MANILA, Philippines - Studies have indicated that that extreme weather fuelled by climate change may become a relevant factor affecting sovereign ratings of vulnerable countries such as the Philippines, not to mentioned reversals to economic growth and huge loss of lives.
International rating agency Standard & Poors (S&P) said that sovereign ratings are at stake when it comes to vulnerable countries to natural catastrophes caused by climate change.
In a recent study by international insurance and reinsurance Swiss Reinsurance (Swiss Re), half of the world’s population lives in cities, generating about 80 percent of global gross domestic product (GDP), is creating an unprecedented concentration of risk.
Manila is among the 10 most heavily exposed urban centers in the world, vulnerable to earthquakes and storms.
A typhoon of similar destructive strength as Super Typhoon Yolanda would affect some 12.6 million residents in the metropolitan area of Manila alone, with massive disruption to the national economy.
Immediately affected are agriculture, sanitation and infrastructure.
“In terms of productivity losses from severe storms like Yolanda, Manila ranks number six worldwide, and number one from possible impact on the national economy,” the Swiss Re report stated.
Weather related losses rose aross all continents since the 1980s, with Asia and North America seeing costs increase more than fourfold.
As the frequency and impact of extreme weather events continue to rise, agriculture, sanitation and infrastructure are also affected – in turn arresting the wheels of the economy.
Ivo Menzinger, head of Global Partnerships Asia Pacific and representing Swiss Re in the recent World Economic Forum (WEF) said that the Philippine government recently invested considerably in strengthening capacity for forecasting and early warning systems.
This helped to limit the loss of life in what is so far noted as the strongest storm in history. The damage to property, agriculture and infrastructure in the affected region was unprecedented.”
Yolanda reported cost economic losses of at least $12 billion, of which only $1.5 billion – including public infrastructure insurance – was covered. Disturbingly, the affected regions were not key contributors to the country’s GDP.
Other countries in the region facing devastating economic risk in the face of a disaster include Jakarta, for example.
A major earthquake or flood would cost the city $10 billion today – and triple that amount by 2023 – unless more active measures are taken to improve disaster preparedness.