advanced flood modelling systems, many port city firms were still failing to take flood risk into account when choosing locations, according to Corfee-Morlot. "If you look at Miami you are still seeing massive development along the coastline, despite the fact we know it is vulnerable and will become more vulnerable," she said. "That is why we expected over $3tr of assets to end up at risk."
She added that insurance companies may have to start refusing to insure some coastal properties to encourage "smarter development".
Her comments echo calls from the head of Britain's Environment Agency for insurance firms to refuse cover to homes built in high-risk flood areas against official recommendations.
Speaking recently to Channel 4's Dispatches TV programme, Baroness Young said the agency would "like the insurance companies to be tougher and to simply refuse to insure properties built on the flood plain against our advice". Last year, 13 major developments were granted planning permission in contradiction of advice from the Environment Agency.
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