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Image: China's coastal province of Jiangsu tops the global list for climate risks. | Jiangsu Provincial People's Government
“Since extensive built infrastructure generally overlaps with high levels of economic activity and capital value, it is imperative that the physical risk of climate change is appropriately understood and priced."
The engine rooms of the global economy are among states and provinces most at
risk from climate change and extreme weather, according to a new ranking of the
physical climate risk of every state, province and territory in the world
released today by The Cross Dependency Initiative (XDI) — a world leader
in physical climate-risk analysis.
XDI's Gross Domestic Climate Risk
ranks over 2,600 jurisdictions around the world in 2050 according to modelled
projections of damage to the built environment from extreme weather and climate
change — including from flooding, forest
and sea-level rise. It also identifies which of these jurisdictions see the
greatest escalation of modeled damage from 1990 to 2050.
The results show that globally significant states and provinces in China and
the United States will be hit hardest, along with major cities and centers
of economic activity around the world.
Image credit: XDI
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"We're releasing this analysis in response to demand from investors for data on
sub-sovereign and regional risk," said XDI CEO Rohan
Hamden. "This is the first time there
has been a physical climate-risk analysis focused exclusively on the built
environment — comparing every state, province and territory in the world. Since
extensive built infrastructure generally overlaps with high levels of economic
activity and capital value, it is imperative that the physical risk of climate
change is appropriately understood and priced."
The XDI Gross Domestic Climate Risk comparison of physical climate risk for 2050
Two of China's largest sub-national economies — Jiangsu and Shandong
— top the global ranking, in first and second place. Over half of the
provinces in the global top 50 are in China.
After China, the US has the most high-risk states with 18 states in the top
100. Florida is the highest-ranking US state, followed by California
Together, China, India and the US make up over half the states and
provinces in the top 100.
Other highly developed and globally significant economic hubs in the top 100
include Buenos Aires, São Paulo, Jakarta, Beijing, Hồ Chí
Minh City, Taiwan and Mumbai.
Southeast Asia will experience the greatest escalation in damage from
1990 to 2050 anywhere in the world.
Globally, most damage is caused by riverine and surface flooding or flooding
combined with coastal inundation.
A 2022 survey from online real estate education platform Anytime Estimate
found that 93 percent of respondents believe that climate change will impact the
already-volatile real estate market — the likelihood of increased extreme
weather events and natural disasters has already played a role for 3 in 5 people
in deciding where to move; and about half expect homes and home insurance to
become more expensive due to the impact of natural disasters. Recognizing this
growing risk, in 2021 US-based real estate platform Redfin began providing
for every location it lists — providing 30-year trend information for
extreme heat, droughts and storms to better inform prospective home buyers on
the climate impacts facing particular areas.
The XDI report couldn’t be more timely: A report published last week in Nature Climate Change estimates the US housing market alone has been overvalued by
due to unpriced climate risks.
"The findings from the XDI Gross Domestic Climate Risk ranking underscore the
importance of pricing physical climate risk in financial markets — including
bond markets — given the amount of capital investment represented by the assets
at risk in the provinces identified, the vulnerability of global supply chains,
and the need for climate resilience to inform investment," Hamden said.
"It is crucial for companies, governments and investors to understand the
financial and economic implications of physical climate risk and weigh this risk
in their decision-making before these costs escalate beyond financial tipping
points," he added.
The full dataset can be accessed on the XDI
Published Feb 20, 2023 1pm EST / 10am PST / 6pm GMT / 7pm CET