GAR 2013 Main Report

Part I - Chapter 2

activities such as golf courses; or when forests are cut down for agricultural or urban development.

According to a recent survey the external environmental costs of eleven key industry sectors rose by 50 percent from 2002 to 2010, from US$566 to 854 billion and are doubling every fourteen years. In the agribusiness sector alone, external environmental costs outweighed the sectors entire earnings (KPMG International, 2012

KPMG International. 2012.,Expect the Unexpected: Building Business Value in a Changing World. Part I.. .

). These social and environmental risks and costs are not on the balance sheets of businesses but are shared with other sectors as well as future generations.

However, risk sharing is not unidirectional. Failure by the public sector to manage risks in public infrastructure shares risks with businesses that face interruption owing to power outages or transport disruption. Similarly, failure to effectively regulate land-use or to control building standards increases risks for city regions. These risks and externalised costs are then borne by businesses.

Ultimately, however, risk sharing may have a ‘boomerang effect’ (Beck, 1992

Beck, U. 1992.,Risk Society: Towards a New Modernity., London,UK: Sage Publications.. .

), given that entities or individuals that produce these risks will also be exposed to them. From this perspective, disaster risk

is a shared risk, and businesses, the public sector and civil society all participate in its construction. Disaster risk management, therefore, must be considered a shared value—an issue that we revisit in the final chapter of this report.

(Source: UNISDR)

Box 2.2 The impact of the Thailand floods on the urban poor

Although media attention on the 2011 Thailand floods focused on the impact on supply chains in the automobile and electronics industries, there were also major impacts on the urban poor.

Located only 1–2 metres above mean sea level, Bangkok is naturally prone to flooding. But flood hazard has been magnified by urbanisation. Canals, which provided the backbone of the city’s transport network and fulfilled an important drainage function, have been filled in; dense urbanisation has decreased the area of permeable surface; groundwater extraction is causing the city to subside at a faster rate than climate change-induced sea level rise. Watersheds in the Chao Phraya river basin have been degraded, while weakly implemented urban planning and management led to the growth of both private developments and informal settlements in floodprone areas. Informal settlements, for example, often encroach on canals and are the first to be affected.

Although approximately 21 percent of the population of Bangkok was affected by flooding, this percentage increased to 73 percent of low-income households affected. The Thai Government’s National Housing Authority estimates that 90,362 homes out of a total of 135,582 were of low-income families. Five years ago, the IPCC had issued a warning of the particular vulnerability of the Chao Phraya river basin and the danger to the growing population living there (Nicholls et al., 2008

Nicholls, R., Hanson, J., Herweijer, C., Patmore, N., Hallegatte, S., Corfee-Morlot, J., Château, J. and Muir-Wood, R. 2008.,Ranking Port Cities with High Exposure and Vulnerability to Climate Extremes: Exposure Estimates., OECD Environment Working Papers, No.1, OECD Publishing., Paris,France. .

Notes

i These categories are those defined and measured empirically by the World Bank (World Bank, 2011

World Bank. 2011.,The changing Wealth of Nations : Measuring Sustainable Development in the New Millennium., Washington DC,. .

) but many other classifications exist. The items included here are only an example of the components included in each category.

ii ‘Primary’ refers to mainly mining, quarrying and petroleum.

iii Economic regions as defined by the World Bank. East Asia and the Pacific exclude OECD countries such as Australia, Japan and New Zealand.

iv A system of organisations, technology, information and resources that moves products and services from suppliers to customers.

v Figures given at 2010 prices, using GDP deflators from the World Bank database (http://data.worldbank.org/indicator/NY.GDP.DEFL. ZS). The percentage presented is the share of export to the total product sales. The performance for each fiscal year is based on data from 360–450 large automobile parts producers in any given year. vi See http://www.japia.or.jp/research/index.html.