7.1.4 Conclusions of the IPCC Third Assessment Report

The Third Assessment Report of IPCC Working Group II (TAR) included a chapter on Human Settlements, Energy, and Industry (Scott et al., 2001) and also a separate chapter on Insurance and Other Financial Services (Vellinga et al., 2001). Together, these two chapters in TAR correspond to a part of this one chapter in the Fourth Assessment Report; a substantial part of this chapter is devoted to subject matter not directly addressed in previous IPCC reports (e.g., services, infrastructures and social issues).

The first of the TAR chapters (Chapter 7) was largely devoted to impact issues for human settlements, concluding that settlements are vulnerable to effects of climate change in three major ways: through economic sectors affected by changes in input resource productivity or market demands for goods and services, through impacts on certain physical infrastructures, and through impacts of weather and extreme events on the health of populations. It also concluded that vulnerability tends to be a function mainly of three factors: location (coastal and riverine areas at most risk), economy (those dependent on weather-related sectors at most risk), and size (larger settlements at greater aggregate risk but having more resources for impact prevention and adaptation). The most direct risks are from flooding and landslides due to increases in rainfall intensity and from sea-level rise and storm surges in coastal areas. Although some areas are at particular risk, urban flooding could be a problem in any settlement where drainage infrastructures are inadequate, especially where informal settlement areas lack urban services and adaptive capacities. Rapid urbanisation in relatively high-risk areas is a special concern, because it concentrates people and assets and is generally increasing global and regional vulnerability to climate-change impacts. Other dimensions of vulnerability include general regional vulnerabilities to impacts (e.g., in polar regions), lack of economic diversification and fragile urban infrastructures.

Possible impacts of climate change on financial institutions and risk financing were the focus of a separate chapter (Chapter 8) in the TAR. This chapter concluded that climate change is likely to raise the actuarial uncertainty in catastrophe risk assessment, placing upward pressure on insurance premiums and possibly leading to reductions in risk coverage. It identified a significant rise in the costs of losses from meteorological disasters since the early 1980s which, as has been confirmed by the AR4 (see Chapter 1), appeared to reflect an increase in catastrophe occurrence over and above the rise in values, exposures, and vulnerabilities.