Insurers consider likelihood of catastrophic storm in the Pearl River Delta
There is pain in rain for insurers that must pay out millions in claims as companies cast a wary eye at the industries in flood-prone areas of China
Here is a scenario for the not too distant future. Global warming has raised sea levels and the extra heat is powering strong winds and driving an ocean of moisture into the atmosphere. A typhoon as potent as Superstorm Sandy, which walloped the US east coast in 2012, hits the Pearl River Delta, knocking out power, bridges and roads, and levelling buildings.
It takes weeks to get the region's factories back into operation. This upends global supply chains, similar to how Bangkok floods in 2011 crippled the Japanese car industry for months.
The humanitarian impact is massive. Millions go without fresh water, power, sanitation and food, resulting in the loss of thousands of lives.
That a major, catastrophic storm will hit the delta in the years ahead is not so much a probability as an inevitability. Climate change is amplifying world weather conditions. With much of the southern part of the Pearl River Delta just 30 to 40 centimetres above sea level, and with a population of 42 million and an economy half the size of Australia's, the region is the world's most-exposed flood zone, according to Swiss Re.
"Clearly one of the vulnerabilities is the Pearl River Delta, where you have huge gross domestic product … [The risks are] both precipitation causing flooding, rising sea levels and increased wind, and if you have increased wind with rising sea levels, you can write the script," said John Nelson, the London-based chairman of the insurance firm Lloyd's.
