CONFEDERATION OF ASIA-PACIFIC CHAMBERS OF COMMERCE AND INDUSTRY (CACCI)

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1 CONFEDERATION OF ASIA-PACIFIC CHAMBERS OF COMMERCE AND INDUSTRY (CACCI) Policy Paper on Flexible Responses to Environmental Uncertainty and Infrastructure Resolved as of 3 rd October,. A. BACKGROUND 1. The Asia Pacific is the home for over 60% of the world s population and is becoming the dominant power in the global economy as growth in Europe and North America falters under the weight of the current economic crisis. The Asia Pacific region is also the home to some of the world s richest and poorest people along with some of the fastest growing countries anywhere on the planet. 2. Rapid growth in populations has placed a huge pressure on global resources as this number of people demand food, clothing and shelter. Conversion of land from previously relatively pristine conditions to urban use and food and fibre production has and will continue to have a substantial impact on the environment both locally and globally. 3. The region also experiences relatively regular episodes of natural disasters from various causes. The most recent and most devastating of these have been related to seismic activity which then produced tidal waves which had devastating effects in Japan and Indonesia and earthquakes in other regions such as New Zealand, China and Pakistan. 4. The Asia Pacific region is also home to many of the world s most vulnerable people and species when it comes to climate change and its potential impacts. Whilst it is acknowledged that there is an open debate about the trajectories and causes of climate change, a 2006 study by the Australian CSIRO 1 found that within the region there could be a degree C increase in temperature by 2030 and 1-7 degree C rise by The impact of this could be substantial changes in monsoon patterns, increased intensity of tropical storms, desertification in some regions and a potential sea level rise of between 3-16 cm by 2030 and 7-50 cm by The major areas for risk and concern contained in the report include: a. A high degree of spatial variability in the vulnerability of Asia/Pacific agriculture to climate change. b. The net effect of climate change on regional and national economies is projected to be largely negative. 1 Climate Change in the Asia/Pacific Region, CSIRO,

2 c. Coastal communities at risk of inundation, especially in the lowlying river deltas of Bangladesh, India, Vietnam, and China as well as the small island states. d. Reduction in ecosystem and biodiversity resilience through land use change. e. Disease related mortality and cold and heat related health impacts both positive and negative. Changing patterns of temperature and rainfall will likely cause shifts in the distribution of dengue and malaria-carrying mosquitoes. f. Water resources may become more stressed and variable. 6. CACCI acknowledges global concern regarding possible changes to the earth s climate caused by the enhanced greenhouse effect and accepts that the weight of scientific evidence increasingly supports the enhanced greenhouse hypothesis. Although the economics and the science guiding policy makers on this issue continues to develop, and sometimes is called into question, CACCI believes that governments and the community must continue to monitor and systematically address this issue in order to minimise detrimental impacts to economies and communities. 7. If some of the predictions come to fruition, some countries face inundation from potential sea level rises, such as the low-lying Pacific island of Tuvalu. Should inundation occur, issues arise with the sovereignty and recognisability of the inundated country, such that the boundaries of sovereign ownership of land and sea cease to be recognised at international law. This issue is not limited to the complete inundation of low-lying islands, since even permanent coastal inundation has the capacity to alter the sovereign rights of a country in waters off its coastline, and there is potential for national economic loss as a result. These considerations lend further weight to CACCI s encouragement for the continued systematic monitoring of the economics and science guiding policy developers in the region. 8. Ultimately, any balanced assessment of the various policy options for addressing the enhanced greenhouse effect will be impossible without further impartial and rigorous research on its climatic, environmental, social and economic ramifications. It must also continue to consider the hierarchy of risk management associated with the potential for disaster from other causes. 9. CACCI therefore encourages continued impartial research on climate change, which is fundamental in addressing uncertainty about the global effects of greenhouse gas emissions arising from human activities and the even greater uncertainty about their regional impacts - 2 -

3 Meeting scientific uncertainty with realistic flexibility: a paradigm shift in infrastructure and disaster recovery 10. Any climate change related response to infrastructure management must by necessity be long term. Disaster management for any single event, however, is acute and therefore short term in its response. 11. Planners and designers manage these risks and known variability by planning against recorded information from previous events and to a risk profile of say 1 in 100 years, etc. Part of the difficulty in infrastructure planning for climate change is understanding what the risk profile for the future is. Clearly this is a difficult task, and being overly conservative also increases the costs of construction if planners now need to design infrastructure to withstand 1 in 1000 year events. 12. Australia, for example has issued some information to local planning authorities about the potential for sea level rise and coastal erosion based on climate change predictions. The previous State Government in NSW implemented a policy of mandatory consideration of the predictions. In one particular location, this resulted in the local authority declaring some particular streets and homes were not sustainable and so in a planned retreat policy, banning any further development in that area. The result was a huge economic cost to the individual home owners who already had houses in that area as they were now regarded as unsalable and presumably uninsurable. 13. With the change of Government in NSW, the current Government has withdrawn this policy. It highlights though, the severe impacts of planning decisions and the risks to developers from trying to predict the future based on the current assumptions. 14. Similarly, communities have lived along coastlines across the CACCI region for thousands of years. Even with the best planning, unpredictable individual events such as the Fukushima earthquake and subsequent tidal wave, are difficult to manage. 15. Given the already existing level of coastal development, it would be very hard for current authorities to relocate entire cities to new locations where they would never be at risk of a disaster. Risk of disaster is ever present and climate change should simply be considered as one of the many potential causes for dislocation of communities and economies. 16. Uncertainty as to the causes of environmental disasters does not detract from a range of possible considerations when developing responses, particularly in relation to flexibility of infrastructure and disaster recovery

4 17. In the wake of an increase in environmental disasters in the region, it is important for CACCI member chambers to raise awareness about innovative methods of infrastructure development that meet environmental challenges, particularly in coastal zones and along waterways, where changes can be most dramatic and recovery difficult. 18. There are three traditional bases of managing infrastructure in the event of a radical environmental change. The first is to attempt to continue to use the infrastructure, the second is to abandon the infrastructure altogether, and the third is to modify the disrupted infrastructure to suit the new environment. With an increasing number of natural disasters in the region, however, the continual employment of these management modes is increasing in cost, and unlikely to be sustainable in the long term. 19. Free market forces provide a natural economic basis for adaptation of infrastructure in a changing environment, where competition can present a range of alternatives in the face of disruption. However, where the frequency of natural disasters is on the rise, additional considerations must be encouraged to cushion dramatic change such as the loss of land to inundation, or the destruction of major infrastructure components. These cushions are found in flexible infrastructure arrangements CACCI should encourage support for a shift towards greater flexibility in infrastructure such that it may be designed and constructed to be readily adaptable to environmental changes from the outset as opposed to traditional notions of inflexible, unchangeable infrastructure. A focus should be given to disposable infrastructure along coastlines that may be easily dismantled or moved to suit environmental changes. Immovable infrastructure such as sewerage works should be located well away from coastal regions at risk of inundation during their economic life, in order to better manage disaster recovery following dramatic environmental events, particularly inundation by coastal waters. Innovation should be encouraged where infrastructure that is inherently inflexible, such as power, telecommunication and gas supplies is concerned. 21. A further issue requiring attention in the event of disaster and dislocation is the impact on human infrastructure. Labour markets need restoration, and even in short term disaster responses, the right skills need to be found to respond to the recovery and rebuilding tasks. 22. Experience in Banda Aceh, Indonesia, after the Indian Ocean tsunami, highlighted the value of labour market recovery programmes. 2 A.D. Gordon, Water and Climate: Policy Implementation Challenges, Proceedings of the 2 nd Practical Responses to Climate Change Conference, 1-3 May 2012, Canberra, Australia

5 B. POLICY PRINCIPLES 23. CACCI should adopt the following policy principles when considering responses on this subject: a. Environmental disasters have always existed and can be expected to continue. The planning and development of critical infrastructure should be based on reasonable expectations of risk of any one disaster within the economic life of the development. b. Given that climate change is a long term change and the predictions are uncertain, the financial analysis for the project should reflect the climate range predicted for the economic life of infrastructure project. c. The strategic approach to climate change should facilitate adjustment within the economy while recognising the dynamic nature of economic change and investment opportunities. d. Market-based mechanisms usually provide a flexible and least costly means of meeting infrastructure disruption in disaster recovery, however due to sudden environmental change and growing frequency of disasters, there may be a need for modern managerial approaches involving the use of flexible infrastructure. e. Human infrastructure and the recovery of labour market is a key component to economic and social recovery in the event of natural disasters. C. POLICY OBJECTIVES 24. The adoption of a principled comprehensive greenhouse policy framework must reinforce the following national policy objectives and priorities: a. No one group in society bears the cost of climate change adaptation schemes. b. Jobs are not sacrificed. c. Competitiveness of efficient industries is maintained. d. Innovation in vulnerable infrastructure is encouraged. e. Costs of post-disaster recovery should be minimised in the long term. f. Labour market skills exist to add value to the response

6 D. ACTIONS 25. CACCI and its membership should: a. Encourage the continued systematic monitoring of the economics and science guiding policy development in the region. b. Encourage continued impartial research on climate change, which is fundamental in addressing uncertainty about the global effects of greenhouse gas emissions arising from human activities and the even greater uncertainty about their regional impacts. c. Raise awareness about innovative methods of infrastructure development that address the various risk challenges, particularly invulnerable zones, where changes can be most dramatic and recovery difficult. d. Promote an understanding of the hierarchy of relative risks of disaster and appropriate planning approaches. For example the risk of disaster caused by seismic activity as opposed to the risk of potential climate change. e. Encourage governments and local communities to assess the capabilities of local labour markets and attend to any skills which exist and which may be called on to support post disaster recovery. f. CACCI member chambers have a role in promoting awareness of the possibility of flexible infrastructure, particularly near coastal regions and in waterways. g. CACCI to facilitate collaboration between member chambers on a needs basis regarding climate-related crisis management techniques within Asia and the Pacific region. October 3,

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