OECD Environment Working Papers

1997-0900 (online)
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This series is designed to make available to a wider readership selected studies on environmental issues prepared for use within the OECD. Authorship is usually collective, but principal authors are named. The papers are generally available only in their original language English or French with a summary in the other if available.

Flood Risks, Climate Change Impacts and Adaptation Benefits in Mumbai

An Initial Assessment of Socio-Economic Consequences of Present and Climate Change Induced Flood Risks and of Possible Adaptation Options You or your institution have access to this content

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Stéphane Hallegatte1, Nicola Ranger2, Sumana Bhattacharya3, Murthy Bachu4, Satya Priya4, K. Dhore4, Farhat Rafique4, P. Mathur4, Nicolas Naville1, Fanny Henriet1, Anand Patwardhan5, K. Narayanan5, Subimal Ghosh5, Subhankar Karmakar5, Unmesh Patnaik5, Abhijat Abhayankar5, Sanjib Pohit6, Jan Corfee-Morlot7, Celine Herweijer8
Author Affiliations
  • 1: Centre International de Recherche sur l'Environnement et le Développement, France

  • 2: Grantham Research Institute for Climate Change, United Kingdom

  • 3: NATCOM PMC, MoEF, India

  • 4: RMS, India

  • 5: Indian Institute of Technology, India

  • 6: National Council of Applied Economic Research, India

  • 7: OECD, France

  • 8: Risk Managment Solutions Limited, United Kingdom

22 Nov 2010
Bibliographic information

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Managing risks from extreme events will be a crucial component of climate change adaptation. In this study, we demonstrate an approach to assess future risks and quantify the benefits of adaptation options at a city-scale, with application to flood risk in Mumbai. In 2005, Mumbai experienced unprecedented flooding, causing direct economic damages estimated at almost two billion USD and 500 fatalities. Our findings suggest that by the 2080s, in a SRES A2 scenario, an ‘upper bound’ climate scenario could see the likelihood of a 2005-like event more than double. We estimate that total losses (direct plus indirect) associated with a 1-in-100 year event could triple compared with current situation (to $690 – $1890 million USD), due to climate change alone. Continued rapid urbanisation could further increase the risk level. Moreover, a survey on the consequences of the 2005 floods on the marginalized population reveals the special vulnerability of the poorest, which is not apparent when looking only through a window of quantitative analysis and aggregate figures. For instance, the survey suggests that total losses to the marginalized population from the 2005 floods could lie around $250 million, which represents a limited share of total losses but a large shock for poor households. The analysis also demonstrates that adaptation could significantly reduce future losses; for example, estimates suggest that by improving the drainage system in Mumbai, losses associated with a 1-in-100 year flood event today could be reduced by as much as 70%. We show that assessing the indirect costs of extreme events is an important component of an adaptation assessment, both in ensuring the analysis captures the full economic benefits of adaptation and also identifying options that can help to manage indirect risks of disasters. For example, we show that by extending insurance to 100% penetration, the indirect effects of flooding could be almost halved. As shown by the survey, the marginalized population has little access to financial support in disaster aftermaths, and targeting this population could make the benefits of such measures even larger. While this study explores only the upper-bound climate scenario and is insufficient to design an adaptation strategy, it does demonstrate the value of risk-assessment as an important quantitative tool in developing city-scale adaptation strategies. We conclude with a discussion of sources of uncertainty, and of risk-based tools that could be linked with decision-making approaches to inform adaptation plans that are robust to climate change.
climate change, global warming, insurance, flood management, adaptation, sustainable development, urban planning, natural disasters, government policy
JEL Classification:
  • E20: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / General
  • O18: Economic Development, Innovation, Technological Change, and Growth / Economic Development / Urban, Rural, Regional, and Transportation Analysis ; Housing ; Infrastructure
  • Q01: Agricultural and Natural Resource Economics ; Environmental and Ecological Economics / General / Sustainable Development
  • Q54: Agricultural and Natural Resource Economics ; Environmental and Ecological Economics / Environmental Economics / Climate ; Natural Disasters and Their Management ; Global Warming
  • R11: Urban, Rural, Regional, Real Estate, and Transportation Economics / General Regional Economics / Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
  • R52: Urban, Rural, Regional, Real Estate, and Transportation Economics / Regional Government Analysis / Land Use and Other Regulations
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