Managing climate and natural disaster...
Re/insurance plays an important role in managing climate and natural disaster risk, and that's why it's part of Swiss Re's core business.
One in three buildings on the island of Samoa is located below four metres elevation. That means that the problems associated with rising sea levels are literally on the doorstep of a huge number of Samoa’s 200,000 inhabitants. Accompanying the risk of coastal flooding, with the damage that causes to infrastructure, is the issue of salinisation. This is when salt water encroaches into fresh groundwater aquifers, leading to contamination of water supplies. Since Samoa relies on groundwater for one third of its water for human use, the threat of salinisation is considerable. In the face of an expected increase in sea levels during the next two decades, Samoan decision-makers are confronted with the challenge of putting together a strategic package of climate resilience measures, integrating highly beneficial risk transfer.
Coastal flooding in Samoa will increase in the years to come, driven by rising sea levels, with local climatic circumstances adding force to global forecasts. For example, sea level rise in Samoa is exacerbated by geological subsidence at a rate of between 0.1 mm and 1.7 mm per year, due to long-term cooling of the island’s volcanic terrain. Recent research indicates that in a severe scenario, sea levels around Samoa could rise by up to 26.2 cm by 2030. The same scenario predicts the freshwater lens moving up by between 60 m and 160 m, potentially contaminating additional freshwater sources.
Solutions proposed by the recent study on Samoa highlight the efficiency and practicality of risk transfer. Particularly for events predicted to occur rarely, transferring risk to capital markets is considerably cheaper than the direct prevention of expected losses. It also achieves extremely broad coverage. Other cost-effective measures in the portfolio of climate resilience proposals include moving infrastructure to higher ground, installing mobile flood barriers and applying a minimum elevation of four metres to new buildings. In 2008, the annual expected loss from coastal flooding in Samoa amounted to US$ 25 million. With a powerful combination of measures in place, future economic forecasts should present a more promising outlook.
1 Based upon select regions analyzed within the countries (e.g., Mopti, Mali; Georgetown, Guyana Hull, UK; North and Northeast China; Maharashtra, India; Central regions of Tanzania; Southeast Florida, U.S.)
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