Cities Are the Global Economy’s Anchors, but Climate Change Puts Them at Financial Risk

People have long been moving to cities for a host of reasons, mostly economic. The struggle many cities have faced, however, is that they haven’t been able to build infrastructure fast enough to keep up with population growth. Now, add the long-term risks of climate change, and many of the world’s largest cities will struggle even more to keep afloat by mid-century — literally.

A C40 Cities report released earlier this week presents a grim outlook for many of the world’s largest cities — visually and financially. At a higher level, the climate change risks are spread across four pillars: flooding, drought, healthcare and energy.

The big numbers? C40’s researchers suggest that 7 million-plus people in the largest cities will be prone to river flooding annually, costing cities a total of $64 billion annually. Add in the other costs to risks related to climate change, and that figure could approach close to $200 billion a year. To describe the costs in another way, that money which will be used to repair and bolster infrastructure after future climate change events won’t be spent on other needed infrastructure investments, nor on basic needs for citizens such as healthcare and social services.

There’s no shortage of 21st-century news accounts of urban areas that have suffered from flooding: Recent years have exposed the saga through which residents of Houston, Kuala Lumpur, New Orleans, São Paulo and Venice have endured. It’s hard to wrap our heads around the amount of water that could inundate these cities by mid-century, but C40 gives it a shot. The cities within the C40 network, say the organization’s researchers, could experience a combined river flooding of 10.5 million cubic meters annually, or, more than four times the volume of the Great Pyramid of Giza.

But it’s not only flooding that will force city leaders to face a reckoning. For every city that has little choice but to plan for excessive flooding, there are other cities that need to prepare for extreme drought. California and its cities have been in the drought spotlight during 2022, but large cities in China, India and Latin America also have the specter of severe water shortages in the coming decades. As groundwater reserves and the capacity of dammed rivers all diminish, large cities could encounter a combined surface water loss of more than 16 billion cubic meters of water by 2050 — and if you need a visualization, C40 says that’s the equivalent of Sydney’s harbor drying up 30 times over.

The data surrounding potential flooding and drought connected to climate change conjure up images of distressed infrastructure like roads, waterways and residential areas. But these climate change risks also threaten many cities’ essential services for its citizens, such as healthcare. When looking at the C40 cities, researchers concluded that approximate 2,400 hospitals across these urban areas are at high risk of floods. Almost half of those hospitals are in India alone, a sign that the country’s future economic growth (and literally, health) could confront huge challenges. To be clear, it’s not only flooding that can shut down hospitals and other healthcare services: Severe drought can also affect hospitals’ ability to deliver services, as they require copious amounts of water to remain clean and sanitized.

The fourth pillar, energy, by this point should be a seamless one to explain. Bottom line, if there’s too much water, and especially if there’s far from enough, now we’re talking about the constant disruption of electricity services in the world’s largest cities — especially if they rely on hydropower, which is the case of Zambia’s capital, Lusaka, as well as many major Brazilian cities. 

As for what C40 actually recommends as solutions, they are, depending on one’s point of view, obvious or basic. The short answers come in all sizes, as in massive investments in infrastructure, or micro-sized solutions such as instituting behavioral changes that can nudge people to use even less water on a day-to-day basis. But in these humdrum suggestions lies a massive hint for the world’s largest companies, which rely on cities for its peoples’ talent as well as for their local infrastructure. These same companies also benefit from the investments that cities have already made, while sharing little of the cost when a major climate change-induced event such as a hurricane or prolonged drought hit. Companies will have to cope with the reality that they’ll have to open up their pocketbooks to share in this collective climate change pain; and these cities’ leaders shouldn’t expect anything less.

Image credit: Jonathan Ford via Unsplash