No Infrastructure is an Island

Risk-sharing, public-private partnerships and nature-based solutions all play a part in boosting resilience against flood risk.

(...) Probability and intensity

Models, ratings and other tools are being developed to help investors assess vulnerability to flood and other physical risks, including losses to revenue and asset value, as well as the return on investment in adaptation and resilience. These are increasingly forward looking, to reflect how climate change will increase them over time.

EDHEC Climate Institute offers Scientific Climate Ratings that assess the physical and transition risks of 6,000 infrastructure assets, with flood risks assessments underpinned by a calculation of the probability and intensity of flood events by location.

Because a one-metre flood event every five years has different cost implications for different infrastructure types, for example, EDHEC uses an asset-specific ‘damage function’ qualification to reach an annualised impact figure expressed as a percentage of the value of the asset.

While assets which are located near rivers or coastlines – including ports, airports, wastewater plants – are particularly vulnerable, transport networks, pipelines, and transmission lines can also be affected by flooding, as well as being highly sensitive to storms, notes Anthony Schrapffer, Scientific Director of the EDHEC Climate Institute.

EDHEC also evaluates the effectiveness of the multiple adaptation measures that can be taken to protect a particular asset, for example calculating that these might protect an asset with an efficiency of 80% against flood events with a 1-in-100-year probability.

Integration of cash flow factors such as damage cost reduction as well as capital and operating expenditure generates an internal rate of return for alternative measures.  “In some cases, adaptation measures can increase the value of the asset, even with the cost they generate,” says Schrapffer, adding that this makes them easier to finance. (...)