Energy and Meteorology Portal

Investing in Disaster Risk Reduction for Resilience

To facilitate climate-resilient infrastructure, governments can focus their efforts on four areas (UN-DRR, 2015):
  1. Improving risk assessment and information to support decision-making. Raising awareness and building the capacity of relevant decision-makers by ensuring that data on past and projected natural hazards are available and accessible. This can be supported by undertaking high-level risk assessments to identify the exposure of existing infrastructure.
  2. Screening and factoring climate risks into public investments. When investing in or commissioning infrastructure, governments can require contractors and suppliers to demonstrate they have considered climate risks.
  3. Enabling infrastructure resilience through policy and regulation. The private sector’s incentives for adaptation are shaped by the policy and regulatory environment. Governments can facilitate climate-resilient infrastructure by removing policy or regulatory distortions or adding regulatory requirements to consider climate risks.
  4. Encouraging climate risk disclosure. Governments can facilitate climate risk disclosure by encouraging reporting when there are gaps in existing voluntary privately-led initiatives, supporting a common framework at the international level and using this information when planning climate adaptation at the national level.
There is a need to go beyond the adaptation of individual projects to ensure that the entire system is more resilient (ADB & GCA 2021, Figure 1). In some cases, addressing the risks due to climate change will require action now, while in others the priority will be to build-in flexibility to allow for later adaptive responses. Therefore it is particularly important to have tools guiding the process and technical capacity to interpret information and draw out climate risk implications for decision-making.
Impacts for Climate Change on infrastructure asset financial performance

Figure 1. Impacts for Climate Change on infrastructure asset financial performance. Source: ADB-GCS, 2021

Sophisticated approaches, such as Real Options Analysis or Strategic Decision Making, can be helpful if the appropriate decision is highly sensitive to the climate outcome. More details on the range of decision-making tools available and their applications are provided by Vallejo and Mullan (2017a) and the ADB report (2015).

Moreover, early action should be considered and implemented if:
  1. It is cheaper than to delay action
  2. Delay may lock in future vulnerabilities
  3. Current benefits are large
  4. Implementation of adaptation measures are costly and/or time consuming.

The benefits of resilient electricity systems with weather-proofed infrastructures are much greater than the costs of accounting for weather and climate risks in the planning phase in most of the scenarios considering the growing impacts of climate change. In the Lifelines: In the Resilient Infrastructure Opportunity report (Hallegate 2019), it is estimated that a $4.2 trillion net benefit is achieved on average for low- and middle-income countries, with $4 in benefit for each $1 invested. According to the World Bank and the GFDRR (Global Facility for Disaster Risk Reduction and Recovery), if the actions needed for resilience are delayed by ten years, the cost will almost double (Hallegate, 2019).

Texas Power Outages due to 2021 cold storm  (Golding et al 2021).

The record-breaking cold snap in mid-February 2021 caused major outages throughout Texas. A systemic approach to understanding the compounding events was needed, as the energy value chain is a complex and interdependent mechanism, and not a single piece is the sole source of the devastating event.

  • Loss of at least 111 lives. Widespread damage to homes and businesses, foregone economic activity, and contaminated water supplies.
  • Cost to Texas economy: between $80 and $130 billion (direct and indirect) although calculations come with significant uncertainty. Estimates of insured losses, which are easier to quantify, range from $10 to $20 billion.
  • Using a Value of Lost Load (VOLL) estimate of $4.3 billion, and accounting for the once-in-a-decade frequency of sub-zero temperatures in Texas, winterizing measures and other actions should be equal to or less than $430 million annually.