Strengthening Climate Resilience with Satellite Data

In this article, we’ll explain:

- Climate risks, and their types, including physical, transition, and liability risks.

-The necessity of assessing climate risks for effective adaptation and resilience planning.

- The role and benefits of using satellite data for accurate and real-time climate risk analysis.

Climate Change: A Pressing Reality

Climate change is an undeniable reality, profoundly impacting our lives, ecosystems, and economies. With rising temperatures, altered precipitation patterns, and frequent extreme weather events, the urgency for effective climate adaptation strategies is paramount. As scientists continue to reinforce the severity of climate change, it becomes evident that proactive measures are essential to mitigate these impacts and build resilience.

Satellite data provided by platforms such as Orbify offer a promising solution to enhance our resilience against climate risks such as droughts, floods, and wildfires. The integration of advanced technologies allows for accurate monitoring, prediction, and management of these risks, providing critical insights that drive informed decision-making and sustainable practices.

What is Climate Risk?

As billions of people face extreme heat warnings, droughts, wildfires, and catastrophic flooding, our vulnerability to climate change has never been clearer. We must urgently start identifying the physical climate risk most likely to impact our assets, so that we can adapt to the inevitable climate volatility yet to come.

But what exactly is climate risk, why does it matter, and what can be done about it?

Understanding climate risk is crucial for many reasons. The consequences of climate change can exacerbate social inequalities and harm public health. The World Health Organization estimates that between 2030 and 2050, climate change might cause approximately 250,000 additional deaths per year from malnutrition, disease, and heat stress. Additionally, extreme weather events can lead to loss of life, displacement of people, and increased poverty. According to the Task Force on Climate-related Financial Disclosures (TCFD), these changing climate conditions also have potential financial implications for organizations and the global financial system at large. Such implications include property and infrastructure damage, operational disruptions, and increased insurance claims. Investors are increasingly considering climate risk in their investment decisions. Meanwhile, governments and other entities worldwide are developing new regulations and standards that require businesses to assess and disclose their climate-related risks.

Types of Climate Risk

Climate risk can be broadly categorized into three types:

Physical Risks

These are direct threats posed by changing climate conditions. They include acute risks from extreme weather events such as hurricanes, floods, heatwaves, and droughts, as well as long-term shifts in climate patterns, such as rising sea levels and increasing temperatures. Physical risks can damage infrastructure, disrupt operations and supply chains, and lead to loss of life and economic productivity. For example, coastal flooding risks (climate shock) are exacerbated by sea-level rise (climate stress).

Transition Risks

These risks arise from the process of adjusting to a low-carbon economy. As industries, businesses, and communities transition away from fossil fuels, those reliant on these resources may face significant financial losses and socio-economic disruptions. Transition risks encompass policy and regulatory changes, technological advancements, and shifts in consumer preferences.

Liability Risks

These risks involve legal actions taken by individuals or entities seeking compensation for losses due to climate change. This can include lawsuits against companies or governments that have failed to mitigate their contributions to climate change or adapt to its impacts. Liability risks can result in significant financial and reputational damage for the accused parties.

Who Does Climate Risk Impact Most?

Financial Impact

Climate change can significantly impact the global economy in various ways. Extreme weather events, such as hurricanes, floods, and wildfires, can cause substantial damage to infrastructure, disrupt supply chains, and reduce productivity. According to estimates, these events caused an estimated EUR 650 billion in economic losses across the EU from 1980 to 2022. Increased temperatures and shifting precipitation patterns can adversely affect agriculture, leading to reduced crop yields and higher food prices. Water scarcity and stress can hinder industrial operations and increase operational costs, with water stress and fluvial flooding expected to be the second- and third-mostsignificant sources of financial impact for companies in the , generating up to 28% per annum in asset value losses by the 2050s. Additionally, as the climate changes, there are growing pressures on financial systems, with rising insurance claims and the need for substantial investments in adaptation and resilience measures. For example, climate-related impacts could reduce global income by 19% over the next 25 years, amounting to $38 trillion in annual losses by 2050. These factors combined pose a serious threat to economic stability and growth worldwide.

Societal Impacts

Climate change has profound societal implications, affecting various aspects of human life, from health and living standards to culture and social structures. It may exacerbate medical issues, from heat-related illnesses to driving the spread of diseases like malaria and dengue. Changes in weather patterns can complicate access to clean, safe water—which is essential for human health, agriculture, and energy production. Climate risk often disproportionately affects the most vulnerable populations, including those in low-income countries, indigenous communities, the elderly, and children. This can exacerbate existing social inequalities and lead to increased poverty and marginalization, as well as displacement, instability, and conflict. According to the World Bank, without climate action, more than 100 million additional people might be living in poverty by 2030.

Business and Financial Impacts

For businesses, climate risk can manifest in various ways. Physical risks from extreme weather events and changing weather patterns can damage assets, including buildings, equipment, and infrastructure. They may also disrupt supply chains and production processes and make it more difficult to find labor and maintain safe working conditions. Climate risk can lead to higher expenditures for businesses, including increased insurance premiums or high compliance costs to meet new regulatory standards. At a macroeconomic level, climate risks can pose systemic threats to financial stability. For instance, a sudden revaluation of assets due to climate risks might trigger a broader financial crisis. And as stakeholders become more sensitive to climate risk, taking steps to assess and mitigate it may become an essential part of a business’s decision-making approach.

Assessing Climate Risk

Assessing climate risk involves identifying and quantifying the potential impacts of climate change on an organization or region. This includes finding likely physical climate hazards, such as extreme weather events and changing climate patterns, as well as transition risks associated with shifting to a low-carbon economy. Organizations must assess their susceptibility to these hazards based on a variety of factors and measure their likely impacts in the future. For example, a company might evaluate how many of its facilities are located in flood-prone areas. To quantify those impacts, organizations must estimate the damage in financial terms, calculating potential repair costs from physical damage, lost revenue from operational disruptions, or compliance costs from new regulations.

Tools for Climate Risk Assessment

Satellite data plays a vital role in climate risk assessment by providing accurate and timely information on environmental conditions. This data helps monitor changes, predict extreme events, and assess the impacts of climate change on various regions. The benefits of using satellite data include its ability to cover vast areas, offer high-resolution images, and provide near-real-time updates, making it an essential tool for effective climate risk management.

Orbify Features for Climate Risk Assessment:

1. Comprehensive Area Overview:

- Provides a detailed overview of the area to be analyzed, including boundaries, relevant details, land cover types, and changes in land use categories over time.

2. Flood Risk Analysis:

- Incorporates various parameters into a multi-criteria analysis, such as meteorological data, historical flood events, terrain morphology, hydrological soil profiles, and proximity to rivers and floodplains.

- Identifies elements contributing to the likelihood of a flood event and assesses potential impacts on specific regions.

- Compares annual precipitation values against climate normals to identify precipitation anomalies influencing flood risk.

3. Drought Risk Assessment:

- Utilizes the Combined Drought Indicator from the European Drought Observatory to measure deviations from normal precipitation levels.

- Employs 1- and 3-month analyses to capture short- and medium-term precipitation deficits.

- Analyzes soil moisture at both surface and root zone levels using the standardized precipitation index and soil moisture anomaly values.

- Incorporates the Remote Sensing Index fraction of observed photosynthetically active radiation to assess vegetation health and productivity.

4. Fire Risk Assessment:

- Employs a multi-criteria decision-making tool to analyze various elements affecting fire risk and rank areas based on their risk profiles.

- Utilizes the Canadian Fire Weather Index to assess fire risk based on weather conditions, including temperature, humidity, wind speed, and precipitation.

- Analyzes historical forest loss due to fire over a 15-year span to identify regions prone to recurrent fires.

- Assesses extreme heat events to detect regions prone to high temperatures that affect fire behavior.

5. Non-Permanence Risk Assessment:

- Identifies areas with high risk due to fires, floods, and droughts to inform planning and implementation of more resilient carbon offset projects.

- Addresses the risk of carbon sequestration projects being compromised by natural events, ensuring the long-term effectiveness of these initiatives.

By utilizing Orbify’s platform, organizations can effectively assess and manage climate risks, ensuring better preparedness and resilience against the adverse effects of climate change.

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