TCFD - Riesgos Físicos

UNEP Finance Initiative Online Course
Climate Change & the TCFD: Risks and Opportunities for the Banking Industry
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Module 1 Physical Risks of Climate Change .................................................................................... 3
1.0 Introduction ........................................................................................................................ 3
1.1 Meteorology and Climate ................................................................................................... 4
1.1.1 The Greenhouse Effect......................................................................................................... 5
1.1.2 Radiative Forcing and Greenhouse Gases ............................................................................ 6
1.2 Anthropogenic Climate Change ........................................................................................ 11
1.2.1 Sources of Anthropogenic Greenhouse Gas Emissions ...................................................... 14
1.3 IPCC: Mapping Climate Change Impacts ........................................................................... 16
1.3.1 The Working Groups I, II & III ............................................................................................. 16
1.3.2 Fifth Assessment Report (AR5) .......................................................................................... 17
1.3.3 Special Report “Global Warming of 1.5˚C” ........................................................................ 18
1.3.4 Forecasting Models ............................................................................................................ 21
1.4 Physical Impacts and Risks of Climate Change ................................................................. 22
1.4.1 Introduction ....................................................................................................................... 22
1.4.2 Acute or Chronic or Hazard or Disaster?............................................................................ 24
1.4.3 Rapid Onset Hazards (Extreme Weather) .......................................................................... 25
1.4.4 Slow Onset Hazards............................................................................................................ 29
1.4.5 Biodiversity Impacts ........................................................................................................... 35
1.4.6 Impacts on Food Supplies .................................................................................................. 36
1.4.7 Changing Land Use Change ................................................................................................ 38
1.4.8 Tipping Points (!) ................................................................................................................ 42
1.4.9 Nonlinearity of Climate Impacts ........................................................................................ 45
1.4.10 Adaptive Capacity ............................................................................................................... 46
1.4.11 Human Health ..................................................................................................................... 48
1.5 Physical Risks to Business Sectors: Tables ....................................................................... 49

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1.5.1 Agriculture, Food & Beverage, Apparel ............................................................................. 49
1.5.2 Electric Power: the example of Pacific Gas & Electric ........................................................ 50
1.5.3 Insurance & Tourism .......................................................................................................... 51
1.5.4 Mining, Oil & Gas ............................................................................................................... 52
1.5.5 Section Summary ............................................................................................................... 53
1.6 Key Points ......................................................................................................................... 53
Other References .......................................................................................................................... 55
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Module 1 Physical Risks of Climate Change

“Every extra bit of warming matters, especially since warming of 1.5˚ C or higher increases the
risk associated with long-lasting or irreversible changes, such as the loss of some ecosystems1”
1.0 Introduction
• Climate change is a change in the statistical distribution of weather patterns when that change
lasts for an extended period (i.e., decades to millions of years). Climate change may refer to a
change in average weather conditions, or in the time variation of weather around longer-term
average conditions.
• Natural climate change is caused by factors such as biotic processes, variations in solar radiation
received by Earth, plate tectonics, and volcanic eruptions. The term "climate change" is more
often used to refer specifically to anthropogenic climate change (also known as global warming).
Anthropogenic climate change is caused by human activity, as opposed to changes in climate that
result from Earth's natural processes.
• The overwhelming scientific consensus is that human activities are the primary driver of global
climate change since the mid-20th century. This consensus is found in scientific reports by the
Intergovernmental Panel on Climate Change (IPCC)2, and by numerous studies, including surveys
of experts3 and comprehensive reviews of the peer-reviewed literature on climate change456. All
the work converges on the same basic conclusion: more than 97% of climate scientists are certain
that human-caused climate change is happening7.
1
Hans-Otto Pörtner, Co-Chair of IPCC Working Group II, IPCC press release (October 2018)
2
Intergovernmental Panel on Climate Change. Global Warming of 1.5 °C, an IPCC special report on the impacts of
global warming of 1.5 °C above pre-industrial levels and related global greenhouse gas emission pathways, in the
context of strengthening the global response to the threat of climate change, sustainable development, and efforts
to eradicate poverty (SR15). Cambridge University Press (2018).
3
Doran, Peter T., and Maggie Kendall Zimmerman. "Examining the scientific consensus on climate change." Eos,
Transactions American Geophysical Union 90.3 (2009): 22-23.
4
Oreskes, Naomi. "The scientific consensus on climate change." Science 306.5702 (2004): 1686-1686.
5
Anderegg, William RL, et al. "Expert credibility in climate change." Proceedings of the National Academy of
Sciences 107.27 (2010): 12107-12109.
6
Cook, John, et al. "Quantifying the consensus on anthropogenic global warming in the scientific literature."
Environmental research letters 8.2 (2013): 024024.
7
E Maibach, T Myers, and A Leiserowitz. "Climate scientists need to set the record straight: There is a scientific
consensus that human‐caused climate change is happening." Earth's Future 2.5 (2014): 295-298.
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At the end of Module 1:
1) You will understand what climate change is.

2) You will understand the causes of climate change.
3) You will understand how climate change is measured.
4) You will gain understanding of the physical impacts caused by climate change now and
some of the climate risks facing us in the future.
1.1 Meteorology and Climate

• Meteorology is the interdisciplinary scientific study of the atmosphere. The atmosphere is the gaseous
layer of the physical environment that surrounds a planet. The earth’s atmosphere is roughly 100 to
125 kilometres thick. Meteorologists often focus on atmospheric research or operational weather
forecasting. The term ‘weather’ is at one end of the ‘meteorological spectrum’, and generally refers
to short-term fluctuations (‘the coming weeks’). The term ‘climate’ is characterized by longer time
scales (months, years, millennia).
• The Intergovernmental Panel on Climate Change (IPCC) is a United Nations body, founded in 1988,
which evaluates climate change science. Research meteorologists engaged by the IPCC cover
subdisciplines of meteorology including climate modelling, remote sensing, air quality, atmospheric
physics, and climate change. The IPCC process involves hundreds of scientists and draws on the work
of thousands more. Most contribute as volunteers. They research the relationship between the
atmosphere and Earth’s climate, oceans, and biological life. Weather occurs at different scales of
space and time. The four meteorological scales, space-wise, are: microscale (0-5 km square),
mesoscale (2-1000 km square), synoptic scale (1000s of km square), and global scale. Meteorologists
often focus on a specific scale in their work8.
• At short time scales, the main factors that impact the weather (and inform related forecasts) are
convection, cloud cover, humidity, and soil moisture. Climate, at the other end of this spectrum, is
broadly impacted by solar variations, volcanic eruptions, shifts in ocean circulation, and changes in
the chemical composition of the atmosphere. The science of anthropogenic climate change focuses
on, precisely, how human-induced changes in the chemical composition of the atmosphere are
affecting long-term “climate” and, by extension, short-term “weather”.
8
Michalakes, J., Dudhia, J., Gill, D., Henderson, T., Klemp, J., Skamarock, W., & Wang, W. (2005). The weather
research and forecast model: software architecture and performance. In Use of High-Performance Computing in
Meteorology (pp. 156-168).
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1.1.1 The Greenhouse Effect

The greenhouse effect is the process by which radiation from a planet's atmosphere warms the planet's
surface to a temperature above what it would be without its atmosphere. If a planet's atmosphere
contains radiatively active gases (known as “greenhouse gases”) they will radiate energy in all directions.
Part of this radiation is directed towards the surface, warming it. The intensity of the downward radiation
(the strength of the greenhouse effect) will depend on the atmosphere's temperature and on the amount
of greenhouse gases that the atmosphere contains9.
Figure 1.1 An idealised model of the natural greenhouse effect. (IPCC AR4 2007)
The Sun powers Earth’s climate,
radiating energy at very short
wavelengths, predominately in
the visible or near-visible (e.g.,
ultraviolet) part of the spectrum.
Roughly one-third of the solar
energy that reaches the top of
Earth’s atmosphere is reflected
directly back to space. The
remaining two-thirds is absorbed
by the surface and, to a lesser
extent, by the atmosphere. To
balance the absorbed incoming
energy, the Earth must, on average, radiate the same amount of energy back to space.
Because the Earth is much colder than the Sun, it radiates at much longer wavelengths, primarily in the
infrared part of the spectrum (Figure 1.1). Much of this thermal radiation radiated by the land and ocean
is absorbed by the atmosphere, including clouds, and reradiated back to Earth. This is our planet’s
greenhouse effect10. Earth’s greenhouse effect warms the surface of the planet. Greenhouse gases
(abbreviated as ‘GHGs’) such as water vapour, carbon dioxide, methane, nitrous oxide and ozone slow the
escape of heat from the atmosphere11. Although GHGs make up only about 1% of the Earth's atmosphere,
they regulate our climate by trapping heat and holding it in a ‘blanket’ of warm air surrounding the planet.
Without the greenhouse effect, scientists estimate that the average temperature on Earth would be
colder by approximately 30 degrees Celsius (°C), too cold to sustain our current ecosystems12.
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The atmospheres of Earth, Venus, Mars and Titan contain gases that cause a greenhouse effect.
10
IPCC Climate Change 2007: Working Group I: The Physical Science Basis
11
Water vapour, ozone (O3), carbon dioxide (CO2), methane (CH4), and nitrous oxide (NOx) occur naturally in
smaller quantities. Other atmospheric GHGs are synthetic, such as chlorofluorocarbons (CFCs), hydrofluorocarbons
(HFCs) and perfluorocarbons (PFCs), as well as sulphur hexafluoride (SF 6).
12
In the Solar System, the atmospheres of Venus, Mars and Titan also contain gases that cause a greenhouse
effect.
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Human activities, mainly the burning of fossil fuels and clearing of forests, have strengthened the
greenhouse effect, and caused anthropogenic climate change. GHG emissions are generally discussed in
terms of carbon dioxide (CO2), but other GHGs contribute more to global climate change than CO2 on a
per unit basis (and the relative impacts vary with time).
1.1.2 Radiative Forcing and Greenhouse Gases

The climate of the Earth is affected by changes in radiative forcing (RF) due to several sources known as
radiative forcing agents. These agents include the concentrations of radiatively active greenhouse gases,
solar radiation, aerosols and albedo (defined on next page)13. The RF of a gas is defined as the difference
between incoming solar radiation and outgoing infrared radiation caused by the increased
concentration of that gas. Subtract the energy flowing out from the energy flowing in, and if the number
is positive (“positive forcing”), there is warming. If the number is negative (“negative forcing”), then there
is cooling.
Radiative forcing is essentially a measure of the amount that the Earth’s energy budget is ‘out of balance’.
This imbalance is measured at the boundary between the troposphere (the lowest level of the
atmosphere) and the stratosphere (the very thin upper layer). For practical purposes, this boundary marks
the top of the atmosphere. Radiative forcing is a useful way to compare different causes of perturbations
in a climate system. For comparative convenience, most researchers choose a “baseline” year before the
beginning of world industrialization (usually either 1750 or 1850) as the zero point and compute radiative
forcing in relation to that base. The IPCC uses 1750 as the baseline year. Changes (the rate of energy
change) in radiative forcing agents are measured from the baseline until now in terms of watts per square
meter (W/m2) of the Earth’s surface at the top of the atmosphere (tropopause).
Radiative forcing is a direct measure of the impact of human activities (including not just greenhouse
gases added directly to the atmosphere, but also the impact of deforestation, which changes the
reflectivity of the surface)14. The major contributor to increases in radiative forcing due to higher
concentrations of greenhouse gases since pre-industrial times is carbon dioxide (CO2), with contributions
from methane (CH4) (17%) nitrous oxide (N2O) (4%) and chlorofluorocarbons (CFCs) (12%).
The main uncertainty in measuring radiative forcing comes from the multiple effects of aerosols (small
airborne particles) in the atmosphere, which are complex and often contradictory. For example, ‘bright’
aerosols (like sulphates from burning coal) are a cooling mechanism, whereas dark aerosols (like black
carbon from diesel exhausts) lead to warming. Overall, aerosols have a cooling effect. To control global
warming, there needs to be a massive global reduction of greenhouse gas emissions. At the same time,
aerosol emissions will need to be greatly reduced too.
13
Shindell, Drew (2013). "Radiative Forcing in the AR5" (PDF). See “albedo effect”.
14
This number also includes any natural atmospheric changes.
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Recent research shows that cleaning up aerosols, predominantly sulphate, may add an additional half
a degree (0.5˚C) or more of global warming, with impacts that strengthen those from greenhouse gas
warming. The northern hemisphere is found to be more sensitive to aerosol removal than elsewhere15.
Figure 1.2: Radiative forcing of atmospheric components (IPCC AR5 2014). Since 1750 the concentration of carbon
dioxide and other greenhouse gases has increased in Earth's atmosphere. As a result of these and other factors,
Earth's atmosphere retains considerably more heat than in the past.
The major contributor to increases in radiative forcing due to higher concentrations of greenhouse gases
since pre-industrial times is carbon dioxide (CO2) (64%), with substantial contributions from methane
(CH4) (17%) nitrous oxide (N2O) (4%) and chlorofluorocarbons (CFCs) (12%).
15
Samset, B. H., Sand, M., Smith, C. J., Bauer, S. E., Forster, P. M., Fuglestvedt, J. S. & Schleussner, C. F. (2018).
Climate impacts from a removal of anthropogenic aerosol emissions. Geophysical Research Letters, 45(2), 1020-
1029.
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The overall RF of a GHG at any moment in the atmosphere is measured by linking its atmospheric
concentration, warming capacity, residence time, and spatial distribution, as below:
a) Amount/Atmospheric Concentration: determined by the emitted quantity of a GHG and by how

much of it stays in the atmosphere. The greater the concentration of a GHG in the atmosphere, the
larger its impact will be. Atmospheric concentrations of GHGs are typically measured in parts per
million (ppm), parts per billion (ppb) or parts per trillion (ppt). The global annual mean concentration
of CO2, for instance, has increased by more than 45% since the start of the ‘industrial revolution’, from
280 ppm during the 10,000 years up to the mid-18th century to 410 ppm as of mid-201816. The present
concentration is the highest in the last 800,000 and possibly even the last 20 million years. The
increase has been caused by human activities, particularly the burning of fossil fuels and
deforestation. Reigning in the growth of CO2 concentrations is vital. For example, about 30–40% of
the CO2 released by humans into the atmosphere dissolves into oceans, rivers and lakes, which has
produced toxic ocean acidification17.
b) Global Warming Potential (GWP): some gases are more effective than others at trapping heat and
this is reflected in their “GWP” values. The GWP of any given GHG expresses its estimated climate
impact over a specific time-period compared to an equivalent amount by weight of carbon dioxide
(abbreviated “CO2e”). Over a 100-year time frame, a molecule of methane is approximately 25 times
more potent (effective at trapping radiation and inducing warming) than a molecule of CO2. Thus,
methane has a GWP of 25. Similarly, the current 100-year GWP for N2O is 298, which indicates that
one ton of N2O will have the same global warming effect over 100 years as 298 tons of CO2. GWP
values are internationally agreed.
c) Duration/Residence Time in the Atmosphere: the time a GHG stays in the atmosphere. Some GHGs
are short-lived (water vapour) while others remain in the atmosphere for hundreds, even thousands
of years (such as “F-gases”, see below).
d) Spatial Distribution: refers to how far GHGs spread geographically. Long-lived greenhouse gases
spread across the entire atmosphere (CO2, methane); their warming impact is therefore global in
scale. These “well-mixed greenhouse gases” (WMGHGs) have lifetimes long enough to be relatively
homogeneously mixed in the troposphere. There are also short-lived climate forcers (SLCFs, which
include methane, some hydrofluorocarbons [HFCs], ozone, and aerosols), contrails, and changes in
albedo (for example, land-use changes). Some WMGHGs are also considered SLCFs (for example,
methane).
16
“Trends in Atmospheric Carbon Dioxide". Earth System Research Laboratory. NOAA (2018).
17
Pachauri, R. K., Allen, M. R., Barros, V. R., Broome, J., Cramer, W., Christ, R., ... & Dubash, N. K. (2014). Climate
change 2014: synthesis report. Contribution of Working Groups I, II and III to the fifth assessment report of the
Intergovernmental Panel on Climate Change (p. 151). IPCC.
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Albedo Effect
Astronomers define the reflectivity of an
object in space using the term Albedo. This
is the amount of radiation that reflects
away, compared to the amount that gets
absorbed. A perfectly reflective surface
would get an albedo score of 1, while a
completely dark object would have an
albedo of 0. Of course, albedo scores are
not that black or white, as most objects
will tend to have an albedo score in-
between 0 and 1.
The Albedo effect has a significant impact

on Earth’s climate. The lower the albedo
effect, the more radiation from the Sun that gets absorbed by our planet – and the more that
temperatures rise. If the albedo is higher, and the Earth is more reflective, more of the radiation is
returned to space, less is absorbed and Earth cools. Snow cover is highly reflective. That is one of the
many reasons that melting snow and ice in the Arctic and Antarctic are a serious concern.
Atomic Bombs
Earth is warming very rapidly. The speed and intensity of this warming is difficult to imagine. The
greenhouse effect has warmed the surface and atmosphere, but most heat (about 90%) is being captured
by the oceans. The oceans can hide this energy from immediate view. One Joule is the equivalent of one
watt of power radiated or dissipated for one second. One watt of power converted to joules per second
equals to 1.00 J/s . So, 100 watts is 100 joules per second. Research that combines warming data (land,
air, ice, and ocean) for recent decades finds the earth is heating at a rate of 250 trillion Joules per second18
19
. In terms that are easier to visualize, 250 trillion Joules per second is equivalent to:
 Detonating four Hiroshima atomic bombs per second

 Experiencing two Hurricane Sandys per second
 Enduring four 6.0 Richter scale earthquakes per second
 Being struck by 500,000 lightning bolts per second
 Exploding over eight Big Ben towers, with every inch packed full of dynamite, per second
18
Douglass, D. H., & Knox, R. S. (2012). Ocean heat content and Earthʼs radiation imbalance. II. Relation to climate
shifts. Physics Letters A, 376(14), 1226-1229.
19
Levitus, S., Antonov, J. I., Boyer, T. P., Baranova, O. K., Garcia, H. E., Locarnini, R. A., ... & Zweng, M. M. (2012).
World ocean heat content and thermosteric sea level change (0–2000 m), 1955–2010. Geophysical Research
Letters, 39(10).
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In order, the most abundant GHGs in Earth's atmosphere are:

Figure 1.3: Anthropogenic emissions by GHG (U.S. EPA 2016)
1. Water vapour (H2O) concentrations are not shown

on this diagram, but it is Earth’s most abundant
greenhouse gas. Water vapour contributes very
little to global warming20, however. It only persists
in the atmosphere a few days while carbon dioxide,
for example, persists for hundreds of years.
2. Carbon dioxide (CO2) currently constitutes about

0.041% (equal to 410 parts per million: ppm) by
volume of the atmosphere. CO2 enters the
atmosphere through burning fossil fuels (coal,
natural gas, oil), solid waste, wood, and some
industrial chemical reactions (e.g., manufacture of
cement). Some atmospheric CO2 is soaked up (or
“sequestered”) by natural reservoirs such as trees
and forests (called “carbon sinks”). The rest of the
CO2 persists in circulation21.
3. Methane (CH4) is emitted during the production and transport of coal, natural gas, and oil. Methane
emissions are produced by keeping livestock, other agricultural practices (clearing land, rice paddies) and
by the decay of organic waste in solid waste landfills.
4. Nitrous oxide (N2O) is emitted during agricultural (e.g., spreading fertilizer) and industrial activities, as well
as during the combustion of fossil fuels and solid waste.
5. Ozone (O3) occurs naturally in low concentrations. However, tropospheric ozone is formed by the
interaction of sunlight (particularly ultraviolet light) with hydrocarbons and nitrogen oxides emitted by
automobiles, gasoline vapours, fossil fuel power plants, refineries, and certain other industries. Since 1900,
ozone is thought to have caused approximately 30% of the direct GHG-induced warming seen since the
industrial revolution.
6. Fluorinated gases (“F-gases”) are synthetic, powerful greenhouse gases that are emitted from a variety of
industrial processes. Fluorinated gases are sometimes used as substitutes for stratospheric ozone-
depleting substances (e.g., chlorofluorocarbons, hydrochlorofluorocarbons, and halons). These gases are
typically emitted in much smaller quantities but are very potent and long-lived GHGs, sometimes
referred to as High Global Warming Potential Gases (“High GWP gases”).
20
Gregory, J., Stocker, T., Lemke, P., & Bindoff, N. (2007). Climate change 2007: the physical science basis.
Contribution of.
21
Ibid.
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1.2 Anthropogenic Climate Change

“Anthropogenic climate change is caused by emissions of greenhouse gases, predominantly CO2
and methane, from energy, industry, transport, agriculture and other economic sectors. Human
activities have dramatically increased the atmospheric concentration of carbon dioxide.
Compared with ‘natural’ climate change patterns throughout Earth's history, the rate of
temperature increases since 1750 is extremely high/fast22.”
The natural greenhouse effect was first identified early in the 19th century. Already by the start of the
20th century, scientists argued that human emissions of GHGs could change the climate. In the 1960s,
the case for the warming effect of CO2 became increasingly convincing. By the 1990s, a consensus position
formed: greenhouse gases were deeply involved in most observed climate changes and human caused
emissions were bringing discernible global warming. As of late 2015, global mean warming for the first
time reached 1°C above the “preindustrial era”23.
An increase of global temperature by more than 2°C above the “pre-industrial average” has come to be
the majority definition of what would constitute intolerably dangerous climate change. Recent research
aims to better define the “pre-industrial” baseline and suggests that 1720-1800 is the most suitable
choice. This analysis estimates the change in global average temperature since the pre-industrial era using
a range of approaches based on observations, radiative forcings, global climate model simulations and
proxy evidence. The assessment is that this pre-industrial period was likely 0.55–0.80°C cooler than 1986-
2005 and that 2015 was likely the first year in which global average temperature was 1°C above pre-
industrial levels24.
Climate scientists generally agree that dramatic changes of the Earth system would occur if the global
mean surface temperature exceeds the threshold of 2°C relative to pre-industrial levels, such as large sea
level rise due to a melting of major ice sheets in the Greenland and Antarctic, more frequent occurrence
of climate-related extreme events, and massive species extinctions25. The current and future physical
impacts of climate change are discussed in section 1.5.
Over the past 800,000 years, CO2 concentrations have shown cycles of variation from about 180 parts per
million (during the deep glaciations of the Holocene and Pleistocene) to 280 parts per million (interglacial
periods).
22
Pachauri, Rajendra K., et al. Climate change 2014: synthesis report. Contribution of Working Groups I, II and III to
the fifth assessment report of the Intergovernmental Panel on Climate Change. IPCC, 2014.
23
Donnelly, C., Greuell, W., Andersson, J., Gerten, D., Pisacane, G., Roudier, P., & Ludwig, F. (2017). Impacts of
climate change on European hydrology at 1.5, 2 and 3 degrees mean global warming above preindustrial level.
Climatic Change, 143(1-2), 13-26.
24
Hawkins, Ed, et al. "Estimating changes in global temperature since the pre-industrial period." Bulletin of the
American Meteorological Society (2017).
25
Wang, Z., Lin, L., Zhang, X., Zhang, H., Liu, L., & Xu, Y. (2017). Scenario dependence of future changes in climate
extremes under 1.5 C and 2 C global warming. Scientific Reports, 7, 46432.
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Each part per million by volume of CO2 in the atmosphere represents approximately 7.82 gigatonnes of
CO226. Since the industrial revolution, the atmospheric CO2 concentration has quickly increased to over
400 parts per million and continues to rise. Some research has proposed that human activities, primarily
deforestation, began to alter atmospheric carbon dioxide and methane levels centuries before the
industrial revolution27, but it was since the industrial revolution and the at-scale combustion of fossil fuels
that GHG concentrations started to rise continuously and significantly.
Climate change is related to the concentration of GHGs in the atmosphere and not to emissions in any
given year. Greenhouse gas concentrations are closely related to the net accumulation of emissions over
long periods of time28. The graph below (Figure 1.4) shows the dramatic spike in the global atmospheric
concentration of CO2. Other GHGs, such as methane, have a similar chart profile29.
Figure 1.4: Global CO2 Concentrations (U.S. EPA 2016)
26
"Conversion Tables". Carbon Dioxide Information Analysis Center. Oak Ridge Laboratory. Retrieved Oct 2020.
27
Ruddiman, William F. "The anthropogenic greenhouse era began thousands of years ago." Climatic change 61.3
(2003): 261-293.
28
Pachauri, R. K., Allen, M. R., Barros, V. R., Broome, J., Cramer, W., Christ, R., ... & Dubash, N. K. (2014). Climate
change 2014: synthesis report. Contribution of Working Groups I, II and III to the fifth assessment report of the
Intergovernmental Panel on Climate Change (p. 151). IPCC.
29
In 2015, the three-month global average concentration of CO2 exceeded 400 ppm for the first time.
12
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Figure 1.5: Global annual average

near-surface temperature anomalies
(UK Met Office, Hadley Centre 2018)
The term temperature anomaly
means a departure from a reference
value or long-term average.
• There is a direct correlation between increased emissions and higher temperatures. There are
effectively two man-made ‘systems’ that cause the large majority of anthropogenic GHG emissions:
1) land use (emissions from agriculture and land use changes including tropical deforestation), and
2) energy transformation (conversion of energy from fossil fuels to thermal and kinetic energy with
resulting emissions). Cumulative emissions mean that most aspects of climate change will persist for
centuries even if emissions are stopped.
• To limit the concentration of atmospheric GHGs, global anthropogenic GHG emissions must
eventually peak and then decline. This result follows from the nature of the carbon cycle, as it is
presently understood. While non-CO2 GHGs with relatively short lifetimes, such as methane (CH4),
have an atmospheric concentration that is stable with a stable rate of annual emission, CO2 does not.
The cumulative net introduction of CO2 emissions from terrestrial reservoirs, such as fossil fuels or
biological carbon, through (for example) energy production and use or land-use change, determines
the long-term, steady state, atmospheric CO2 concentration30.
• The observed increase in atmospheric CO2 concentration over the past decades is equal to about 57%
of our cumulative emissions. Other parts of the ‘climate system’ (ocean and land biospheres which
act as carbon sinks) have absorbed the remaining 43% of emissions from the atmosphere. The ocean
has taken up about 2 gigatons (Gt) of carbon per year, or 30% of anthropogenic emissions. This CO 2
uptake makes seawater more acidic and is damaging to marine life. The heat that the oceans are
absorbing (page 9) combined with growing acidity creates increasingly hostile marine environments
around the planet.
30
Intergovernmental Panel on Climate Change. (2015). Climate change 2014: Mitigation of climate change (Vol. 3).
Cambridge University Press.
13
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1.2.1 Sources of Anthropogenic Greenhouse Gas Emissions

Figure 1.6: Sources of anthropogenic emissions (U.S. EPA 2016)
Electricity and heat generation: the burning of

coal, natural gas, and oil for electricity and heat is
the largest single source of anthropogenic GHGs
globally. In 2016, this area of emissions
amounted to 13.41 GtCO2. Since the early 2000s,
Asia has the dominant source of emissions from
fuel combustion, reaching 17.4 GtCO2 in 2016,
twice the level of the Americas and three times
that of Europe. China accounted for more than
one half of emissions in Asia in 2016 followed by
India with 12%31.
Agriculture, Forestry, and Other Land Use

(AFOLU): GHG emissions from this sector come
mostly from animal agriculture, land clearance
and deforestation in the tropics (e.g., countries
such as Brazil, Indonesia, and the Democratic
Republic of Congo). However, this estimate does
not include the CO2 that ecosystems remove from the atmosphere by sequestering carbon in biomass,
organic matter, and soils.
Industry: GHG emissions from industry are primarily fossil fuels burned on site at facilities for electricity
or heat. This industry sector also includes emissions from chemical, metallurgical, and mineral
transformation processes not associated with energy transformation and emissions from waste
management activities.
Transportation / mobility: GHG emissions from this sector primarily involve fossil fuels burned for road,
rail, air, and marine transportation. Almost all (95%) of the world's transportation energy comes from
petroleum-based fuels, largely gasoline and diesel.
Buildings: GHG emissions from this sector arise from onsite energy generation and burning fuels for heat
in buildings or cooking in homes. (Note: Emissions from electricity use in buildings are excluded and are
instead covered in ‘Electricity and Heat Production’).
Other Energy: emissions from the energy sector which are not directly associated with electricity or heat
production, such as fuel extraction, refining, processing, and transportation.
31
International Energy Agency, Statistics: CO2 Emissions from Fuel Combustion (2018)
14
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Figure 1.7: Global carbon emissions hit an all-time high. Again. (University of East Anglia, Global Carbon Project)
15
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1.3 IPCC: Mapping Climate Change Impacts

Understanding the concepts of climate impact risk and uncertainty and communicating these to
policymakers and the public is a constant work in progress led by the Intergovernmental Panel on Climate
Change (IPCC). The IPCC issues comprehensive reports to update the state of knowledge on the scientific,
technical, and socio-economic aspects of climate change. The IPCC’s Fifth Assessment Report (AR5) was
published in 2014 (the previous report, AR4, came out in 2007) and more than 800 authors from around
the world worked on the project. The Synthesis Report of AR5 provides an abbreviated overview of the
state of knowledge concerning the science of climate change. In October 2018, the IPCC issued “Global
Warming of 1.5˚C”, discussed further on in this text. See the IPCC website for the latest publications and
announcements.
1.3.1 The Working Groups I, II & III

The IPCC workload is shared amongst three Working Groups, a Task Force32 and a Task Group. Each Group
has a particular focus and operates independently.
I. IPCC Working Group I (WG I) assesses the physical scientific aspects of the climate system and
climate change. These include: changes in GHG and aerosols in the atmosphere; observed changes in
air, land and ocean temperatures, rainfall, glaciers and ice sheets, oceans and sea level; historical and
paleoclimatic perspectives on climate change; biogeochemistry, carbon cycle, gases and aerosols;
satellite data and other data; climate models; climate projections, causes and attribution of climate
change. Parts of this area of focus are covered in the Online Course’s Module 1.
II. The IPCC Working Group II (WG II) assesses the vulnerability of socio-economic and natural systems
to climate change, negative and positive consequences of climate change, and options for adapting
to it. It also takes into consideration the inter-relationship between vulnerability, adaptation and
sustainable development. The assessed information is considered by sectors and regions. Parts of this
area of focus are covered in the Online Course’s Modules 1 and 2.
III. The IPCC Working Group III (WG III) assesses options for mitigating climate change through limiting
or preventing GHG emissions and enhancing activities that remove GHGs from the atmosphere.
Major economic sectors (energy, transport, buildings, industry, agriculture, forestry, waste
management) are analysed from a near-term and long-term perspective. WG III analyses the costs
and benefits of the different approaches to mitigation, also considering the available instruments and
policy measures. The approach is increasingly solution oriented. (‘Transition’, see Module 2.)
32The Task Force on National Greenhouse Gas Inventories (TFI) was established by the IPCC to develop and refine an
internationally-agreed methodology and software for the calculation and reporting of national GHG emissions and removals
and engage with countries participating in the IPCC and by parties of the United Nations Framework Convention on Climate
Change (UNFCCC).
16
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1.3.2 Fifth Assessment Report (AR5)

The AR5 Summary for Policymakers (WG II) is a concise overview of the IPCC’s findings. These are some
of the the main points:
✓ It is extremely likely that human influence has been the dominant cause of observed warming
since 1950, with the level of confidence having increased since AR4.
✓ Ongoing climate change is certain. The uncertainties that remain are in estimating the timing and
magnitude of climate hazards and making associated impact projections.
✓ The longer we wait to reduce our emissions, the more expensive it will become.
The IPCC guidance incorporates an explicit evaluation of the type, amount, quality, and consistency of
evidence, with a modified set of summary terms. The “level of confidence” in a scientific statement
reflects probabilities based on the available
Likelihood scale used by the IPCC
evidence (robust, medium and limited) and the
Term Likelihood of the outcome degree of agreement across different sources (high,
Virtually certain 99-100 % probability medium and low).
Very likely 90-100 % probability
Table 1.1 (Left): Likelihood scale used by the IPCC: The
Likely 66-100 % probability level of confidence in each finding was rated on a
confidence scale, qualitatively from very low to very high
About as likely as not 33 to 66 % probability
and, where possible, quantitatively from exceptionally
Unlikely 0-33 % probability unlikely to virtually certain (based on statistical analysis
Very unlikely 0-10 % probability and expert judgment).
Exceptionally unlikely 0-1 % probability Here are examples of the “Likelihood scale” used in
context from the IPCC AR5 report.
“Oceans will continue to warm, with heat extending to the deep ocean, affecting circulation patterns.
Decreases are very likely in Arctic sea ice cover, Northern Hemisphere spring snow cover, and global
glacier volume. Global mean sea level will continue to rise at a rate very likely to exceed the rate of the
past four decades. Changes in climate will cause an increase in the rate of CO2 production. Increased
uptake by the oceans will increase the acidification of the oceans. The global water cycle will change, with
increases in disparity between wet and dry regions, as well as wet and dry seasons, with some regional
exceptions.” (IPCC AR5 WG1 2014, 2.2.3)
“Extreme precipitation events over most of the mid-latitude land masses and over wet tropical regions
will very likely become more intense and more frequent.” (IPCC AR5 2014, 2.2.2)
17
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1.3.3 Special Report “Global Warming of 1.5˚C”

As part of the UNFCCC decision adopting the Paris Agreement (more details on the intergovernmental
response to climate change and the UNFCCC are provided in Module 2), the IPCC was ‘invited’ to produce
a Special Report on global warming of 1.5°C above preindustrial levels. In October 2018, the IPCC issued
“Global Warming of 1.5˚C” (abbreviated as SR15 or Special Report 1.5˚C) on the “impacts of global
warming of 1.5°C and the related global greenhouse gas emission pathways, in the context of
strengthening the global response to the threat of climate change, sustainable development, and efforts
to eradicate poverty”33.
SR15 assesses the latest science on 1.5˚C of warming above preindustrial levels as opposed to 2˚C of
warming, which is projected to lead to worse global and regional climate impacts, exposing 420 million
more people to severe heatwaves, for example. Special Report 1.5°C assesses three main themes:
i. What would be required to limit warming to 1.5˚C (“mitigation pathways”)?

ii. The impacts of 1.5°C of warming, compared to 2˚C and higher
iii. Strengthening the global response to climate change; mitigation and adaptation options
Even a seemingly slight average temperature rise is enough to cause a dramatic transformation of Earth.
The world’s leading climate scientists warn that, at our current rate of emissions, there is as little as 12
years (from 2018) for global warming to be kept to a maximum of 1.5˚C, beyond which even half a degree
will significantly worsen the risks of drought, floods, extreme heat and poverty for hundreds of millions of
people. In the 728-page document, the IPCC details how Earth would be in much better shape if the
political will could be found to limit anthropogenic warming to 1.5˚C, instead of the agreed-upon goal of
2.0˚C. Amongst other things:
- Half as many people would suffer from lack of water.

- There would be many fewer deaths and illnesses from heat, smog and infectious diseases.
- Seas would rise 0.1 meters less.
- Half as many animals with back bones and plants would lose most of their habitats.
- There would be substantially fewer heat waves, downpours, and droughts.
- The West Antarctic ice sheet might not kick into irreversible melting.
- And it may be enough to save some of the world’s coral reefs from dying.
The 1.5˚C study was launched after approval at a final plenary of all 195 IPCC member countries in South
Korea that saw delegates hugging one another, with some in tears. The authors of the landmark report
say urgent and unprecedented changes are required to reach the target, which they say is affordable
and feasible.
33
See Global Warming of 1.5°C, an IPCC special report, October 2018
18
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The report includes sobering warnings about the importance of cutting GHG emissions by 45% by 2030
and to “net zero” by 2050. SR15 advises that dramatic climate consequences will begin to cascade in the
2030s without equally dramatic action now. One of the report’s key messages is that the consequences
of the +1°C of global warming that we are experiencing today already are observable, recently exemplified
by devastating hurricanes in the USA, record droughts in South Africa and forest fires in the Arctic. The
IPCC makes clear that climate change damage is already well underway, upgrading its risk advisory from
the Fifth Assessment Report (AR5 2014) and warning that every fraction of additional warming will
significantly worsen climate change impacts.
Scientists who reviewed the 6,000 studies referenced in the report, said the change caused by just half
a degree came as a “revelation”34. The greatest difference between 1.5˚C and +2.0˚C would be in the
damage done to the natural world. Insects, which are vital for pollination of crops, and plants are almost
twice as likely to lose half their habitat at 2˚C compared with 1.5˚C. Corals would be 99% lost at the
higher of the two temperatures, but more than 10% have a chance of surviving if the lower target is
reached. In AR5, SR15 and these modules, a “pathway” refers to the trajectory of restructuring actions
required to significantly reduce GHG emissions. More detail on this is provided in Module 2.
A. “Pathways limiting global warming to 1.5°C with no or limited overshoot would require rapid and
far-reaching transitions in energy, land, urban and infrastructure (including transport and
buildings), and industrial systems (high confidence). These systems transitions are unprecedented
in terms of scale, but not necessarily in terms of speed, and imply deep emissions reductions in
all sectors, a wide portfolio of mitigation options and a significant upscaling of investments in
those options (medium confidence).35”
B. “All pathways that limit global warming to 1.5°C with limited or no overshoot project the use of
carbon dioxide removal (CDR) on the order of 100–1000 GtCO2 over the 21st century. CDR would
be used to compensate for residual emissions and, in most cases, achieve net negative emissions
to return global warming to 1.5°C following a peak (high confidence). CDR deployment of several
hundreds of GtCO2 is subject to multiple feasibility and sustainability constraints (high
confidence).36”
SR15 explains that global anthropogenic carbon dioxide (CO2) emissions would need to decrease by about
45% from 2010 levels by 2030, reaching net zero by around 2050, meaning that any remaining emissions
would need to be balanced by removing CO2 from the air. Allowing the global temperature increase to
temporarily exceed or “overshoot” 1.5°C would necessitate greater reliance on CO2 removal techniques
to return the global temperature rise to below 1.5°C by 2100.
34
Report: Action Needed Now in Climate Crisis, The Scientist, 8 October 2018
35
SR15 from “Headline Statements”, Emission Pathways and System Transitions Consistent with 1.5°C Global
Warming (IPCC October 2018)
36
ibid
19
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The IPCC maps out 4 pathways to achieve 1.5˚C, with different combinations of land use and
technological change. Reforestation is essential to all of them as are shifts to electric transport systems
and adoption of carbon capture technology. “We have presented governments with pretty hard choices.
We have pointed out the enormous benefits of keeping to 1.5C, and the unprecedented shift in energy
systems and transport that would be needed to achieve that.” “We show it can be done within laws of
physics and chemistry. Then the final tick box is political will. We cannot answer that. Only our audience
can – and that is the governments that receive it.37”
Figure 1.8: Observed global warming, and estimation of human-induced temperature change for a range of possible
climate response magnitudes (IPCC SR 2015)
37
Jim Skea, Co-Chair of Working Group III on mitigation, SR15 launch press conference 8 October 2018
20
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1.3.4 Forecasting Models

A general circulation model (GCM) is a type of climate model. It employs a mathematical model of the
general circulation of a planetary atmosphere or ocean. It uses the Navier–Stokes equations on a rotating
sphere with thermodynamic terms for various energy sources (radiation, latent heat). These equations
are the basis for computer programs used to simulate the Earth's atmosphere or
oceans. Atmospheric and oceanic GCMs (AGCM and OGCM) are used by scientists
to model the physical impacts of climate change.38
Working with economists, climate scientists have also developed a suite of tools
known as integrated assessment models (IAMs). IAMs are mathematical computer models based on
explicit assumptions about how the modelled system behaves. These models integrate climate science
and economic data. The strength of an IAM is its ability to calculate the consequences of different
assumptions and to interrelate many factors simultaneously, but an IAM is constrained by the quality
and character of the assumptions and data that underlie the model. There are different varieties of IAMs
(known broadly as “simple” and “complex”). There are more details on models in Modules 2, 3 and 4.
These models are used to answer central questions about climate change, from how the world could limit
global warming to 1.5 °C at the lowest cost, through to the implications of countries’ current pledges to
cut emissions under the Paris Agreement. Climate models have greatly improved in recent years. The
IPCC AR5 relies on the Coupled Model Intercomparison Project Phase 5 (CMIP5), which is a cooperative
international effort among the climate modelling community39. So that research between different groups
of scientists is complementary and comparable, a standard set of “scenarios” are used. The cost of running
complex climate models can be high since the powerful computers required are in short supply and great
demand. Scenarios provide a framework by which the process of building experiments can be
streamlined. Scenarios are further discussed in Modules 3 and 4.
The widely used IPCC scenarios in the Fifth Assessment Report (AR5)
report are called the Representative Concentration Pathways (RCPs).
AR5 details a range of forecasts for warming, and climate impacts with
different RCP. The projections for global mean temperature rise
(compared to pre-industrial levels) by 2100 exceeded 1.5 °C in all
scenarios presented. There are four pathways: RCP8.5, RCP6, RCP4.5
and RCP2.6. The numbers refer to radiative forcings (RF) for each RCP.
As discussed earlier, RF expresses the change in energy in the atmosphere. There are more details on the
RCPs in Modules 3 and 4 (and a question in the Part 1 quiz).
38
Klein, R. (2010). Scale-dependent models for atmospheric flows. Annual review of fluid mechanics, 42, 249-274.
39
Most of the CMIP5 and Earth System Model (ESM) simulations for AR5 WRI were performed with prescribed CO 2
concentrations reaching 421 ppm (RCP2.6), 538 ppm (RCP4.5), 670 ppm (RCP6.0), and 936 ppm (RCP 8.5) by the
year 2100. (IPCC AR5 WGI, page 22).
21
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1.4 Physical Impacts and Risks of Climate Change

1.4.1 Introduction
We all face direct and indirect impacts and risks from climate change now and these will increase in the
years ahead. More than half the weather events scientifically assessed by the World Meteorological
Organization in recent years show some type of anthropogenic climate change signal40. Population
increase, and economic growth are likely to lead to an increased demand for energy and in turn, drive
additional emissions without substantial additional efforts to transition towards a global low-carbon
economy.
Table 1.2: The World Economic Forum’s (WEF) Global Risk Report 2020, Global Risks by Likelihood
For the first time in the WEF’s Global Risk Report, environmental risks captured the top 5 spots in terms
of likelihood. This benchmark global risk report shows climate is seen by global and business leaders as a
major risk. Yet, climate change related risks (“climate risks”) are probably the most poorly understood
risks faced by banks today. The exact timing and severity of physical impacts are difficult to estimate. The
large-scale and long-term nature of the problem makes it uniquely challenging in the context of economic
decision making.
40
Lewis, S. C., King, A. D., & Perkins-Kirkpatrick, S. E. (2017). Defining a new normal for extremes in a warming
world. Bulletin of the American Meteorological Society, 98(6), 1139-1151.
22
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However, waiting for consensus over the path and impacts of climate change to emerge before acting
risks some extreme scenarios where options to manage threats will be greatly reduced41. Companies are
already experiencing business impacts from weather-related phenomena that climate change is expected
to make more common and/or intense. Virtually every sector of the economy faces risks from the short-
and long-term physical impacts of climate change. Increasing temperatures, rising sea levels, changing
weather patterns, and more frequent or intense droughts, floods, and storms, can pose serious challenges
for company facilities, supply chains, employees, current and potential customers, and the communities
on which companies depend.
Climate change is severely impacting ecosystems and their species today. These ecosystems provide a
vast range of important goods and services for human society. Historically, large-scale losses of global
ecosystems and species extinctions have been associated with rapid climate change combined with other
ecological stressors42. Climate change is shifting the geographic ranges, changing the timing of seasonal
and migratory behaviours, and impacting the many terrestrial, freshwater and marine species. These
impacts are likely to result in the extinction of vulnerable species and loss of ecosystem services43. Loss
and degradation of ecosystems are largely responsible for the extremely high current rate of extinction
by geological standards. (IPCC SR15 2018)
Every little bit of warming matters. Between 1960 and 1979 the world was roughly 0.5°C cooler than it
was between 1990 and 2010s. This increase in global warming has already caused an increase in the
frequency and duration of marine heatwaves, an increase in the intensity, frequency and/or amount of
heavy precipitation events worldwide, and it has led to an increase in risk of drought in the Mediterranean
region. Climate change exacerbates resource stress in global energy, food, and water systems. Planting
and harvesting seasons could change, and agricultural yields could be adversely impacted. The food
security of local populations could be severely impacted by declining crop yields and fish stocks44.
Ecosystem changes could also alter the distribution of some water-borne illnesses and disease vectors,
which could increase health risks and disease burdens of local populations45. Tourism could be impacted
if tourist destinations (coral reefs, parks, etc.) are adversely impacted.
Peaking global warming at 1.5°C offers a much better future scenario than peaking at 2°C. Staying at or
below 1.5°C would see at least 420 million fewer people being frequently exposed to extreme heatwaves
and at least 10.4 million fewer people exposed to the impacts of sea level rise. (IPCC SR15 2018)
41
Task Force on Climate-related Financial Disclosures, Final Report: Recommendations of the Task Force on
Climate-related Financial Disclosures (June 2017).
42
Harnik, Paul G., et al. "Extinctions in ancient and modern seas." Trends in Ecology & Evolution 27.11 (2012)
43
Côté, Isabelle M., Emily S. Darling, and Christopher J. Brown. "Interactions among ecosystem stressors and their
importance in conservation." Proc. R. Soc. B. Vol. 283. No. 1824. The Royal Society, 2016.
44
Wheeler, Tim, and Joachim Von Braun. "Climate change impacts on global food security." Science 341.6145
(2013): 508-513.
45
Bellard, Céline, et al. "Impacts of climate change on the future of biodiversity." Ecology letters 15.4 (2012)
23
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1.4.2 Acute or Chronic or Hazard or Disaster?

There is overlapping terminology to be aware of around climate change impacts and risks and how to
classify them. For example, the Task Force on Climate-related Financial Disclosures (TCFD), covered in this
Online Course in Modules 3 and 4, says that physical risks resulting from climate change can be event-
driven (“acute”) or longer-term shifts in climate patterns (“chronic”).
The United Nations International Strategy for Disaster Reduction (UNISDR) works with a hazard-related
terminology: “There is no such thing as a 'natural' disaster, only natural hazards… Disasters often follow
natural hazards. A disaster's severity depends on how much impact a hazard has on society and the
environment.46” For completeness, both UNISDR and TCFD terminology is shown below.
Acute physical risks (or “rapid onset hazards”) refer to those that are event-driven, including
increased severity and frequency of extreme weather events that increasingly are a result of
climate change.
Rapid onset hazards arrive rapidly and sometimes with little warning. For example, cyclones,
hurricanes, and typhoons (the same hazard with different names) arrive with just a few days
warning but cyclone “season” in specific regions can be forecasted, so that preparations can be
made. Floods can arrive extremely fast (“flash floods”), but the conditions in which floods
manifest can be predicted with adequate information.
Chronic physical risks (also known as “slow-onset hazards” or “incremental” climate impact) refer
to longer-term shifts in climate patterns (e.g., sustained higher temperatures or reduced
precipitation) that cause sea level rise, chronic heat waves and shifting seasons (such as shorter
winters and longer summers) with accompanying changes in annual average precipitation.
Slow onset hazards chart a steady course of damage over time. Ecosystem and environmental
degradation and desertification are very slow onset events, but also may ultimately be considered
as disasters in terms of the damage and disruption caused.
✓ A hazard threatens life, health, environment, or property. The losses and impacts that characterise
disasters usually have much to do with the exposure and vulnerability of people and places as they do
with the severity of the hazard event47. A disaster's severity depends on how much impact a hazard
has on society and the environment. A hazard event may have only a small disaster impact on a well
prepared (resilient) community. However, a similar hazard can cause disastrous damage to a badly
prepared (“un-adapted”) community48. (UNISDR)
46
United Nations Office for Disaster Risk Reduction (UNISDR, 2018).
47
(UNISDR, 2013).
48
Example: the 2015 Illapel earthquake in Chile was 500 times stronger than the 2010 Haiti earthquake, but
caused less than 1% of the deaths that occurred in poorly adapted Haiti.
24
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About 70 to 80 million people are affected by disasters

each year49. Disasters kill millions but, since 1980, only
5% of them have occurred in high-income countries50. To
save lives, the most effective policy is via early warning
systems with evacuation schemes. Many developing
countries do not yet have this capacity.
Disasters affect social welfare by disrupting economic

activity, leading loss of production, lower productivity, higher unemployment, lower future consumption,
lower taxes revenues, etc. These are long-term consequences which are often more severe than
immediate losses related to property damages, business interruptions, and casualties. and often go
beyond (re)insurance claims. The severity of loss and ongoing consequences is directly associated with
the resilience of a country, a region, or a city.
1.4.3 Rapid Onset Hazards (Extreme Weather)

“We have no time to lose as weather-related disasters continue to increase, affecting millions
of people... (They) are alerting the world about how difficult it is to predict global warming
impacts and climate change.51”
Changes in extreme weather and sudden climate events are probably the most common way in which
people today experience climate change. New patterns of more frequent and more intense weather
events are unfolding across the planet. There have been statistically significant trends in the number of
heavy precipitation events in some regions and extreme temperatures in others. Climate models simulate
such changes in extreme events.
Some of the reasons for the changes are well understood. Warming increases the likelihood of extremely
hot days and nights, favours increased atmospheric moisture that may result in more frequent heavy
rainfall and snowfall and leads to evaporation that can exacerbate droughts52. Research now links climate
change to record-breaking extreme weather events with a high degree of confidence53, especially as the
science of extreme event attribution advances54. Climate extremes can result from external forcing of the
climate system, such as from increasing greenhouse gases, or natural variability, or more likely some
combination of the two.
49
UNISDR, C. (2015). The human cost of natural disasters: A global perspective.
50
ibid
51
Margareta Wahlström, head of the UN Office for Disaster Risk Reduction (UNISDR), In December 2015.
52
National Academies of Sciences, Engineering, and Medicine. 2016. Attribution of Extreme Weather Events in the
Context of Climate Change. Washington, DC: The National Academies Press.
53
Huber, Daniel G., and Jay Gulledge. Extreme weather and climate change: Understanding the link, managing the
risk. Arlington: Pew Center on Global Climate Change, 2011.
54
Shepherd, Theodore G. "A common framework for approaches to extreme event attribution." Current Climate
Change Reports 2.1 (2016): 28-38.
25
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While weather variability and extremes have always existed, the science that links climate change to
extreme weather events shows that such events are becoming both more frequent and more intense55 56.
Probabilistic Event Attribution (PEA) allows increasingly quantitative assessments of the extent to which
anthropogenic climate change is affecting local weather events.
PEA seeks to identify the influence of human-caused climate change as distinct from other factors (e.g.
natural sources of variability like El Niño), as contributors to individual extreme events57. Event attribution
can answer questions about how much climate change influenced the probability or intensity of a specific
type of weather event. Attribution, especially to human greenhouse gas emissions, lends confidence to
model projections of the future driven by anthropogenic forcing as well as predictions of extremes at
shorter time scales. Attribution also provides information for more robust decisions in adaptation
activities related to weather and climate extremes58.
Table 1.3: The table below is adapted from data in the World Bank’s Series: Turn Down the Heat and summarizes a
selection of record-breaking meteorological events from 2002 - 2012, their societal impacts and the confidence level
that the meteorological event can be attributed to anthropogenic climate change.
Confidence in
Region (Year) Meteorological Record- Attribution to Climate Impact, Costs
Breaking Event Change
Europe (2003) Hottest summer in at least 500 Death toll exceeding 70,000
years HIGH
England & Wales May to July wettest since records Major flooding causing ~£3
(2007) began in 1766 MEDIUM billion damage
Eastern Substantial damage to cereal
Mediterranean, MENA Driest winter since 1902 HIGH production
(2008)
500 wildfires around Moscow,
Western Russia Hottest summer since 1500 MEDIUM crop failure of ~25%, death toll
(2010) ~55,000, ~us$15B
Economic losses
Western Amazon Drought - record low water level in Area with significantly increased
(2010) Rio Negro LOW tree mortality spanning 3.2
million km
Southwest USA record-breaking summer heat Wildfires burning 3 million acres
(2011) and drought since 1880 HIGH (preliminary impact of $6 to $8
billion)
55
Mann, Michael E., et al. "Influence of Anthropogenic Climate Change on Planetary Wave Resonance and Extreme
Weather Events." Scientific Reports 7 (2017).
56
Intergovernmental Panel on Climate Change. Climate Change 2014, Impacts, Adaptation and Vulnerability:
Regional Aspects. Cambridge University Press, 2014.
57
Trenberth, Kevin E., John T. Fasullo, and Theodore G. Shepherd. "Attribution of climate extreme events." Nature
Climate Change 5.8 (2015): 725-730.
58
S. Seneviratne, F. Zwiers, Attribution and prediction of extreme events: Editorial on the special issue, Weather
Clim. Extremes, 9 (2015), pp. 2-5,
26
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There is enormous interdependency of climate and weather risks. Tropical cyclones and hurricanes
generally form in areas with high sea surface temperatures (SST), and the intensity of these events is also
related to SST. Sea level rise exacerbates the storm surge.
Hurricanes are a rapid onset hazard, which includes high wind and
surge components. A hurricane is an intense tropical weather system
with a well-defined circulation and minimum sustained winds of 120
kph or higher59. Climate change is increasing the magnitude of
hurricane events.
Hurricanes have the potential to impact virtually all sectors. Infrastructure located on or near the shoreline
is particularly vulnerable. Relatively flat areas may also experience very high winds much further inland
than the surge zone. A structure’s vulnerability is related to the ability to keep its ‘envelope’ intact and
remain out of the surge zone. Tropical cyclones are typically amongst the most destructive of all
meteorological phenomena. Cyclones are unpredictable, changing direction and intensity quickly60.
In 2018, extreme weather in the form of a rapid onset heat

wave struck across Europe, from the Arctic Circle to Greece,
and across the world, from North America to Japan. This
intensity, speed and ‘staying power’ of the 2018 heatwave
was caused by an extraordinary stalling of the jet stream
wind, which usually funnels cool Atlantic weather over the
continent. This left hot, dry air in place for two months, far
longer than usual. Another heat wave hit Europe in 2019.
The stalling of the northern hemisphere jet stream is now being

firmly linked to climate change, especially the rapid heating of
the Arctic and resulting loss of sea ice. Professor Michael Mann,
an eminent climate scientist, commented on the 2018 heatwave.
“This is the face of climate change. We literally would not have
seen these extremes in the absence of climate change.61”
59
National Oceanic and Atmospheric Administration, NOAA 2016.
56
Tropical cyclone Patricia made landfall in Jalisco state on the west coast of Mexico in October 2015. Patricia was
the most intense cyclone ever recorded in the Western Hemisphere, with measured 1-minute sustained winds of
322 km/h and a minimum central pressure of 879 hPa. The sparse population of its landfall point limited casualties
and damage.
61
Extreme global weather is 'the face of climate change' says leading scientist, The Guardian, 27 July 2018.
27
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Table 1.4: Risks of severe weather events on the water cycle, agriculture, industry, and human needs.
RISKS / IMPACTS
PHENOMENOM Agriculture and Industry, settlements,

ecosystems Water resources Human health and society
Rapid Onset Damage to crops; soil Adverse effects on Increased risk of deaths, Disruption of settlements,
erosion; inability to quality of surface and injuries, and infectious, commerce, transport, and
Heavy rain, hail, cultivate land due to groundwater; respiratory, and skin societies due to flooding;
or snow water logging of soils contamination of diseases pressures on urban and
water supply; water rural infrastructures; loss
scarcity relief poss. of property
Rapid Onset Damage to crops; wind Power outages Increased risk of deaths, Disruption by flood and
throw (uprooting) of causing disruption of injuries, water- and food high winds; withdrawal of
Tropical cyclone trees; damage to coral public water supply borne diseases; post- risk coverage in vulnerable
reefs traumatic stress areas by private insurers;
disorders potential for population
migrations; property loss.
Slow Onset Land degradation, lower Increased risk of food Water shortages for
yields/crop damage and and water shortage; settlements, industry, and
Drought failure; increased More widespread increased risk of societies; reduced
livestock deaths; water stress malnutrition; increased hydropower generation
increased risk of wildfire risk of water- and food potentials; potential for
borne diseases population migration
Floods are a rapid onset hazard. A flood is the general and temporary
condition of partial or complete inundation of normally dry land areas
from overflow of inland or tidal waters from the unusual and rapid
accumulation or runoff of surface waters from any source62. Flooding can
be caused by:
- a large amount of rain - either from very heavy rain or rain over a long period of time;
- rapid melting snow;
- a combination of high tides and high river levels; or,
- a storm surge.
Increasing incidences of destructive flooding have occurred in many parts of the world in recent years,
causing numerous casualties, major humanitarian impacts and heavy economic losses. Floods have the
potential to impact virtually all business sectors. India and Pakistan have suffered from destructive flood
events in each monsoon season from 2011 to 2014. Extensive flooding in the Paraná river basin in 2014
affected more than 700,000 people in Paraguay, western Brazil, and northern Argentina63.
62
UN Spider Knowledge Portal, “Risks & Disasters” (Nov 2018)
63
UNISDR, C. (2015). The human cost of natural disasters: A global perspective.
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Facilities located adjacent to rivers, lakes, shorelines, and other bodies

of water may be subjected to flooding. Sea level rise may also exacerbate
coastal flooding. Infrastructure located in these susceptible areas are
particularly vulnerable. A structure’s vulnerability is related to its
elevation (or critical component elevations) with respect to the flood
waters. Projects located in and adjacent to floodplains with
substructures are particularly vulnerable to flooding64.
In many regions, climate change will have a significant impact on water

resources. In the high latitudes and in some tropical regions, the average
annual runoff is estimated to increase by 10% to 40% by 2050. An overall
increase in the frequency of heavy downpours is predicted. This increases
the probability of cities experiencing flooding and severe damage. The
volume of water stored in glaciers and the snowpack will decline. After an
initial phase of increased discharge there will be less water available in regions supplied by melt-water
run-off from mountains (IPCC AR5).
1.4.4 Slow Onset Hazards
Drought
Drought is a complex phenomenon affected by changes in the
hydrological cycle and producing a web of impacts across many
sectors and potentially leading to land degradation and forest
dieback65. Climate change already is exacerbating droughts. Few
areas of the world are completely immune to droughts and their
often-devastating impacts on water resources, ecosystems, and
people. Droughts are among the most expensive weather-related
disasters in the world66. Regions as diverse as California, the Eastern Mediterranean, East Africa, South
Africa, and Australia have all experienced severe – and, in some cases, unprecedented – droughts in recent
years. Droughts are characterised by a lack of precipitation, higher temperatures and winds, low relative
humidity, greater sunshine, and less cloud cover. High water demand and insufficient water management
exacerbate a drought condition.
64
Hydrologic models represent the distribution of rainfall, with the goal of obtaining a discharge and flood
hydrograph for streams and rivers. Hydraulic models take the output from the hydrologic models, along with the
stream channel morphology, to generate flood elevations. These flood elevations are used to create flood elevation
and flood depth grids. In a coastal flood hazard assessment, there are three components which need to be
understood: the coastal erosion process, the wave height analysis, and the wave run-up analysis. In a riverine flood
hazard assessment, there are two fundamental processes: the hydrology of the watershed and the channel
hydraulics.
65
IPCC AR5 (2014)
66
WMO Integrated Drought Management Programme Working Paper No. 1 (pdf) (2017)
29
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Droughts have the potential to impact almost all businesses. Brazil has been severely affected by droughts.
In the São Paulo region levels in local water storage fell to below 10% during the 2014-15 summer,
resulting in severe restrictions on water supply. Mexico experienced significant drought over large areas
throughout the same period. Economic losses due to drought in the United States between 2011 and 2014
were estimated at US$60 billion. Drought, associated with El Niño, affected many parts of Indonesia as
well as other countries in the Pacific region 2015 – 2017. Drought conditions contributed to serious
wildfires on the islands of Sumatra and Borneo in 2015. The resulting “killer haze” caused widespread
disruption in neighbouring Indonesia, Singapore and Malaysia, with significant health impacts and about
1000.000 premature deaths.
There are numerous ways to define a drought and several ways to quantify droughts too. There are some
“indices” that consider different variables that can be measured directly or indirectly, such as
precipitation, temperature, evaporation, soil moisture, river flows and reservoir levels. One of the most
common, for example, is the Palmer Drought Severity Index (PDSI). This uses monthly estimates of
evapotranspiration (calculated largely as a function of temperature) and rainfall data, as well as
information on the water-holding capacity of the soil. The US Drought Monitor classifies drought severity
according to a combination of five different indices (including PDSI), along with drought impacts and local
reports from expert observers.
Figure 1.9: Schematic illustrating the classical definitions of drought and the associated processes. Precipitation
deficits are the ultimate driver of most drought events. Other climate variables, particularly temperature, can also
affect both agricultural and hydrological drought67.
67
Herrera, D. A., Ault, T. R., Fasullo, J. T., Coats, S. J., Carrillo, C. M., Cook, B. I., & Williams, A. P. (2018).
Exacerbation of the 2013–2016 Pan‐Caribbean Drought by Anthropogenic Warming. Geophysical Research Letters,
45(19), 10-619.
30
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Although real estate assets may not be directly damaged by a drought,

there may be many indirect impacts. Any project requiring water,
especially large quantities of water, can be impacted by a drought.
Droughts impact drinking water supply and availability, which often cause
shortages or water restrictions for affected communities. Agriculture may
be seriously affected. Tourists and other visitors may stay away from a
drought-stricken location.
Melting glaciers and more run-off now will lead to water shortages in the coming years. For example,
recent research shows that at least a third of the massive ice fields in the Hindu Kush and Himalayas are
doomed to melt due to climate change, with serious consequences for almost 2 billion people68.
Even if emissions are dramatically and rapidly cut and succeed in limiting global warming to 1.5˚C, 36% of
these glaciers will have gone by 2100. If emissions are not cut, the loss soars to two-thirds69. The glaciers
are a critical water store for the 250 million people who live in the Hindu Kush-Himalaya (HKH) region,
and 1.65 billion people rely on the major rivers that flow from the peaks into India, Pakistan, China and
other nations.
The HKH region runs from Afghanistan to Myanmar and is the planet’s “third pole”, harbouring more ice
than anywhere outside Arctic and Antarctica. Despite being populous, the HKH region previously received
less climate-related attention than other places, such as low-lying island states and the Arctic, that are
also highly vulnerable to global warming.
The International Centre for Integrated Mountain Development (Icimod) is leading new research and
development efforts in the HKH region. Their mission is to “enable sustainable and resilient mountain
development for improved and equitable livelihoods through knowledge and regional cooperation”.
68
Wester, P., Mishra, A., Mukherji, A., & Shrestha, A. B. (December 2018). The Hindu Kush Himalaya Assessment.
Berlin: Springer.
69
Bolch T. et al. (2019) Status and Change of the Cryosphere in the Extended Hindu Kush Himalaya Region. In:
Wester P., Mishra A., Mukherji A., Shrestha A. (eds) The Hindu Kush Himalaya Assessment. Springer, Cham
31
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Oceans Warming, Sea Level Rise & Ocean Acidification

“The global ocean will continue to warm during the 21st century, with the strongest warming projected
for the surface in tropical and Northern Hemisphere subtropical regions”. (IPCC AR5)
Ocean Warming
In the decades ahead, freshwater is likely to become scarcer, but an overabundance of warming saltwater
will be a major risk. Oceans have been absorbing more than 90% of the energy that has accumulated in
the climate system from human emissions of greenhouse gases, resulting in higher temperatures and
rising sea levels. Global ocean temperatures are now at unprecedented levels. Since 2010, two notable
ocean temperature anomalies have developed (NOAA 2016):
1) a large area of very warm

water in the eastern North
Pacific, with sea surface
temperatures more than 2°C
above average in places; and,
2) a persistent pool of below-

normal sea surface
temperatures in the eastern
North Atlantic between the
British Isles and the southern
tip of Greenland.
Figure 1.10: Ocean heat content down to a depth of 2000m (NOAA NCEI 2016)
New international research70 shows marine ‘heatwaves’ are becoming

more common and likely to get much stronger. Ocean heatwaves
destroy kelp forests, seagrasses and corals, which provide food and
shelter for many other species. The number of heatwaves affecting
the planet’s oceans has increased sharply in recent years. “You have
heatwave-induced wildfires that take out huge areas of forest, but this
is happening underwater as well,” said Dr Dan Smale at the Marine
Biological Association in Plymouth, UK, who led the research. “You see the kelp and seagrasses dying in
front of you. Within weeks or months, they are just gone, along hundreds of kilometres of coastline.”
70
Smale, Dan A. et al., “Marine heatwaves threaten global biodiversity and the provision of ecosystem services.”
Nature Climate Change (March 2019)
32
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A particularly severe consequence of ocean warming is

the continued expansion of ocean hypoxic zones (“dead
zones” with no oxygen, photo of Gulf of Mexico),
interfering with global ocean production and damaging
marine ecosystems. Warmer water holds less oxygen.
Reductions in the oxygenation zones of the ocean are
already being observed. In some ocean basins, dead
zones are reducing the habitat for tropical pelagic fishes,
such as tuna71. Loss of oceanic food production would
have severe consequences for international food
security, let alone the substantial economic costs.
Sea Level Rise (SLR)

Global sea levels are rising sharply posing near-
term threats to many coastal areas. The levels of
inter-annual variability in global sea level are high
by the standards of the satellite era. Weather
patterns such as La Niña have a big effect on
variability. The contribution of melting continental
ice sheets, particularly Greenland and west
Antarctica, to sea level rise is accelerating.
Figure 1.11: Global mean sea level (GMSL) (Church and

White 2011) reconstructed from tide-gauge data (blue,
red) and measured from satellite altimetry (black).
Sea-level rise impacts are projected to be

asymmetrical even within regions and countries. There have been strong regional differences in rates of
SLR in the Pacific Ocean over the past 20 years, largely associated with the El Niño-Southern Oscillation,
and predominance of El Niño events in the 1990s and La Niña events between 2007 and 2012. The western
Pacific has seen the world’s fastest rates of sea level rise in the last two decades: more than 10 millimetres
per year in places. Yet, parts of the eastern Pacific have seen little change during the same period72.
Of the impacts projected for 31 developing countries in varied studies, only 10 cities account for two-
thirds of the total exposure to extreme floods. The most vulnerable cities are in Mozambique,
Madagascar, Mexico, Venezuela, India, Bangladesh, Indonesia, the Philippines, and Vietnam.
71
Melzner, Frank, et al. "Future ocean acidification will be amplified by hypoxia in coastal habitats." Marine Biology
(2013): 1-14.
72
Cazenave, Anny, et al. "The rate of sea-level rise." Nature Climate Change 4.5 (2014): 358-361.
33
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Figure 1.12: Left panel (a): The

contributions of land ice (glaciers,
ice caps and ice sheets),
thermosteric (i.e., due to ocean
temperature change) sea-level rise,
and terrestrial storage (effects of
groundwater extraction dam
building). Right panel (b): the sum
of contributions approximates
observed sea-level rise since the
1970s. (Church and white 2011)
Adverse effects of projected sea- level rise on agriculture - in important low-lying delta areas, such as in
Bangladesh, Egypt, Vietnam, and parts of the African coast - are a critical concern. Small island states and
river delta regions, rising sea levels are likely to have far ranging adverse consequences, especially when
combined with the projected increased intensity of tropical cyclones, other extreme weather events, and
climate change–induced effects on oceanic ecosystems (e.g., loss of protective reefs due to temperature
increases and ocean acidification). Sea-level rise is also producing higher rates of coastal erosion around
the world73. Sea-level rise is also likely to impact many mid-latitude coastal areas and increase seawater
penetration into coastal aquifers used for the irrigation of coastal plains.
Ocean Acidification
Ocean acidification is the ongoing decrease in the pH of the Earth's oceans, caused by the uptake of CO2
from the atmosphere. An estimated 30–40% of the carbon dioxide from human activity released into
the atmosphere dissolves into oceans, rivers, and lakes. Since the beginning of the industrial era, the
ocean has absorbed some 525 billion tons of CO2 from the atmosphere, presently around 22 million tons
per day. To achieve chemical equilibrium, some of it reacts with the water to form carbonic acid. Some of
these extra carbonic acid molecules react with a water molecule to give a bicarbonate ion and a
hydronium ion, thus increasing ocean acidity (H+ ion concentration).
73
Hinkel, Jochen, et al. "Coastal flood damage and adaptation costs under 21st century sea-level rise." Proceedings
of the National Academy of Sciences 111.9 (2014): 3292-3297.
34
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1.4.5 Biodiversity Impacts

Disruption of the ocean ecosystems because of warming and ocean acidification presents many
emerging high-level biodiversity risks. The impacts of ocean ‘heatwaves’ are discussed in the previous
section. Ocean acidification also has major impacts upon biodiversity. Higher acidity leads to reduced
availability of calcium carbonate (aragonite), the resource vital for
coral species and ecosystems to build skeletons and shells. The
combination of warming and ocean acidification is very likely to
lead to the demise of most coral reef ecosystems. Warm-water
coral reefs, cold-water corals, and ecosystems in the Southern
Ocean are especially vulnerable. Limiting warming to as little as
1.5°C may not be enough to protect fragile reef systems globally.
Loss of 90% of coral reef systems is likely and would have far-
reaching consequences and represent a major loss to Earth’s biological heritage. The current and
projected ocean acidification has been described as an unprecedented geological event. Over ten years
ago (2009), Thomas Lovejoy, former chief biodiversity advisor to the World Bank said,
"The acidity of the oceans will more than double in the next 40 years. This rate is 100 times faster
than any changes in ocean acidity in the last 20 million years, making it unlikely that marine life
can somehow adapt to the changes."
• Thousands of tiny but critically important species at the base of the marine food chain will be wiped
out. Predators of these creatures and their predators, up to the top of the marine food chain will
suffer indirectly. Lovejoy said it is “like pulling the rug out from under the marine food chain.”
• On land, much of the planet’s biodiversity is concentrated in a few locations and these need to be
protected. The megadiverse countries are a group of countries that harbour most of the Earth's
species and high numbers of endemic species. Seventeen megadiverse countries host about 70% of
the planet’s biodiversity (species). Many of the megadiverse countries are in the tropics. This factor
explains their richness in fauna and flora, ecosystems and habitats (Australia, Bolivia, Brazil, China,
Colombia, Costa Rica, Democratic Republic of Congo, Ecuador, Mexico, Peru, PNG, India, Indonesia,
Kenya, Malaysia, Madagascar, the Philippines, South Africa, USA and Venezuela are the nations
identified by Conservation International as megadiverse.)
• Ecosystems will be affected by the increased occurrence of extremes such as forest loss resulting from
droughts and wildfire exacerbated by changing land use and agricultural expansion. Increasing
vulnerability to heat and drought stress will likely lead to increased mortality and species extinction.
• Ecosystems have been found to be particularly sensitive to geographical patterns of climate change.
Ecosystems are affected by local changes in the mean temperature and precipitation, along with
changes in the variability of these quantities and changes by the occurrence of extreme events. These
climatic variables are decisive factors in determining plant structure and ecosystem composition.
35
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• Climate change also has the potential to facilitate the

spread and establishment of invasive species (pests and
weeds) with often detrimental implications for ecosystem
services and biodiversity. (IPCC AR5 2014)
• Human land-use changes are expected to further

exacerbate climate change driven ecosystem changes,
particularly in the tropics, where rising temperatures and
reduced precipitation are expected to have major impacts.
(IPCC AR5 2014)
• Increasing vulnerability to heat and drought stress will likely lead to increased mortality and species
extinction. Interactions between phenological74 changes driven by gradual climate changes and
extreme events can lead to reduced fecundity. (IPCC SR15 2018)
• Climate change also has the potential to catalyze rapid shifts in ecosystems such as sudden forest loss
or regional loss of agricultural productivity resulting from desertification. The predicted increase in
extreme climate-related events would also drive dramatic ecosystem changes. For example, wildfires
are powerful drivers of biome shifts, potentially resulting in considerable changes in carbon fluxes
over large areas. (IPCC SR15 2018)
1.4.6 Impacts on Food Supplies

✓ Projections for food and agriculture over the 21st century indicate substantial challenges irrespective
of climate change. As early as 2050, the world’s population is expected to reach about 9 billion people
and demand for food is expected to increase accordingly.
Global food demand is increasing rapidly, as are the environmental impacts of agricultural expansion.
Based on the observed relationship between per capita GDP and per capita demand for crop calories
(human consumption, feed crops, fish production and losses during food production), global increase in
the demand for crops is projected to increase by about 70% from 2010 to 205075. Increases in non-animal
food production have mainly been driven by more efficient use of land, rather than by the extension of
arable land, with the former more widespread in developed countries and the latter tending to be
practiced in poor countries. While grain production has more than doubled, the area of land used for
arable agriculture has only increased by about 9%. The expansion of agricultural production has proved
possible through technological innovation and improved water-use efficiency.
74
Phenology is the study of periodic plant and animal life cycle events and how these are influenced by seasonal
and interannual variations in climate, as well as habitat factors.
75
Tilman, D., Balzer, C., Hill, J., & Befort, B. L. (2011). Global food demand and the sustainable intensification of
agriculture. Proceedings of the national academy of sciences, 108(50), 20260-20264.
36
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However, empirical observation and analyses point to a significant level of vulnerability of food production
and prices to the consequences of climate change, extreme weather, and underlying social and economic
development trends76. Since the 1960s, sown areas for all major crops have increasingly experienced
drought. Flooding of agricultural land is expected to severely impact crop yields in the future. Given the
competition for land that may be used for other human activities (for example, urbanization and biofuel
production), which can be expected to increase as climate change places pressure on scarce resources, it
is likely that the main increase in production will have to be managed by an intensification of agriculture
on the same (possibly reduced) amount of land77.
Table 1.6: Projected impacts on different crops without and with adaptation78.
CROP WITHOUT ADAPTATION WITH ADAPTATION
Spring Wheat –14 to –25% –4 to –10%

Maize –19 to –34% –6 to –18%
Soybean –15 to –30% –12 to –26%
Declines in nutrient availability (for example, phosphorus), as well as the spread in pests and weeds, could
further limit the increase of agricultural productivity. Geographical shifts in production patterns resulting
from the effects of global warming could further escalate distributional issues of foodstuffs in the future.
In 2019, Italy witnessed a 57% drop in their olive harvest as

result of extreme weather attributed to climate change79. This
plunge in the olive harvest is the worst in 25 years and leaves
the country dependent on imports. In the prior 18 months, Italy
experienced summer droughts, autumn floods and spring ice
waves. Olive trees are weakened by these kinds of weather
shocks and become vulnerable to outbreaks of disease and
parasites. Sudden extremes in any direction – warming or
cooling, freezing, or drying – can harm plant development. Average temperatures in the Mediterranean
have already risen by 1.4˚C above pre-industrial levels (compared to the global average of plus 1˚C) and
precipitation has fallen by 2.5%80.
76
Hanjra, M. A., & Qureshi, M. E. (2010). Global water crisis and future food security in an era of climate change.
Food Policy, 35(5), 365-377.
77
Wheeler, T., & Von Braun, J. (2013). Climate change impacts on global food security. Science, 341(6145)
78
Deryng, D., Sacks, W. J., Barford, C. C., & Ramankutty, N. (2011). Simulating the effects of climate and
agricultural management practices on global crop yield. Global biogeochemical cycles, 25(2).
79
Prof Riccardo Valentini, of the Euro-Mediterranean Center for climate change, 05 March 2019
80
Worrying effects of accelerating climate change on the Mediterranean Basin, European Commission, Oct 2018
37
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1.4.7 Changing Land Use Change
Changing how we use land is a critical aspect of ‘managing’ climate change. In August 2019, the
Intergovernmental Panel on Climate Change (IPCC) published a special report called Climate Change and
Land. The full title of the report gives an indication as to the catalogue of interlinked and overlapping land
issues it covers: Climate Change and Land: an IPCC special report on climate change, desertification, land
degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial
ecosystems. As the report says, land provides the “food, feed, fibre, fuel and freshwater” without which
human society could not exist81. ‘Agriculture, Forestry, and Other Land Use’ (AFOLU) is probably the most
important ‘sector’ considered by the IPCC in this report because of the enormous potential to reduce
emissions through management of forests, land, and livestock. From the report:
“Land is both a source and a sink82 of greenhouse gases (GHGs) and plays a key role in the
exchange of energy, water and aerosols between the land surface and atmosphere. Land
ecosystems and biodiversity are vulnerable to ongoing climate change and weather and climate
extremes, to different extents. Sustainable land management can contribute to reducing the
negative impacts of multiple stressors, including climate change, on ecosystems and societies
(high confidence)83.”
The general term ‘land use’ refers to the management and modification of natural environment or
wilderness into built environment and semi-natural habitats such as arable fields, pastures, and managed
woods84. Land use change is a term for the process by which human activities transform the natural
landscape, referring to how land has been used, usually emphasizing the functional role of land for
economic activities. In recent years, the term ‘land use change’ has become almost synonymous with
deforestation to make way for animal agriculture85. Deforestation is the change of intended land use from
forest to non-forest (urban, agricultural, etc.), as distinct from the cutting of selected trees (FAO).
Deforestation releases the carbon trapped in trees thus producing atmospheric CO2. Land use changes are
nonlinear, so may trigger feedbacks to the system, stress living conditions, and create vulnerability86.
81
IPCC Special Report on Land Use, Land-Use Change and Forestry, 2.2.1.1 Land Use
82
The main natural carbon sinks are plants / trees, soil, and the ocean. Plants / trees take carbon dioxide from the
atmosphere to use in photosynthesis; some of this is transferred to soil as plants die and decompose. The oceans
are the planet’s main storage system for carbon dioxide. Marine animals take up CO2 for photosynthesis and some
dissolves in the seawater.
83
Shukla, P. R., Skea, J., Calvo Buendia, E., Masson-Delmotte, V., Pörtner, H. O., Roberts, D. C., ... & Ferrat, M. IPCC,
2019: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation,
sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems.
84
Aznar-Sánchez, J. A., Piquer-Rodríguez, M., Velasco-Muñoz, J. F., & Manzano-Agugliaro, F. (2019). Worldwide
research trends on sustainable land use in agriculture. Land use policy, 87, 104069.
85
Sakadevan, K., & Nguyen, M. L. (2017). Livestock production and its impact on nutrient pollution and greenhouse
gas emissions. In Advances in agronomy (Vol. 141, pp. 147-184). Academic Press.
86
Briassoulis, H. (2019). Analysis of land use change: theoretical and modeling approaches.
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AFOLU contributes a
significant share of
global GHG emissions,
about 17% directly
through agricultural
activities plus an
additional 7 to 14%
through land use
changes (OECD)87,
primarily forest
clearance for the
livestock industry.
So, agriculture is a big part of the problem – and will be an important part of the solution too. To limit
global warming while feeding an expanding population, every part of the food system from farming to
refrigeration is likely to need to become cleaner and more efficient88. Many land-related responses (e.g.
re/afforestation, planting mangroves etc) that contribute to climate change adaptation and mitigation can
also combat desertification and land degradation and enhance food security (IPCC 2019).
Currently, the global livestock industry provides some 18% of food calories but occupies about 83% of
agricultural land, including billions of hectares of pasture that had been forested89. The livestock sector
produces vast quantities of methane. The livestock industry annually produces more CO2e emissions than
does the global transport sector (e.g., planes, cars, ships, trains, and trucks)90.
Methane (CH4) is the second most important anthropogenic GHG after carbon dioxide (CO2). Animal
agriculture and hydraulic fracking are the main sources. Methane is emitted into the atmosphere in
smaller quantities than CO2, but its global warming potential is 25 to 28 times greater (GWP 25). As a
result, methane has a much stronger influence on warming during its short 12.5-year atmospheric lifetime
than CO2, which persists in the atmosphere for centuries.
(The Global Methane Initiative focuses on mitigating methane emissions from agricultural sources
through abatement, recovery, and use.)
87
The IPCC estimate for agriculture emissions is about 23% of the global total, some land use is not covered
88
Niles, M. T., Ahuja, R., Barker, T., Esquivel, J., Gutterman, S., Heller, M. C., ... & Vermeulen, S. (2018). Climate
change mitigation beyond agriculture, Renewable Agriculture and Food Systems, 33(3), 297-308.
89
Ranganathan, J., Vennard, D., Waite, R., Dumas, P., Lipinski, B., & Searchinger, T. I. M. (2016). Shifting diets for a
sustainable food future. World Resources Institute.
90
Reisinger, A., & Clark, H. (2018). How much do direct livestock emissions actually contribute to global warming?
Global change biology, 24(4), 1749-1761.
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✓ Theoretically, abolishing the livestock industry and replacing it with new forests would achieve much
more than electrifying the entire transport sector, and would also be easier to accomplish since no
new technologies or major infrastructure changes are required.
“We don’t want to tell people

what to eat,” says Hans-Otto
Pörtner, an ecologist who co-
chairs the IPCC’s working group on
impacts, adaptation, and
vulnerability. “But it would indeed
be beneficial, for both climate and
human health, if people in many
rich countries consumed less
meat, and if politics would create
appropriate incentives to that
effect.” 91
Diagram 1.12: Schiermeier, Q (Nature

2019). Eat less meat: UN climate-
change report calls for change to
human diet
Only two activities saw drastic emissions changes during the 2020 pandemic: transportation and land use
change. Transportation, which accounts for 20% of fossil CO2 emissions, fell by half during the worst stages
of the global lockdown due to cancelled commutes and travel, but it has quickly bounced back. Emissions
metrics for the other big sectors, like manufacturing, shipping, and electricity, did not drop as much during
the pandemic.
By contrast, deforestation activities jumped globally during the 2020 pandemic.92 Examining satellite
data from 18 countries, the World Wildlife Fund found that global deforestation in March 2020 jumped
150% compared to the three-year average.
91
Schiermeier, Q. (2019). Eat less meat: UN climate-change report calls for change to human diet. Nature,
572(7769), 291-292.
92
WWF: Rainforest deforestation more than doubled under cover of coronavirus (DW 21.05.20)
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Cattle ranching is the largest driver of deforestation in every Amazon country, accounting for 80% of
current deforestation rates. While most countries’ greenhouse gas emissions will fall in 2020 because of
the pandemic, Brazil’s emissions will increase by 10–20%, despite President Jair Bolsonaro’s
administration being forced by an international divestment campaign to announce a 120-day moratorium
on fires in the Amazon. Brazil is not alone. Forests in Indonesia and Congo have been razed at an even
faster rate in 2020. (WRI)
The IPCC Climate Change and Land report discusses the vital importance of the Amazon and other tropical
rainforests to global climate and the dangers being caused by accelerating rates of deforestation.
Essentially, the Amazon rainforest is an enormous carbon sink that acts to cool global temperature. Unless
stopped, scientists believe deforestation could force a “tipping point” (see next section 1.4.8) when the
Amazon begins to die and dry out, releasing billions of tonnes of CO2 into the atmosphere93. Yet there are
many good strategies for protecting forests, and for ending tropical deforestation (WRI).
To manage the latent environmental risks, land use change trajectories need assessment and the possible
future conditions (scenarios) and assumptions should be studied to better ensure adequately sustainable
conditions94. Climate change exacerbates and is aggravated by land use change, especially deforestation.
93
Amigo, I. (2020). When will the Amazon hit a tipping point? Nature, 578(7796), 505.
94
Cardona, O. D., Van Aalst, M. K., Birkmann, J., Fordham, M., Mc Gregor, G., Rosa, P., ... & Keim, M. (2012).
Determinants of risk: exposure and vulnerability. In Managing the Risks of Extreme Events and Disasters to
Advance Climate Change Adaptation: Special Report of the Intergovernmental Panel on Climate Change (pp. 65-
108). Cambridge University Press.
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Everything is linked. From the IPCC report:
“Deferral of GHG emissions reductions from all sectors implies trade-offs including irreversible
loss in land ecosystem functions and services required for food, health, habitable settlements and
production, leading to increasingly significant economic impacts on many countries in many
regions of the world (high confidence).” (IPCC 2019 D3.3)
1.4.8 Tipping Points (!)

• Politicians, economists and even some natural scientists have tended to assume that tipping points in
the Earth system - such as the loss of the Amazon rainforest or the West Antarctic ice sheet - are of
low probability and little understood. Yet evidence is mounting that these events could be more likely
than was thought, have high impacts, and are interconnected across different biophysical systems,
potentially committing the world to long-term irreversible changes95.
Many components in the Earth system are potentially

susceptible to abrupt or irreversible change. Climate
change has the potential to catalyze rapid shifts in
ecosystems such as sudden forest loss or regional loss of
agricultural productivity resulting from desertification.
The predicted increase in extreme climate events would
also drive dramatic ecosystem changes. Climate change
induced shifts are powerful drivers of biome shifts,
potentially resulting in considerable changes in carbon
fluxes over large areas96.
Scientists have identified potential ‘tipping points’ where abrupt regional climate shifts could occur due
to global warming. The research found evidence of 41 cases of regional abrupt changes in the ocean, sea
ice, snow cover, permafrost, and terrestrial biosphere.
Many of these events occur with global warming levels of less than 2˚C97. Deforestation not only depletes
ecosystems; it also exacerbates climate change. (Even though Brazil has low levels of carbon emissions
per capita, if the emissions relating to deforestation are considered, then Brazil is one of the world’s
largest carbon emitters.)
95 Lenton, T. M., Rockström, J., Gaffney, O., Rahmstorf, S., Richardson, K., Steffen, W., & Schellnhuber, H. J. (2019).
Climate tipping points—too risky to bet against.
96 Intergovernmental Panel on Climate Change. Climate Change 2014–Impacts, Adaptation and Vulnerability:
Regional Aspects. Cambridge University Press, 2014.
97 Lontzek, Thomas S., et al. "Stochastic integrated assessment of climate tipping points indicates the need for
strict climate policy." Nature Climate Change 5.5 (2015): 441-444.
42
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There is a significant risk that the rain forest covering large areas of the Amazon basin will be lost because
of an abrupt transition in climate toward much drier conditions and a related change in the vegetation
system98. Once the collapse occurs, conditions would likely prevent rain forest from re-establishing.99. A
collapse would have catastrophic impacts on biodiversity, the livelihoods of indigenous people, Amazon
basin hydrology and water security, nutrient cycling, and other vital ecosystem services.
Figure 1.13: Climate tipping points (Lenton, Rockström et al. 2019)
Ocean heatwaves have led to

mass coral bleaching and to
the loss of half of the shallow-
water corals on Australia’s
Great Barrier Reef (F on the
diagram). A staggering 99% of
tropical corals are projected
to be lost if global average
temperature rises by 2 °C,
owing to interactions between
warming, ocean acidification
and pollution. This would
represent a profound loss of
marine biodiversity and
human livelihoods100.
The Arctic is warming at least

twice as quickly as the global
average and the boreal forest
in the subarctic is increasingly
vulnerable. Already, warming
has triggered large-scale insect
disturbances and a major
increase in fires. The fires have
led to dieback of North
American boreal forests.
98 Marengo, José A., et al. "Extreme seasonal climate variations in the Amazon basin: droughts and floods."
Interactions Between Biosphere, Atmosphere and Human Land Use in the Amazon Basin. Springer Berlin
Heidelberg, 2016. 55-76.
99 Lenton, Timothy M., et al. "Tipping elements in the Earth's climate system." Proceedings of the national
Academy of Sciences 105.6 (2008): 1786-1793.
100
Lenton, T. M., Rockström, J., Gaffney, O., Rahmstorf, S., Richardson, K., Steffen, W., & Schellnhuber, H. J. (2019).
Climate tipping points—too risky to bet against.
43
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The dieback is turning some regions from a carbon sink into a carbon source101. Permafrost across the
Arctic is beginning to irreversibly thaw and release carbon dioxide and methane.
Greenland and West Antarctic Ice Sheets. These ice sheets have a high albedo, locally reflecting much of
the Sun’s energy. They are much thicker than sea-ice (up to several km thick), but when ice sheets melt
at their edges, their albedo is reduced, and they get thinner.
Arctic sea-ice loss is amplifying regional warming, and Arctic

warming and Greenland melting are driving an influx of fresh
water into the North Atlantic. This could have contributed to a
15% slowdown since the mid-twentieth century of the Atlantic
Meridional Overturning Circulation (AMOC) , a key part of
global heat and salt transport by the ocean102. Paleo-records
show that both the Greenland and West Antarctic Ice Sheets
have melted and collapsed in the past, indicating they are probably susceptible to tipping points.
Atlantic Deep-Water formation. Cold, salty, deep water is produced in the North Atlantic, partly driving
the global ocean circulation. However, when ice sheets (such as the Greenland Ice Sheet) melt, they
release freshwater into the Atlantic. An input of freshwater makes the ocean less salty and less dense,
reducing the amount of deep water produced and slowing down the ocean circulation. As ice sheets melt,
deep water formation and ocean circulation are likely vulnerable to a critical tipping point103. .
El Niño Southern Oscillation (ENSO). The periodic change in sea surface temperatures in the tropical
Pacific, known as ENSO, has an impact on temperatures and precipitation across the globe. Both the
duration and strength of the warmer (El Niño) and colder (La Niña) parts of the oscillation vary
considerably, but current projections suggest that extreme ENSO events may become more frequent.
It is possible that changes to the West African monsoon could lead to greening of the Sahara/Sahel; a
rare example of a beneficial potential tipping point (IPCC AR5). The worst-case scenario would be if we
were approaching a global cascade of tipping points that led to a new, less habitable, ‘hothouse’ climate
state. Interactions could happen through ocean and atmospheric circulation or through feedbacks that
increase greenhouse-gas levels and global temperature. Alternatively, strong cloud feedbacks could cause
a global tipping point104.
101
Ashwin, P., & Anna, S. (2020). Extreme sensitivity and climate tipping points. Journal of Statistical Physics,
179(5), 1531-1552.
102
IPCC. IPCC Special Report on the Ocean and Cryosphere in a Changing Climate (IPCC, 2019).
103
Dowdeswell, J. A., Ottesen, D., & Bellec, V. K. (2020). The changing extent of marine-terminating glaciers and ice
caps in northeastern Svalbard since the ‘Little Ice Age’from marine-geophysical records. The Holocene, 389-401.
104
Schneider, T., Kaul, C. M., & Pressel, K. G. (2019). Possible climate transitions from breakup of stratocumulus
decks under greenhouse warming. Nature Geoscience, 12(3), 163-167.
44
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1.4.9 Nonlinearity of Climate Impacts

“The climate system can be highly nonlinear, meaning that small changes in one part can lead to much
larger changes elsewhere.”105
A non-linear change is a change that is not based on a simple

proportional relationship between cause and effect.
Nonlinear changes are often abrupt, unexpected, and difficult
to predict (“Tipping Points”). Climate effects can amplify each
other, greatly increasing exposure and limiting options to
respond.
As the scale and number of climate impacts grow with

increasing global mean temperature, interactions between
them are increasingly likely to occur, compounding the overall
scale of each ‘climate event’. In worst case scenarios, the
result is forced migration. Stresses on human health, such as heat waves, malnutrition, and decreasing
quality of drinking water due to seawater intrusion, have the potential to overburden health-care systems
to a point where adaptation is no longer possible, and dislocation is forced (“forced migration”).
Agriculture is an economic sector that exemplifies nonlinear climate risks due to drought or flood. A
large shock to agricultural production due to extreme temperatures, along with substantial pressure on
water resources and changes in the hydrological cycle, would likely impact both human health and
livelihoods. Such impacts would, in turn, cascade into effects on economic development by reducing a
population´s work capacity and damaging GDP106.
The Pacific’s small island developing states, such as Kiribati,

Tuvalu, Tokelau and the Marshall Islands, are already struggling
to manage requests from their people for assistance to address
climate-related damage to homes and infrastructure. This is
placing increasing pressure on national treasuries and systems
that are ill-equipped to handle it. Sea-level rise, cyclones and
typhoons (magnified by warmer seas) challenge the existence of
these and other island nations. There is real risk that sea-level
rise in these atoll countries exceeds the capabilities of controlled, adaptive migration, resulting in the need
for abrupt abandonment of entire islands. A forced exodus of people from their islands threatens regional
stability and could severely damage Pacific societies.
105
Praetorius, Summer K., and Alan C. Mix. "Synchronization of North Pacific and Greenland climates preceded
abrupt deglacial warming." Science 345.6195 (2014): 444-448.
106
Ray, Deepak K., et al. "Climate variation explains a third of global crop yield variability." Nature communications
6 (2015).
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In recent years, the scientific community has made efforts to identify regions, sectors, and systems that
may be particularly exposed to large / nonlinear climate changes. These are generally termed
"hotspots"107.
1.4.10 Adaptive Capacity

Adaptive capacity is the “ability or potential of a system to respond successfully to climate variability and
change and includes adjustments in both behaviour and in resources and technologies.” (IPCC AR5 2014)
Adaptive capacity is an increasingly important risk metric in the context of climate change. Adaptive
capacity is also known as resilience.
Adaptive capacity greatly influences the vulnerability

of businesses, communities and regions to climate
change effects and hazards. Vulnerability has been
described as the "capacity to be wounded" by climate
related risks. Human activities and groups are
considered sensitive to climate change to the degree
that they can be affected by it and vulnerable to the
degree that they can be harmed108.
107
de Sherbinin, Alex. "Climate change hotspots mapping: what have we learned?" Climatic Change 123.1 (2014)
108
Siders, A. R. (2019). Adaptive capacity to climate change: A synthesis of concepts, methods, and findings in a
fragmented field. Wiley Interdisciplinary Reviews: Climate Change, 10(3), e573.
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✓ Because vulnerability and its causes play essential roles in determining impacts, understanding the
dynamics of vulnerability is as important as understanding climate itself. (IPCC AR5) Regarding
climate change, the vulnerability or resilience of a given system or society is a function of its physical
exposure to climate change effects and its ability to adapt to these conditions. It is important to
distinguish between these two aspects of differential vulnerability: a) physical exposure to the
hazardous agent, and b) the ability to cope with its impacts.
Vulnerability recognizes the role of socioeconomic systems in amplifying or moderating the impacts of
climate change and "emphasizes the degree to which the risks of climate catastrophe can be cushioned
or ameliorated by adaptive actions that or can be brought within the reach of populations at risk"109.
Adaptive capacity is a function of

available financial resources,
human resources and adaptation
options, and will differ between
risks and sectors. For example, a
region that is well prepared to
cope with floods may be poorly
prepared to cope with a heat wave. When assessing adaptive capacity there is a need to be clear about
the scale of the assessment110. The abilities of people and ecosystems at a local or regional level to
respond to climate change may be significantly different from those observed at a national level111. Many
theoretical and empirical studies identify drivers of disaster resilience, which a few meta-reviews
summarise112113.
Technology can play an important role in adapting to climate change. Clean energy systems, water
management and desalination technologies, and geoengineering solutions represent some of the many
options that can lead to improved outcomes and increased coping under conditions of climate change.
The global socioeconomic impacts of climate change will be substantial and increasingly affect human
beings, alongside physical and natural capital. For financial institutions, it is important to understand the
nature and extent of physical risks (vulnerability) from climate change, and to properly explore physical
risk since it forms the basis for transition risk (Module 2). Addressing physical risk will require more
systematic risk management practices, accelerating adaptation, and decarbonization across sectors.
109
IPCC AR4 Chapter 18.5. Adaptive Capacity and its Determinants, (2007)
110
Brooks, Nick, and W. Neil Adger. "Assessing and enhancing adaptive capacity." Adaptation policy frameworks
for climate change: Developing strategies, policies and measures (2005): 165-181.
111
“Assessing risks and vulnerability to climate change”, European Climate Adaptation Platform (CLIMATE-ADAPT)
2017
112
Bahadur, A.V., et al. The Resilience Renaissance? Unpacking of resilience for tackling climate change and
disasters. (2010)
113
Castleden, M., et al. Resilience thinking in health protection. Journal of Public Health, 33, 369–377. 2011
47
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1.4.11 Human Health

The Lancet is the oldest peer-reviewed medical journal in the world and in 2018 and 2019 it issued “Health
and Climate” Reports114, 115 that dissect the impacts of climate change on humans. The diagram below is
reproduced from Lancet’s 2018 report and shows a cascade of climate impacts and the associated damage
to human health. Figure 1.14: climate health cascade
Today there is a fairly clear understanding around the impacts of climate change on human health, but
most measures show we are failing to act quickly enough or at sufficient scale. One way to stimulate action
could be for the World Health Organization (WHO) to use the authority it derives from its constitution and
the International Health Regulations to declare climate change a Public Health Emergency of International
Concern (PHEIC), like Covid-19.
114
Watts, N., Amann, M., Arnell, N., Ayeb-Karlsson, S., Belesova, K., Berry, H., ... & Campbell-Lendrum, D. (2018).
The 2018 report of the Lancet Countdown on health and climate change: shaping the health of nations for
centuries to come. The Lancet, 392(10163), 2479-2514.
115
Watts, N., Amann, M., Arnell, N., Ayeb-Karlsson, S., Belesova, K., Boykoff, M., ... & Chambers, J. (2019). The
2019 report of The Lancet Countdown on health and climate change: ensuring that the health of a child born today
is not defined by a changing climate. The Lancet, 394(10211), 1836-1878.
48
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1.5 Physical Risks to Business Sectors: Tables

This section of Module 1 presents a series of connected tables summarizing the physical risks of climate
change to major business sectors. A value chain is a set of activities that a firm operating in a specific
industry performs to deliver a valuable product or service for the market.
1.5.1 Agriculture, Food & Beverage, Apparel
BUSINESS SECTOR RELEVANT SHORT- AND ILLUSTRATIVE

LONG-TERM PHYSICAL EFFECTS ON VALUE
CLIMATE IMPACTS CHAIN
• Water scarcity and droughts • Decreased crop yield and

• Increased frequency and severity potential crop failures
of floods and storms • Loss of productive land (e.g.,
AGRICULTURE, due to increased soil salinity)
• Changing rainfall patterns and
FOOD, AND • Altered growing conditions and
increased rainfall intensity
BEVERAGE seasons
• Increased weather extremes and
variability • Increased exposure to pests and
diseases
• Rising average temperatures
• Increased irrigation demand and
• Shifts in seasons
costs
• Rising sea level and increased saline
• Commodity price volatility
intrusion
• Distribution network problems
• Changes in pest and disease
distribution and prevalence • Disruptions to farmers and labour
force
• Loss of biodiversity
• Water conflicts with
communities and other
users (and damaged
corporate reputation)
• Water scarcity and droughts • Fluctuating availability,
• Increased frequency and severity quality, and cost of
of floods and storms agricultural raw materials
• Changing rainfall patterns and • Disruptions for operations
APPAREL
increased rainfall intensity and workers at
manufacturing facilities
• Increased weather extremes and
variability • Disruptions in supply chain
• Rising average temperatures and distribution network,

including transport,
• Rising sea level
warehouses, and stores
• Changes in pest and disease
• Shifting consumer preferences
distribution
(e.g., less reliable seasonal
cycles)
49
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1.5.2 Electric Power: the example of Pacific Gas & Electric
BUSINESS RELEVANT SHORT- AND ILLUSTRATIVE EFFECTS ON

SECTOR LONG-TERM PHYSICAL VALUE CHAIN
CLIMATE IMPACTS
• Increased intensity and duration of • Reduced output (e.g., inadequate quantity

extreme weather events, such and quality of water for hydroelectric plants
ELECTRIC cyclones, floods heat waves and or to cool nuclear and fossil fuel plants)
POWER wildfires. • Damage to infrastructure and facilities
• Warmer average temperatures, droughts • Changing seasonal power demand and
• Increased wildfires increased peak demand during extreme
• Storm surge heat or other conditions
• Rising sea level • Increased electricity losses in
• Water scarcity and overall variability in transmission and distribution systems
water supply and precipitation due to heat load
patterns
Pacific Gas & Electric

When Pacific Gas & Electric (PG&E) Corp. filed for Chapter 11 in January 2019, it marked one of the largest
utility bankruptcies in history and probably the first major bankruptcy attributed directly to climate
change116. PG&E, owner of California’s largest electric utility, has said that its equipment probably caused
the Camp Fire, the November 2018 blaze that destroyed thousands of homes in Paradise, Calif., and killed
at least 86 people. PG&E immediately recorded a $10.5 billion charge and reported a $6.9 billion loss for
2018, in anticipation of damage claims for that fire, the deadliest in state history.
The utility filed for Chapter 11 protection after estimating that it faced up to $30 billion in liabilities from
two years of wildfires whose intensity has been blamed by state officials on severe droughts linked to
climate change. Fire victims suing PG&E say it did not adapt quickly enough to the increased risks created
by persistent hot, dry weather.
The bankruptcy filing points to the danger that global warming could pose for many companies. Those
risks aren’t always obvious, and assessments of them are often buried deep within securities disclosures
(the disclosures recommended by the international Task Force on Climate-related Financial Disclosures
(TCFD), as dealt with in depth in Modules 3 & 4 of this course, precisely aim to move climate risk reporting
beyond this fine print so that it becomes an active market concern)
116
“Climate change just claimed its first bankruptcy — PG&E succumbs to fallout from the world's most expensive
natural disaster of 2018” Business Insider, 29 January 2019
50
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PG&E investors should not have been caught off guard.

Since the 2016 wildfires in northern California’s wine
country, the utility repeatedly warned that climate change
is raising the risk of catastrophic fires in the state (frequent
drought and invasive, warm-weather pests decimate the
forests natural protections). The company’s critics had
dismissed those warnings as a scare tactic intended to
pressure the state government into changing California’s wildfire liability rules, something the state
legislature refused to do. The company’s former CEO (who stepped down) called droughts and wildfires
the ‘new normal’ and said that utility companies were bearing the costs of climate-related fires117.
1.5.3 Insurance & Tourism
BUSINESS RELEVANT SHORT- AND LONG- ILLUSTRATIVE

SECTOR TERM PHYSICAL CLIMATE EFFECTS ON VALUE
IMPACTS CHAIN
• Virtually all physical effects, including hurricanes • Increased claims, losses, and
and storms, wildfires, floods, droughts, sea-level liabilities
INSURANCE rise, thawing permafrost, and increased exposure to • More difficulty pricing physical perils
diseases • Reduced availability and
affordability of some types of
insurance
• Potential need for new products
to address physical climate risks
• Reduced value of investment portfolio
• Increased weather extremes and variability • Damage to infrastructure and
• Increased frequency and severity of floods
facilities
TOURISM 118 and storms • Decreased attractiveness
• Rising temperatures
of tourism destinations
• Disruptions of transportation
• Rising sea level and coastal erosion
(e.g., flights and cruises)
• Droughts
• Loss of ski trails, coral reefs, and
• Increased wildfires
other natural tourism attractions
• Changes in precipitation patterns and
• Altered tourist seasons
snow reliability
• Conflicts with communities
over coastal and other
development
117
“PG&E May Be the Business World’s Biggest Climate-Change Casualty Yet”, Bloomberg News, 15 Jan. 2019
118
Scott, Daniel, C. Michael Hall, and Stefan Gössling. "A review of the IPCC Fifth Assessment and implications for
tourism sector climate resilience and decarbonization." Journal of Sustainable Tourism 24.1 (2016): 8-30.
51
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1.5.4 Mining, Oil & Gas

(Continued)
BUSINESS SECTOR RELEVANT SHORT- AND LONG-TERM ILLUSTRATIVE EFFECTS ON VALUE

PHYSICAL CLIMATE IMPACTS CHAIN
• Water scarcity and drought • Constrained exploration,

• Precipitation extremes and flooding processing, refining, and site
MINING rehabilitation
• Increased intensity and duration
of extreme weather events, such • Damage to infrastructure and facilities
as storms • Higher decommissioning costs
• Rising sea level • Altered access to mining
• Rising temperatures deposits and coastal
facilities
• Thawing permafrost and land ice
• Increased wildfires • Disrupted transportation routes
and reduced port availability
• Increased exposure to diseases
• Risks to worker health and safety
• Water conflicts with
communities (and
damaged corporate
reputation)
• Increased intensity and duration • Damage to infrastructure and facilities
of extreme weather events, such • Rising risks to employee safety and
OIL AND GAS119 as storms and floods health
• Rising sea level, higher storm • Altered access to fossil fuel reserves
surges, and increased coastal • Constrained production of water-
erosion intensive oil and gas resources, such
• Land and sea ice melting and as oil sands, and water conflicts with
permafrost thawing communities and other users (and
• Water scarcity and droughts damaged corporate reputation)
• Disruption of transport and
distribution systems
119Burke, Marshall, Solomon M. Hsiang, and Edward Miguel. "Global non-linear effect of temperature on economic
production." Nature 527.7577 (2015): 235-239.
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1.5.5 Section Summary

The fallout from PG&E’s bankruptcy has been largely limited to other utility companies in California.
Southern California Edison utility and Sempra Energy’s San Diego Gas & Electric both saw their credit
ratings cut by Standard & Poor’s. Power companies with contracts with PG&E were also affected. The
problem of power lines sparking serious fires is coming up in other drought-prone regions.
PG&E was aware of wildfire risks in California and

made that public (even if nobody listened). However,
material climate risks are almost certainly overlooked
by many other sizeable companies. Large numbers of
organizations have been treating climate-related risks
as difficult-to-pinpoint, long-term future risks. Now
that future arrives.
The warnings that climate scientists have issued for

over 30 years about threats to businesses and economies are increasingly being connected to specific
disruptive events (e.g., drought, extreme weather, the spread of pests etc.)120. Markets are supposed to
price in risks through instruments like insurance and credit-default swaps, as well as demanding higher
premiums for greater risk in lending. However, markets simply do not price some risks correctly and
economic research suggests that climate change falls in that category. Since 2008, a growing number of
senior financiers have likened the swelling systemic pressures of climate change to the under-priced risks
that exploded during the financial crisis121.
1.6 Key Points

Human activities have dramatically increased the atmospheric concentration of carbon dioxide (about
416 ppm monthly as of September 2020). Anthropogenic climate change is caused by emissions of
greenhouse gases, predominantly CO2 and CH4 (methane), from energy, industry, transport, agriculture,
and land use change. Currently the world is about 1°C warmer than before the industrial revolution.
Cumulative emissions will continue to drive climate change for many years. About 43% of cumulative
CO2 emissions have been absorbed by ocean and land biospheres (‘carbon sinks’). The evidence for
accelerating climate change is compelling: declining arctic sea ice; decreased snow cover (albedo effect);
extreme events; glacial retreat; global temperature rise; ocean acidification; sea level rise; shrinking ice
sheets; and warming oceans. New patterns of more frequent and more extreme weather events are
unfolding across the planet.
120
“After PG&E’s Climate-Driven Bankruptcy, Who’s Next?” D Baker & E Roston, Bloomberg, 22 Jan. 2019
121
Hong, H., Li, F. W., & Xu, J. (2019). Climate risks and market efficiency. Journal of Econometrics, 208(1), 265-281.
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An increase of global temperature by more than 2°C above the “pre-industrial” average has been the
majority definition of what would constitute intolerably dangerous climate change. However, even if
global warming is held to +1.5˚C there will be severe climatic and weather consequences for many
populations. The October 2018 IPCC Special Report 1.5˚C estimates that, at current emissions rates, now
(2020) there are only as little as 10 to 11 years until we reach +1.5˚C.
Physical risks resulting from climate change can be event-driven (acute, rapid onset) or longer-term
shifts (chronic, slow onset) in climate patterns. Acute (rapid onset) physical risks refer to those that are
event-driven, including increased severity of extreme weather events, such as cyclones, hurricanes, or
floods. Chronic (slow onset) physical risks refer to longer-term shifts in climate patterns (e.g., sustained
higher temperatures) that may cause sea level rise or chronic heat waves.
Climate change exacerbates the negative feedback loops and physical impacts caused by overuse of the
environment as a sink for greenhouse-gas emissions and our pollution, over-exploitation of water,
deforestation, depletion of natural resources, and loss of biodiversity. The development of ecological
imbalances into physical impacts is partly linear, but can also be highly unpredictable (nonlinear),
especially as imbalances become larger, with sudden tipping points and feedback loops after which
recovery is no longer possible and the consequences are highly likely to be catastrophic. (IPCC AR5)
Deforestation is the second single largest source of anthropogenic greenhouse gas emissions. It is largely
driven by animal agriculture (mostly the livestock industry) and expanding normal agriculture .
Physical climate risks must be assessed across industries and throughout supply chains. Damage to both
private and public infrastructure is expected from rising sea levels, droughts, floods, and wildfires. Highly
water-dependent industries face significant risks. Water scarcity is already fraught with issues in many
regions of the world. Climate change will make conditions more extreme by exacerbating drought
conditions and altering precipitation patterns. The implications for industries like agriculture, energy,
tourism, and manufacturing, which rely heavily on water, will be significant122.
To stabilise emissions below 1.5°C, CO2 emissions must fall by about 45% by 2030 (from 2010 levels) and
would need to reach “net zero” emissions by 2050123. This would require changes at an unprecedented
scale: deep emission cuts in all sectors, rapid assimilation of new technologies, behavioural change, and
rapid increased investment in low carbon economies. This is transition.
122
IPCC (Intergovernmental Panel on Climate Change). (2018). Special Report, Global Warming of 1.5° C (SR15).
123
ibid
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UNEP Finance Initiative Online Course

Module 1 Physical Risks of Climate Change .................................................................................... 3

1.0 Introduction ........................................................................................................................ 3

1.1 Meteorology and Climate ................................................................................................... 4

1.1.1 The Greenhouse Effect......................................................................................................... 5

1.1.2 Radiative Forcing and Greenhouse Gases ............................................................................ 6

1.2 Anthropogenic Climate Change ........................................................................................ 11

1.2.1 Sources of Anthropogenic Greenhouse Gas Emissions ...................................................... 14

1.3 IPCC: Mapping Climate Change Impacts ........................................................................... 16

1.3.1 The Working Groups I, II & III ............................................................................................. 16

1.3.2 Fifth Assessment Report (AR5) .......................................................................................... 17

1.3.3 Special Report “Global Warming of 1.5˚C” ........................................................................ 18

1.3.4 Forecasting Models ............................................................................................................ 21

1.4 Physical Impacts and Risks of Climate Change ................................................................. 22

1.4.1 Introduction ....................................................................................................................... 22

1.4.2 Acute or Chronic or Hazard or Disaster?............................................................................ 24

1.4.3 Rapid Onset Hazards (Extreme Weather) .......................................................................... 25

1.4.4 Slow Onset Hazards............................................................................................................ 29

1.4.5 Biodiversity Impacts ........................................................................................................... 35

1.4.6 Impacts on Food Supplies .................................................................................................. 36

1.4.7 Changing Land Use Change ................................................................................................ 38

1.4.8 Tipping Points (!) ................................................................................................................ 42

1.4.9 Nonlinearity of Climate Impacts ........................................................................................ 45

1.4.10 Adaptive Capacity ............................................................................................................... 46

1.4.11 Human Health ..................................................................................................................... 48

1.5 Physical Risks to Business Sectors: Tables ....................................................................... 49

1.5.1 Agriculture, Food & Beverage, Apparel ............................................................................. 49

1.5.3 Insurance & Tourism .......................................................................................................... 51

1.5.4 Mining, Oil & Gas ............................................................................................................... 52

1.5.5 Section Summary ............................................................................................................... 53

1.6 Key Points ......................................................................................................................... 53

Other References .......................................................................................................................... 55

Module 1 Physical Risks of Climate Change

At the end of Module 1:

1) You will understand what climate change is.

1.1 Meteorology and Climate

1.1.1 The Greenhouse Effect

1.1.2 Radiative Forcing and Greenhouse Gases

a) Amount/Atmospheric Concentration: determined by the emitted quantity of a GHG and by how

The Albedo effect has a significant impact

 Detonating four Hiroshima atomic bombs per second

In order, the most abundant GHGs in Earth's atmosphere are:

1. Water vapour (H2O) concentrations are not shown

2. Carbon dioxide (CO2) currently constitutes about

1.2 Anthropogenic Climate Change

Figure 1.4: Global CO2 Concentrations (U.S. EPA 2016)

Figure 1.5: Global annual average

1.2.1 Sources of Anthropogenic Greenhouse Gas Emissions

Electricity and heat generation: the burning of

Agriculture, Forestry, and Other Land Use

1.3 IPCC: Mapping Climate Change Impacts

1.3.1 The Working Groups I, II & III

1.3.2 Fifth Assessment Report (AR5)

1.3.3 Special Report “Global Warming of 1.5˚C”

i. What would be required to limit warming to 1.5˚C (“mitigation pathways”)?

- Half as many people would suffer from lack of water.

1.3.4 Forecasting Models