Coping with the Changing Climate
Climate change and water crises, which have featured prominently in the Global Risks Landscape over the last five years, are joined this year by large-scale involuntary migration. The links among these risks appear clearly in the Global Risks Interconnections Map 2016 (Figure 2), and the intertwined challenges are unfolding against a background of many socio-economic pressures.
As illustrated by the Global Risks Interconnections Map, climate change and water risks are intricately linked to food security concerns – a subject explored further in Part 3 of this Report. About 70% of the world’s current freshwater withdrawals are used for agriculture, rising to over 90% in most of the world’s least-developed countries.4 Carbon dioxide also causes ocean acidification, which makes it harder for small shellfish to form the calcium carbonite shells they need to grow – with implications rising up the food chain, threatening the availability of food from the seas as well.5
Challenges around water management are already immense. On the one hand, over a billion people lack access to improved water. Some 2.7 billion – or 40% of the world’s population – suffer water shortages for at least a month each year.6 The Organisation for Economic Co-operation and Development (OECD) estimates that 4 billion people could be living in water-scarce areas by 2050. According to the World Water Council, 80% to 90% of the scarce water in many of the world’s arid and semi-arid river basins is already being used, and over 70% of the world’s major rivers no longer reach the sea.7 On the other hand, inadequate sanitation exposes 2.4 billion people to many diseases, such as diarrhoeal disease, which is the third leading cause of death among children under five.8
Governance – at global, regional and national levels – lies at the heart of water management. Even many developed countries are failing to proactively address water vulnerabilities, instead reacting only after extreme weather events. In developing countries, the political challenges inherent in water infrastructure and conservation projects are exacerbated by greater financing challenges.
Brazil exemplifies the challenge of managing water even within a single country: it has 12% of the planet’s freshwater reserves, mostly in the Amazon region, but much of this water does not reach its urban population. Sao Paulo, which contributes a third of Brazil’s GDP, has a lower water-per-capita availability than even the historically drought-prone north-eastern region of the country. With hydropower constituting approximately 64% of the electricity power load, there are conflicts caused by unclear rules about water governance at federal, state and basin levels.9
Water management is further complicated around the world by economic pressures – developing an economy can be a thirsty business, based on unsustainable use of water. As countries industrialize, more fresh water is needed for energy production – the United States allocates about 40% of its fresh water to energy, Europe over 30% – and the demand for water for energy and industry is forecast to increase by 70% by 2030 across Asia.10 Globally, based on current trends, water demand is projected to exceed sustainable supply by 40% in 2030.11 Adding to the pressures, agricultural production will have to increase in the coming decades to feed a growing population and a rising demand for meat.12
Unless current water management practices change significantly, many parts of the world will therefore face growing competition for water between agriculture, energy, industry, and cities. Tensions are likely to grow within countries, especially between rural and urban areas and between poorer and richer areas, and also potentially between jurisdictions. More than 60% of the world’s transboundary water basins lack any type of cooperative management framework. Even where such frameworks do exist, they often do not cover all states that use the basin.13 Interstate tensions over water access are already apparent in some parts of South Asia, and could impact the evolution of the international security landscape, as discussed in Part 2.
Climate change will only exacerbate these challenges. The latest Intergovernmental Panel on Climate Change (IPCC) report, in November 2014, reaffirmed that this warming in the climate system is “unequivocal” and that human influence is “extremely likely” to be the dominant cause. Atmospheric concentrations of three major greenhouse gases (carbon dioxide, methane and nitrous oxide) are at their highest level in 800,000 years, with CO2 concentration up 13% since 1990. The world today is estimated to be about 1°C warmer, on average, than it was in the 1950s, and the effects are being felt. Regional analysis of the Global Risks Perception Survey shows that declining water availability features as the most likely risk in the Middle East and North Africa and South Asia, and the likelihood of extreme weather events is considered especially high in North America, South Asia and East Asia and the Pacific (see Figure 3).
Scientists caution that a total warming of 2°C implies a high risk of catastrophic climate change that could damage human well-being on a global scale. Yet even if each country meets its Intended Nationally Determined Contributions plans, submitted to the United Nations Framework Convention on Climate Change (UNFCCC) and agreed at the Paris Climate Conference in December 2015 (Box 1.2), warming is projected to reach 2.7°C by 2100.
Given these developments, it will, therefore, be impossible to live without adaptation – but adaptation planning is complicated by the difficulty of predicting not only the expected degree of warming but also the expected pace. One source of uncertainty is the Arctic feedback loop – will ice sheets collapse slowly or rapidly? The average sea level is already rising by 3 millimetres per year, faster than any other time in the last two millennia; many of the world’s cities lie on the coast or on river banks, with poor neighbourhoods most likely to be in low-lying areas vulnerable to flooding.14 Another source of uncertainty is the “Amazon Dieback” scenario: recent oscillation between unusually dry years and heavy flooding could be an early indicator of irreversible system phase change.15 If the Amazon stops absorbing carbon and starts releasing the estimated 120 billion tonnes of carbon it holds – equivalent to 15 years’ worth of 100% fossil fuel emissions – the impact will be global.
Failure to address climate change and water crises will forcibly displace more people – the IPCC warns that droughts and coastal floods could cause “large-scale demographic responses – for example, through migration”. Forced displacement is already at an unprecedented level, causing severe humanitarian challenges, as explored in the following section.
Box 1.2: The Paris Agreement: A Historic Turning Point on Climate Change
The adoption of the Paris Agreement on 12 December 2015 by 195 governments is a major turning point in the global fight against climate change. The world’s nations agreed to limit global average temperature rise to “well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. They also agreed to a review mechanism that will help ratchet up efforts every five years from 2018, as well as a floor for financial flows to developing countries.
The Paris outcomes are far more ambitious than had been expected – a collective recognition of the dangerous risks posed by climate change as well as the cost of inaction. These outcomes are also sending unmistakable signals to the global markets that governments are willing to put aside their differences and do their part in tackling this biggest of global challenges.
In the coming months and years, the impact of the Paris Agreement will be felt in board rooms, banks and stock exchanges across the world. The expectation is that, as a result, trillions of dollars needed for investments will be unlocked to put the world onto a climate-safe pathway. The time has come to pivot from business-as-usual.
One of the innovations that emerged from Paris was the official recognition of the role played by business, investors, cities and provinces in driving and delivering climate action. Effective mobilization of these constituencies – alongside civil society and faith-based groups – has indeed contributed to this successful outcome. But such mobilization was possible only because an ever-growing number of global businesses and cities today understand that deepened globalization has heightened vulnerabilities through global supply chain shocks. And that these disruptions could be further triggered by climate volatility and policy uncertainty.
To date, nearly 190 governments have submitted their climate action plans, covering over 95% of total global emissions. These efforts alone will not suffice, as even the most optimistic estimates suggest that these pledges taken together would contain warming only to 2.7°C above pre-industrial levels. But these bottom-up efforts will provide a solid foundation from which ambition can be ratcheted up in the coming years.
Developments in the real world will also help, with cost-competitive alternatives already available today. In 2014, renewables made up over half of total energy investment, while the cost of solar panels has fallen by 75% and that of batteries for electric vehicles by half since 2009. Wind-generated electricity in over 50 countries is now at grid parity – when the customer of electricity pays the same to buy wind energy as to buy traditional technologies.
Looking forward, global attention will turn firmly towards implementation and developing specific action plans to deliver a low-carbon, climate-resilient world. With a clear direction of travel, the immediate next step will focus on policy frameworks and incentives that will deliver the results, as well as on the consolidation and scaling of much-needed public-private cooperation.
For businesses, the Paris Agreement is a licence not only to implement climate-friendly practices but also to innovate and develop the next generation of solutions. The race is on for forward-looking businesses and governments alike to capitalize on these new business opportunities for growth and resilience.