How to build climate resilience into the construction industry

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Ommid Saberi, Senior Industry Specialist – Global lead for Building Resilience Index programme, IFC, World Bank Group & Naz Beykan, Climate Resilience Consultant, IFC

• Natural disasters are estimated to have caused $210 billion worth of damage worldwide in 2020 alone, with much of this damage to buildings and other infrastructure.
• The need for investment in more resilient buildings is clear, but many countries lack the data to properly assess these risks.
• Tools that help gather and analyse this data could save lives, minimise construction costs and protect investment in development.

The most recent report from the Intergovernmental Panel on Climate Change (IPCC) laid out a bleak future: adapting to climate change is going to become progressively harder if we fail to invest in protecting ourselves now.

Examples of disasters from last year alone show the growing urgency. Multiple tornadoes left a trail of destruction across the midwestern United States, while fatal rains inundated swathes of land from China to South Sudan and forest fires burned through millions of acres around the Mediterranean Sea.

Physical infrastructure is on the frontlines of this emergency. The IPCC report shows buildings in urban areas are already exposed to rapidly intensifying risks arising from a combination of extreme events and growing populations. While many cities have adaptation plans in place, few are being executed as thoroughly as they should.

For the private sector, the implications are clear. According to some estimates, disasters caused $210 billion worth of damage around the world in 2020 – a significant increase on 2019’s figure of $166 billion. In the most exposed countries, such as in the Caribbean, rebuilding after a disaster has become prohibitively expensive. Hurricane Maria in 2017, for instance, cost Dominica more than 200% of its Gross Domestic Product.

Investing early to construct more resilient buildings in secure locations will save lives, minimize costs, and protect development investments. The net benefit of investing in the resilience of infrastructure in low- and middle-income countries would amount to $4.2 trillion, with a $4 return for each $1 invested.

Data needed to assess risk

The business case is clear. So why have countries around the world not yet put these principles into practice?

Emerging economies face a shortage of reliable data when it comes to assessing the costs and benefits of investing in resilient infrastructure. The absence of metrics that consistently assess local climate risks and lack of disclosure about the current state of urban infrastructure are two obstacles when it comes to directing limited resources to improve resilience. This has made it much more difficult for insurers, developers, investors, and governments to make evidence-based decisions and shape the real estate market of tomorrow.

Several countries have piloted efforts to fill those data gaps. For instance, the government of the Philippines – a hotspot for a range of natural disasters – has developed a mobile application allowing users to generate their own local maps showing the level of hazards associated with earthquakes, typhoons and other potential disasters.

The tool is now being used by one of the country’s largest financial institutions, Bank of the Philippine Islands. The bank uses it to evaluate its portfolio and clients’ exposure to physical climate risks and makes key investment decisions accordingly. Even when adequate data about the potential risk from extreme weather events is available, however, addressing vulnerabilities through retrofitting and upgrading existing structures remains challenging.

Building Resilience Index measures exposure to hazards

To attempt to solve this challenge, the International Finance Corporation (IFC) has developed the Building Resilience Index (BRI). This online tool uses a standardised letter grade rating system to evaluate a building’s capacity to stand up to shocks and continue to function. The tool can be applied to residential properties, schools, hospitals, or any other type of construction.

Developed with support from the governments of Australia and the Netherlands, BRI measures a building’s exposure to natural hazards and factors in the upgrades already made to mitigate these risks.

The latest IPCC report shows buildings in urban areas are already exposed to rapidly intensifying risks arising from a combination of extreme events and growing populations. —Ommid Saberi. Naz Baykan, IFC

BRI effectively mirrors and complements IFC’s EDGE app, which certifies green buildings by adding a climate adaptation lens to our work in this industry. For instance, is a building situated in an area that’s prone to floods? Does it have the structural design to withstand inundations and keep occupants safe?

Data and tools like this that support climate risk assessment for infrastructure will have a number of enabling effects on the market:

• Allowing a diversity of stakeholders – including financial institutions, insurers, and governments – to assess and disclose the resilience of their projects or portfolios, and to make more informed decisions on where to invest.
• Helping developers with limited access to capital for designing and constructing more resilient buildings to find new ways of attracting investors and tap into new sources of municipal finance.
• Enabling private sector entities to work more closely with governments, shaping land use regulations and building codes that govern where and what to build.

The Philippines was a natural candidate for the BRI pilot project, but it is anticipated that many more countries around the world will benefit from such efforts to build climate resilience into the world’s infrastructure.