New research into the relationship between climate change and socio-economic turning points

Published: May 25, 2022

Climate change can cause sudden socio-economic turning points, such as large-scale bankruptcies in low-lying ski resorts, house price collapses due to sea level rise or large-scale disruption of the road network due to floods. Kees van Ginkel (Deltares) spent four years researching these types of ‘tipping points’. This week he will present the results, which have been published in various journals, at a scientific conference in Vienna (EGU).

sea ​​level rise

The ever-rising sea level is a ‘game changer’ that can lead to socio-economic turning points in certain circumstances, Kees says. “There are more and more stories about how sea level rise can lead to a deterioration of, for example, the Dutch investment climate or the housing market. For example, the Dutch central bank recently published a study showing that coastal floods could lead to financial instability. “The IPCC indicates that sea levels could rise by 0.3 to 1.0 m in 2100, depending on global warming. However, 2 m in 2100 and 5 m in 2200 cannot be ruled out due to uncertain processes in the ice sheet.

Without adaptation, it will have major consequences for the coastal areas, but the adaptation measures themselves will also fundamentally change the coastal areas. Kees stresses that stories about the consequences of this need to be investigated systematically: “can they really happen, or are they speculations?”

Deltares and VU have developed a method to systematically examine such stories. The method was applied to an imaginary coastal city, which is a model for many cities around the world. It was investigated how the house price could develop up to the year 2200. Many uncertainties had to be taken into account. How much sea level rise can we expect up to 2200? What storms could hit the city during that time? Will homebuyers consider the risk of flooding when buying their home? Will sea level rise be predicted in good time by very proactively raising the dikes, or will it wait until something almost goes wrong, or even a flood actually takes place? And is there still enough time to raise the dike before the next storm hits the city?

Model experiments

The researchers conducted 396,000 model experiments to find out under what conditions a housing market crash could occur. These turning points appear to occur especially during extreme sea level rise scenarios, as a result of the accelerated melting of the Antarctic ice sheets. Only with very proactive flood management can the rate of sea level rise be kept up to date, with a reactive policy there is a real chance of turning points.

A crash in the housing market may also occur under the less extreme, more likely scenarios for sea level rise. Interestingly, this only happens when panic breaks out in the housing market. This can happen if, after a long period of few storms, a flood or near-flood suddenly occurs, which causes the initial underestimation of the risk to suddenly turn into a sharp overestimation of the risk. If the housing market were to behave economically rationally, this effect would not occur. In practice, the housing market often does not behave rationally.

Ski resorts and transport networks

The method was also used to examine tipping points in winter sports areas. This research, led by the University of Zurich, shows that low-lying ski resorts (<2000 m) in the Swiss Alps are already at high risk of bankruptcy before 2050. Making artificial snow as an adaptation measure is not enough to avoid this turning point. Kees explains: "In fact, these areas face a difficult dilemma. If they continue with the same business, they will sooner or later face a turning point. The alternative is to deliberately create a tipping point, by switching to a radically different form. "Business management, where they are far less dependent on revenue from winter tourism. Many winter sports areas are already using their infrastructure to bring up hikers and mountain bikers in the summer. The problem with this is that there is currently even less money to be made on this."

In a third application, we have looked at how the road network can be disrupted on a large scale by river floods. For 30 European countries, it was investigated whether it could lead to a turning point where important economic regions are no longer well connected. There seem to be big differences between the European countries. Belgium, Estonia, Lithuania and Portugal, for example, appear to be relatively robust, while small mountainous countries such as Slovenia, Macedonia and Albania can disrupt up to 40% of important transport links. Such an incident is an example of a tipping point where a relatively small flood results in an abrupt and disproportionate disturbance of the road network. The identification of these is politically relevant for the national road authorities because they give a first-hand impression of the places where a relatively small intervention in advance can mean a great improvement in the robustness of the network.

Conclusion

The red line through these applications is that climate change can lead to different socio-economic turning points. At the same time, many problems can be prevented with targeted adaptation measures. Sometimes these adaptation measures are so drastic that one can speak of a conscious, positive turning point towards a better situation. Kees concludes: “An interesting insight is that in some cases it is better to force a desired turning point consciously than to wait for an unwanted turning point to happen to you. “Ultimately, even after a major climate catastrophe, a new economic equilibrium will emerge, but we can prevent a lot of misery by being proactive and focusing on adaptation now.”

Surveys:

Coastal town turning points:

van Ginkel, KCH, Haasnoot, M., Botzen, WJW, 2021, under revision. A framework for identifying climate change induced socio-economic turning points. http://dx.doi.org/10.2139/ssrn.3935775 [preprint]†

Ski resorts:

Ashraf Vaghefi, S., Muccione, V., van Ginkel, KCH, Haasnoot, M., 2021. Use of decision making under Deep Uncertainty (DMDU) approaches to support adaptation to climate change of Swiss ski resorts. environment. sci. Politics 126, 65–78. https://doi.org/10.1016/j.envsci.2021.09.005

European road network:

van Ginkel, KCH, Koks, EE, de Groen, F., Nguyen, VD, Alfieri, L., 2022, under pressure. Will floods “rock” the European road network? A robustness assessment. transp. res. Part D Transp. environment.

Overview of tipping points:

van Ginkel, KCH, Botzen, WJW, Haasnoot, M., Bachner, G., Steininger, KW, Hinkel, J., Watkiss, P., Boere, E., Jeuken, A., de Murieta, ES, Bosello, F., 2020. Climate change induced socio-economic turning points: review and consultation of stakeholders for policy-relevant research. environment. res. easy. 15, 023001. https://doi.org/10.1088/1748-9326/ab6395

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