Draft Terms of Reference Preparation of a background paper on climate change and natural hazards For the Pacific Possible Report

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2 Draft Terms of Reference Preparation of a background paper on climate change and natural hazards For the Pacific Possible Report The purpose of the Pacific Possible Report is to take a long term view of the development challenges and opportunities faced by Pacific Island Countries (PICs), and focus on activities that could have transformational impacts on countries in the region. The study will seek to provide a realistic assessment of these opportunities and quantify potential increases in per capita GNP and government revenue by 2040, to the extent possible. Pacific Possible (PP) will also identify broad policy and institutional priorities and investments that would need to be developed in order to realize these opportunities (concept note is attached). PP aims to identify and whenever possible quantify development gains that could be achieved, if the right preconditions were in place and losses that could occur in the absence of these pre-conditions. The longterm perspective adopted by PP would consider major changes in the economic environment for PICs and their impact on the PICs development opportunities. Such changes will include climate change, with projected severe impacts on PICs, especially atoll nations. The PP will include six thematic focus areas, one of which is Managing increased stress on pacific livelihoods. This focus area will include consideration of natural disasters and the impacts of climate change on PICs. Regional atolls will be considered as a special category, as with many atolls only 1-3m above sea level and sea levels predicted to rise by 70cm by 2100, this threatens the physical existence of Pacific islanders and their assets and, especially for atoll islands, the existence of these islands themselves. A background paper will be prepared on natural disaster and climate change that will build on existing scientific and policy papers such as the Policy and Practice Note Acting Today for Tomorrow, the Pacific Risk Assessment and Financing Initiative (PCRAFI), the Small Islands State Resilience Initiative Concept note, the Disaster Risk Management Climate Change Adaptation engagement note, the Pacific Climate Science Program (CSIRI/AusAID), the ADB report on the Economics of Climate Change and any other relevant publication/report. As mentioned above, particular attention will be given to the quantification of the impact of disasters and climate change, as well as the cost and benefits of adaptation strategies. Objectives The key questions which this paper seeks to answer are: 1. What will be the increased potential socio-economic impacts of natural hazards and climate change on PICs by 2040 (in terms of impacts on GNP and GDP) and how effective will resilient/adaptation strategies be in bending the cost curve; and 2. Which adaptation strategies/options and combination of investment and polices are the most promising and can be expected to have the highest impact in reducing the socio-economic impact by 2040 and what would be the impact on individual livelihoods. It is proposed that the background note will include the following three sections. (A methodology for these three sections is attached): 1

3 Section 1: A Summary of disaster and climate risks Assess the current disaster and climate risk (mortality, number of people affected, economic impacts, impact on the poor and bottom 40% ( B40 )) Assess the impact of climate change (i.e. extreme events/rapid and slow onset disasters, sea level rise, temperature and rainfall, ocean acidification) and how this, combined with increased growth and urbanization, will change the risk profile of the countries by This section will also include a description of sector impacts 1 (agriculture, fisheries, infrastructure, coastal zones, water bodies etc.).particular attention will be given to the key areas of uncertainty that will have to be taken into account in planning and decision making (i.e. confidence in projections, data limitations etc.). Assess what has been achieved so far in terms of risk reduction and resilience building investments and policies, including what initiatives have been implemented, as well as the key challenges and issues. This will include a discussion on institutional bottlenecks, lack of data, fragmentation issues, lack of leadership/central coordinating agencies as highlighted in the Policy and Practice Note Acting Today for Tomorrow, and other challenges as relevant. Section 2: Quantification of net savings/costs of various resilient scenarios Quantify the increased risk that countries will face in 2040/2050 due to climate change and due to increased exposure brought about by population growth and urbanization, and estimate the level of investments in resilience needed to bend the cost curve and reduce economic losses. This will include a description of the predicted risk in 2040/2050 based on increased exposure (population growth and/or urbanization trends) and climate impacts, with and without adaptation/resilience measures put in place. Net savings from various disaster resilience scenarios will be quantified to the extent possible based on the PCRAFI modelling results as well as any other relevant sources of information. o o Expected output from the PCRAFI model: the model will quantify future losses in several Pacific Island Countries (Vanuatu, with other countries to be confirmed) due to cyclones and earthquakes. Modelling will consider: (i) The status quo/ do nothing scenario regarding the vulnerability of key assets (e.g., hospitals, schools, admin buildings, infrastructure); and (ii) Resilient scenarios which incorporate some retrofitting strategies for existing buildings, potentially paired with more stringent design levels for new buildings. Increased risk due to increased exposure (i.e., through population growth or urbanization trends) will need to be estimated as the modeling of this would not be feasible within the proposed time frame. Other sources/data/information/research will be used to estimate the cost of the longer term impacts of increased exposure 2 and/or climate change related to sea level rise, salinization of water aquifers, more frequent flooding and droughts, changes in temperature and the associated impact on agriculture, and coastal zones (i.e., the ADB report on The Economics 1 Sector impacts may differ from country to country, and this will need to be reflected. 2 PCRAFI modeling of this is not feasible within the proposed time frame for this work. Projections will be made given a set of assumptions about future developments. As the data will be more reliable for some countries than for others, it may be that more detailed estimates will be produced for one or two countries that have better data (e.g Fiji, Samoa). 2

4 of Climate Change (2013), which states that annual losses in the Pacific due to climate change may reach 3.5% of GDP by 2050 and 13% by2100). For atoll islands, estimate the cost and benefits of hard investment in resilience (i.e., through atoll raising, land reclamation, coastal protection, and desalinization) compared to the cost and benefits of migration. Section 3: Cost effective adaptation and risk reduction strategies and options The purpose of this section would be to: (i) provide guidance and recommendations to policy makers on what type of resilient investments and adaptation/risk reduction strategies would be appropriate, respond to the needs and would be cost effective, and (ii) propose a decision making framework. Looking forward, this section will describe what needs to be done to build more resilient societies and how PICs will be able to reach their development targets while taking into account current and future climate and disaster risks. More specifically it will aim to answer questions such as what can be done to reduce the current risks by 50% in ? Is it feasible? How much would it cost? Various options/strategies for adaptation/risk reduction will be presented and discussed. This section will: o provide a set of principles on how to use the scarce resources available to maximum effect o identify the low regret approaches/solutions o identify whether a one size fits all approach be possible for PICs o Investigate a scenario whereby US$ 50 million from climate funds is made available to a country, what would be the best options to use these funds, o identify on what basis decisions should been made, (i.e Cost and Benefit approaches, Robust Decision Making?) and how progress indicators can be set and measured. Given the frequency of disasters and changes in exposure due to increased urbanization, is physical resilience (i.e infrastructure) the best option? Is it cost effective? Would other options (i.e., social safety nets, emergency preparedness, and financial protection, land use planning) be more cost effective? The discussion within this section will differentiate countries vulnerable to rapid onset disasters versus countries, which are vulnerable to longer term impact of climate change. It will also identify the differing vulnerabilities faced by atoll countries. Attachment 1: Proposed Methodology for Background Paper 3

5 Attachment 1 Proposed methodology for the background paper on climate change and natural hazards For the Pacific Possible Report Section 1: A Summary of disaster and climate risks The Methodology for Section 1 will include a literature review/stock take of the current and future disaster and climate risk for PICs. This process should include screening of previous research, reports, assessments and recommendations of relevant technical working groups, organizations etc. from the region. A reference list and reference materials will be made available in order to support this process, although the consultant will also be expected to engage in independent desktop research as required. The literature review/stock take should focus on three key areas: (i) (ii) (iii) Current Risk: Existing knowledge (based on previous reports, research etc.) on current risks, (mortality, number of people affected, economic impacts, impact on the poor and B40), as well as areas of uncertainty; Future Risk: The impact of climate change and how this, combined with increased growth and urbanization, will change the risk profile of PICs by This will include consideration of impacts on sectors, as well as areas of uncertainty; Achievements to date: Risk reduction and resilience building investments and policies to date, including what initiatives have been implemented, as well as the key challenges and issues. Section 2: Quantification of net savings/costs of various resilient scenarios This Section will: (a) quantify the increased risk that countries will face in 2040/2050 due to climate change and increased growth and urbanization; and (b) estimate the level of investments in resilience needed for bending the cost curve and reducing economic losses. The methodology will be as follows: 1. PCRAFI Modelling Identify which assets (e.g., hospitals, schools, admin buildings, infrastructure) are candidates for the resilience scenarios to be considered; Based on the identified resilience scenarios, develop a new set of damage functions for retrofitted/new buildings for all sub perils. AIR (consultants) to re-run PCRAFI models with the same 2010 exposure but with the different damage functions and different stochastic catalogs for Tropical Cyclones (both current and 2050 versions). Modelling should consider: o the status quo/ do nothing scenario regarding the vulnerability of key assets (e.g., hospitals, schools, admin buildings, infrastructure); o resilient scenarios which incorporate some retrofitting strategies for existing buildings, perhaps paired up with more stringent design levels for new buildings. AIR to provide the new risk profiles and average annual losses for all the countries considered and the resilience scenarios considered using the current exposure. This should include a breakdown per assets and hazard, as well as loss maps. For Vanuatu, there should be a TC Pam re-run using the resilience scenarios (i.e. what would the loss be if certain resilience measures were in place). 4

6 2. Other sources Use other sources/information/research (references will be provided, although the consultant will be expected to undertake independent research as necessary) to estimate the cost of the longer term impacts of: o Increased exposure: Estimate increased risk due to increased exposure (i.e., through population growth or urbanization trends) 3. Projections will be made given a set of assumptions about future developments. As the data will be more reliable for some countries than for others, it may be that more detailed estimates will be produced for one or two countries that have better data (e.g Fiji, Samoa). o climate change: In regards to sea level rise, salinization of water aquifers, more frequent flooding and droughts, changes in temperature and the associated impact on agriculture, and coastal zones. 3. Quantification Based on the outputs from the PCRAFI modeling and the other sources: o Describe the predicted risk in 2040/2050 based on increased exposure (population growth or urbanization trends) and climate impacts, with and without adaptation/resilience measures put in place; o quantify the increased risk that countries will face in 2040/2050 due to climate change and increased growth and urbanization; o estimate the level of investments in resilience (investments can be hard such as infrastructure, or soft such as land use planning) that would be needed to bend the cost curve and reducing economic losses; o For atoll islands, estimate the cost and benefits of hard investment in resilience (i.e., through atoll raising, land reclamation, coastal protection, and desalinization) compared to the cost and benefits of migration; o Quantify net savings from various disaster resilience scenarios Section 3: Cost effective adaptation and risk reduction strategies and options Based on the findings from Section 1 and Section 2, this section will: Provide guidance and recommendations to policy makers on what type of resilient investments and adaptation/risk reduction strategies would: (i) be appropriate; (ii) respond to the needs; and (iii) be cost effective; and Propose a decision making framework. Discussion within this section will present various adaptation/risk reduction strategies. Consideration will be given to whether physical resilience (i.e. infrastructure) the best option comparative to softer options (i.e., social safety nets, emergency preparedness, financial protection, land use planning). The discussion within this section will differentiate countries vulnerable to rapid onset disasters versus countries, which are vulnerable to longer term impact of climate change. It will also identify the differing vulnerabilities faced by atoll countries. 3 PCRAFI modeling of this is not feasible within the proposed time frame for this work 5