"Coasts are particularly affected"

Stephane Hallegatte is a lead economist with the Global Facility for Disaster Reduction and Recovery at the World Bank. In the interview he talks about climate related risks for coastal zones and the possibilities for reducing these risks.

Extreme weather events like hurricane "Irma" have attracted a lot of attention recently. Much of the focus was on the United States while Small Island Development States in the Caribbean were also hit very hard. Can you already estimate the damages there?

Countries like Dominica and Antigua and Barbuda have been hit terribly and their recovery will take a long time. Assessments of post-disaster needs, supported by the World Bank and the Global Facility for Disaster Reduction and Recovery, are still underway, but losses probably exceed 10% of GDP in Antigua and Barbuda and 100% of GDP in Dominica, so we are talking about massive catastrophes. Without attracting the same media coverage, many other countries, like Sierra Leone, India, Sri Lanka, and Bangladesh were also heavily affected by climate-related disasters – the summer has been difficult.

Since climate change is expected to cause more of such events, which are the most endangered regions and which assets must be particularly protected?

This is where economic analyses can be misleading. If you measure risk or losses in dollars, then the hotspots will be in rich countries and regions where there is a lot of value in the form of housing, infrastructure, vehicle etc. But if you look at the impact on people and families, then poor people and poor areas are the ones that are the most at risk. They have to reduce their consumption of essential items after disasters, like food, doctor visits, or school visits of their children. They are also the ones with little access to savings and borrowing to rebuild their lives. And too often, the friends and families of poor people are also poor, so that poor people receive little support.

Where do you see opportunities and priorities for action to increase the resilience of societies and economies?

Action should rely on two pillars: prevention to avoid disasters; and resilience building to make populations better able to cope with the disasters that cannot be avoided. There are many opportunities in these two pillars. We could do much more and better in terms of prevention and avoid many disasters. For instance we could improve on how we take into account natural risks in urbanization plans, how we finance flood reduction investments, and how we build and maintain buildings, especially schools and hospitals. But we have to acknowledge that we cannot avoid all disasters and need to make sure the population can deal with disasters, with financial tools and social safety nets. Here also, there are many low-hanging fruits. One is the use of existing social safety nets – for instance the conditional cash transfers that have been implemented in so many countries – to provide support to the population after disasters. Safety nets can be made "reactive" to disasters, by increasing the amount of support or the number of beneficiaries after a shock.

What can finance and development institutions contribute in that field?

Prevention often pays for itself. Building coastal protection is expensive but reduces future asset losses due to flood. Reinforced buildings are more costly but do not require paying for repairs after each storm. So, the obstacle to prevention is not economic. It is financial. The problem is that more resilient infrastructure and assets often have a larger upfront cost. Countries and people who face limited access to capital therefore tend to go for cheaper options, even if it means higher costs over the long term. Providing financing – one of the main role of international finance institutions like the World Bank – is thus a very important contribution.

What can these institutions do in case a disaster hits?

They can help to meet urgent needs. The World Bank, for instance, offers an instrument called "Cat-DDOs", which provides contingent lines of credits that governments can access in case of a natural disaster. That way, governments can focus on helping their population after a shock, and allow for rapid action, without waiting for the reallocation of budgetary resources or foreign aid. And they can ensure that all decision-makers have access to the knowledge they need to make the right decision. The Global Facility for Disaster Reduction and Recovery has pushed for years open source and open data solutions to make risk data more accessible, especially in low-income environments.

Which unique challenges are connected to rising sea levels?

Higher sea levels will affect all coastlines, all coastal cities and all ports and therefore constitute a major challenge, not least because we face large uncertainties. Estimates for sea level rise by 2100 vary by almost one order of magnitude, making long-term planning extremely complicated. This is why we have invested in a set of methodologies we call "decision-making under uncertainty". They tend to favor solutions that are flexible and can be adjusted as we learn about future hazards and risks, and avoid irreversible choices. For instance, nature-based solutions or hybrid solutions that combine hard infrastructure with mangroves, coral reefs, or wetlands are often less brittle than simple dikes and sea walls. In a nutshell, these approaches recommend decision-makers to ask themselves a simple question: "what will be my options in 10 or 20 years, if I realize that sea level rise is not what I expected?"

Some people think the fight against climate change cannot be won in some places and therefore propose resettlements for the local population. Are they right?

There is no unique response to this question. In technical terms, protection against sea level rise is almost always possible, even though it can be very costly, have adverse impacts on the environment, and leave a significant level of residual risks. People will decide about resettlement or protection based on their values and on the options they have. In rich areas people can always invest in defenses. The situation is more difficult in poorer and low-density regions, where the cost of protecting against sea level rise may be unaffordable. The future probably involves a balance of investment in hard protection, environmental conservation of ecosystems that protect us for free, and resettlement where protection is impossible or too expensive. None of these options is easy. Therefore, anticipation is critical to minimize the economic and human cost of sea level rise.

The interview was conducted by Jan Fuhrmann