In this article, Emma Howard Boyd, Chair, Environment Agency talks about the need for our infrastructure to be more resilient if we are to avoid financial as well as climate chaos, in the wake of the UK seeing record soaring temperatures and the pressure this placed on housing, infrastructure, services, and communities.
The UK experienced temperatures of over 40°C for the first time on Tuesday 19 July 2022. Penny Endersby, Met Office Chief Executive said: “Here in the UK, we’re used to treating hot spells as a chance to go and play in the sun. This is not that sort of weather. Our lifestyles and our infrastructure are not adapted to what is coming.”
That Tuesday, I managed to travel by train from London to Bristol in the cool of the morning. However, I was lucky as trains across the UK were cancelled owing to lines failing in the extreme heat. The UK Minister for Transport said: “We’re going to see this more. It’s a huge infrastructure to replace. Decades, actually, to replace it all. Ditto with things like tarmac on the roads and obviously there are millions of miles of roads in total. There is a long process of replacing it and upgrading it to withstand temperatures, either very hot or sometimes much colder than we’ve been used to, and these are the impacts of global warming.”
Adaptation is not only about risk management. Getting ahead of climate shocks actually delivers greater prosperity and this will only become more pronounced as the years go by. Halfway through COP26 in 2021, people in Boston, Lincolnshire, were protected from the highest tide of the year by the newly opened Boston Barrier; the Thames and Hull barriers were also operating at this time. The Boston Barrier scheme is estimated to deliver over £1.4 billion in economic benefits to the town and surrounding area by encouraging investment, improving resilience and well-being, and by protecting historic assets.
Since the scheme’s inception almost £10 million has been invested in the local economy by using local suppliers where possible. It was made with 14,000 tonnes of low carbon concrete, 90 percent of the weight of the whole structure. It was also the first major construction project where the Environment Agency mapped work against the UN’s Sustainable Development Goals and it was also designed by a gender balanced team.
Last year, the Environment Agency completed the government’s £2.6 billion, six-year capital flood programme, on time and on budget. It means 700 flood schemes are better protecting more than 300,000 homes, nearly 600,000 acres of agricultural land, thousands of businesses, and major pieces of infrastructure. The government has increased the budget of the new programme to a record £5.2 billion.
We know this investment works. In February 2022, the UK’s Meteorological Office named three major storms in one week for the first time. Sadly, 400 homes flooded, but 50,000 properties were better protected. However, the UK’s 2021 National Infrastructure and Construction pipeline sets out plans for nearly £650 billion of public and private infrastructure investment by 2030. The Infrastructure and Projects Authority has analysed over £200 billion of this, up to 2024/25. For the equivalent period, England has around £3 billion of public funds allocated to flood and coastal defences. By comparison, this looks like a thin green line of defence.
The Environment Agency delivers blue, green, and grey infrastructure to provide resilience to climate change. But we need all infrastructure to be more resilient if we are to avoid financial climate chaos. Developers in England do not have to mitigate against the heatwaves of the future. The Institution of Civil Engineers’ survey “What makes good design?” said one of the most limiting factors to progress on reducing greenhouse gas emissions and climate adaptation is that “it’s not part of the project brief.”
In May 2022, the Bank of England’s first climate stress tests showed that unless action is taken to curb rising temperatures and sea levels in the UK, banks and insurers will end up taking on nearly £340 billion worth of climate-related losses by 2050. This action will require collaboration between the public and private sectors. However, around the world, just 5 percent of climate finance goes towards resilience and virtually none of that comes from the private sector.
Businesses and public sector organisations should be encouraged to assess their climate risks and develop plans in response. If a local council is approving investment in new housing, or roads, or a shopping centre, they must demand that climate resilience runs through the veins of the project.
More work is needed to develop a strategic approach to managing climate risks. I believe the future lies in some form of adaptation standards. Presently, we do not know what the optimum level of investment is for UK climate adaptation, or how this should be balanced between the public and private sectors.
The government could begin to address this by asking the Treasury to commission a review to assess the economics of resilience. In the same way the 2006 Stern review on climate change helped reach national consensus on a net zero target, this assessment would inform how we plan and budget for climate adaptation. It could consider the costs and benefits of resilient investment both nationally and by economic sectors; as well as what trajectory that investment should follow, and the appropriate balance between public and private investment.
The review should be clear-eyed on the issue that although 1.5°C of global heating is the best case climate scenario, currently a 3°C rise is the most likely and we do not fully know what that will mean. The heatwave in Vancouver was a “black swan” event. We must embed resilience so we are more prepared for unknown extremes in unfamiliar and unexpected places. A review would help to establish an overarching ambition for adaptation investment and a plan to achieve greater preparedness.
Regulation is part of the answer. Environmental regulation must work in lockstep with financial and economic regulation to ensure incentives and penalties have enough clout to drive change. The more businesses are transparent about their plans to transition to net zero and prepare for climate shocks, the easier it is to benchmark best practice, set standards and celebrate the companies that really are delivering on their commitments.
There is growing evidence of a compelling case for using nature-based solutions alongside, or instead of, traditional infrastructure. Nature-based solutions provide cost-effective adaptation. For example, natural flood management can also deliver net-zero benefits in the form of carbon capture. In May 2022, along with Defra, Natural England, and the Green Finance Institute, we announced the second round of projects funded through the Natural Environment Investment Readiness Fund, which provides grants of up to £100,000 to help organisations develop projects to the stage where they can demonstrate a return on investment.
One of the four pilot schemes is the Wyre Natural Flood Management project. This reduces flood risk to downstream communities. Over several years, interventions in the Wyre catchment will include wetland creation, leaky barriers, sloped embankments, alongside peatland and river restoration. It uses a new financial model which will see the upfront investment repaid through contracts with organisations that benefit from improvements, including water and insurance companies.
It was also the first environmental project eligible for Social Investment Tax Relief, brought in by the government in 2014, with the aim of encouraging investment in social enterprises. The use of Social Investment Tax Relief was successful in helping to bring in high net worth investors to the Wyre project. A similar style Environmental Investment Tax Relief would be a possible incentive worth exploring in the Green Finance Strategy 2.0.
As with the government’s ambition for net zero by 2050, delivering on climate resilience and nature recovery requires robust, consistent, and trusted data.
Taking the next 30 years as the near-term and a manageable lifespan for assets, we can deal with the near-term and prepare to adapt to longer term risks. In finance, the importance of disclosure and data cannot be underestimated, but while disclosure and data tell us what we need to know they do not build walls, mix low-carbon concrete, plant trees or treat water.
Last Tuesday, as temperatures reached 40°C for the first time, the London Fire Brigade took over 2,600 calls. It was said to be their busiest day since World War II. Risk management, and climate adaptation and resilience are complimentary activities. We need a plan that helps to achieve the full potential of both against the rising tide of climate shocks. This is the surest way to deliver a more prosperous and resilient country through the mid to late 21st century.