Coastal regions and climate change: how better risk assessment can help protect infrastructure and livelihoods

Coastal regions, where dense clusters of critical infrastructure are found, are facing the sharpest edge of climate change. The threats include paralysed transport networks and disrupted supply chains. To stay ahead, we need a clearer picture of these vulnerabilities that lets us anticipate the fallout before it comes. But right now, patchy data, inconsistent approaches, and the absence of a unified framework make it tough to grasp the scale of the risk.

(...) From risk assessment to informed decision-making

The method developed by the EDHEC Climate Institute for quantifying physical risk involves cross-referencing the probability of a hazard with its expected intensity. Damage functions then correlate each climate scenario with potential losses, accounting for asset type and location. For instance, a 100-year flood – an event with a 1% annual occurrence probability – might correspond to a two-meter flood depth, capable of destroying over 50% of the value of a residential property in Europe.

By translating physical risks into economic terms, these indicators provide a clear basis for public policy and private investment decisions. Should infrastructure be built, reinforced, or adapted? Which projects should take priority?

The analysis also incorporates transition risks, including the impact of evolving regulations, carbon pricing, and technological shifts. A gas terminal, for example, could become a stranded asset if demand declines or regulations tighten. Conversely, proactive adaptation strategies can enhance the financial resilience and long-term value of climate-exposed infrastructure. This approach ensures that decisions are not only reactive but also strategically aligned with future risks and opportunities. (...)