Uncertainty and risk management of climate change impacts on infrastructure assets

Abstract

Infrastructure assets are a constrained resource in India and face stress from population growth, increased urbanization, resource variability and use, and economic growth. Climate change is an additional stress which has a potential to severely affect the life and utility of such long life assets. There is uncertainty about the future state of climate, while investments in infrastructure have to be made now. As a result of this uncertainty, most infrastructure assets only take into account the normal variability of climate. This poses incremental and unaccounted risks for the economic utility of the asset. Any consequent economic losses can be crucial for the economy. This thesis explores the conceptual basis of vulnerability, the present and future economic losses posed by the changing climate, risk management through adaptation planning under uncertainty and policy implications in the context of two case studies of Konkan Railways and Mundra port. In Konkan Railways heavy rainfall during the monsoon period is a critical climate change variable for safe operations. The case study understands the inter-linkages among various system condition variables and sustainable development variables of Konkan railways with rainfall. Based on historical data, a rainfall threshold of 200mm in two days has been calculated. Since Konkan Railways is spread across three states, the locational differences have been identified. The southern part of Ratnagiri district is particularly vulnerable to extreme rainfall events and the changing climate raises concerns for the future safety of the railway track. The accident costs differ in goods and passenger trains and depend upon the location and the intensity of accident. Just to maintain the existing levels of accident status, Konkan Railways would need an investment of 273 million rupees per year by 2050 for the RCP 4.5 scenario. Projections for the investment trade-offs between geo-safety investment and forest cover under have been presented for RCP 4.5 and RCP 8.5 scenarios for mid and end-century. Investment in geo-safety works alone cannot reduce the probability of adverse events beyond 0.029 in the north and 0.008 in south in the event of extreme rainfall. Mundra port is a prominent private of the country and is affected by cyclonic disturbances. 120 year trends show an increase in frequency of cyclonic disturbances in the Arabian Sea. Port development has caused extensive damage to the mangrove plantation along the coast which is undesirable for sustainable protection against storm flooding. A vulnerability index has been created for various future climate scenarios. Insurance cover emerges as a prominent risk management strategy. In future the vulnerability of the port is going to increase. In such a case, insurance sector can play a pivotal role in inducing risk management practices at the end of the port. An important conclusion is that investment in sustainable adaptation options must be emphasized. Assessment of reverse impact has to be given due importance in infrastructure planning. Research in this domain will also help in making future infrastructure choices more climate change resilient. There are public finance and economic growth implications, as the appropriate adaptation choices will limit economic exposure to climate-induced damages and protect existing infrastructure.