Presentation from NY/NJ Metropolitan Storm Surge Working Group Conference, May 18, 2017

1. The Economics of Climate Adaptation
(ECA) Methodology: Application and a
Case Study of New York City
Megan E. Linkin1, Mark D. Way2, David N. Bresch3 and Lea Mueller4
1Swiss Re America Holding Company, Armonk, NY
2 The Nature Conservancy, Arlington, VA
3ETH, Zurich, Switzerland
4Swiss Reinsurance Company Ltd, Zurich, Switzerland

2. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
Introduction
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3. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
The growing burden of uninsured losses
Natural catastrophe losses 1970 – 2016 (in 2016 USD billion)
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Source: Swiss Re Economic Research & Consulting and Cat Perils.
0
50
100
150
200
250
300
350
400
450
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Insured Losses
Not insured
10-year moving average insured losses
10-year moving average total economic losses

4. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
Cities at Risk
Swiss Re's Mind the Risk report
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• Currently, 1.7 billion people (25% of global population) reside in
major metropolitan areas
• Major cities contribute USD 34 trillion, or 50%, to the global GDP.
• New York City: Most storm-surge exposed US city, with 1.1 million
people potentially affected by an extreme storm surge event.
• The UN estimates that by 2050, 6.3 billion people will reside in
cities.
• High emissions scenarios from the IPCC AR5 predict a global sea
level rise of 52-98 cm.
– Increased sea level will change the frequency of floods and storm surges.
• Therefore, it is imperative that cities, states and nations globally
understand the risk posed by natural catastrophes, how the risk
landscape will change under climate change and take the necessary
steps to protect infrastructure, physical structures and citizens.
Source: Swiss Re Catnet

5. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Assess total climate risk
– Today's climate risk
– Future climate change scenarios
• Using Swiss Re's proprietary
catastrophe models, current and future
hazards are translated to economic loss
potential
• Various resiliency strategies can be
implemented to demonstrate savings of
each measure considered.
• Powerful tool to allow decision makers
to understand current and future risk
and benefit of long term action
Economics of Climate Adaptation (ECA)
Comprehensive Risk Assessment, from Hazard to Cost
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6. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
Swiss Re's proprietary model considers four elements that
determine natural catastrophe loss potential
What exactly is covered ...
where... and how?
Hazard Vulnerability
Value
distribution
Cover conditions
n Sums insured
n Cover limits
n Deductibles
n Exclusions
n etc.
Example
Hurricane
“Charley”
Aug 2004
How often / how
strong?
How well built and
protected?

7. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
The working group studied 18
regions with diverse climate hazards
www.swissre.com/climatechange
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Anguilla, Bermuda,
Barbados , Jamaica,
Antigua and
Barbuda, St. Lucia,
Dominica
Samoa
Florida
MaliMali
India
Maharashtra
U.K. / Hull
China
North, Northeast
Samoa
GuyanaGuyana
TanzaniaTanzania
US Gulf coast
New York
Economics of Climate Adaptation (ECA) Working Group, a partnership between the Global
Environment Facility, McKinsey & Company, Swiss Re, the Rockefeller Foundation, ClimateWorks
Foundation, the European Commission, and Standard Chartered Bank.

8. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
The City of New York: A
Case Study
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Hurricane Sandy
Facts and figures: Loss Estimates
Source: AON Benfield, PCS, FEMA

10. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
According to government officials:
• Residential damage is estimated at USD 9.7 billion, with over 100 homes burned in Breezy
Point.
• The MTA sustained USD 5 billion in damage and lost revenue, with the South Ferry –
Whitehall St. station requiring USD 600 million to repair.
• Historic Rye Playland lost its log flume ride and estimates USD12 million in damages.
• Total damages in New York City estimated at USD 19 billion.
– USD 13 billion in physical damage
– USD 6 billion in lost economic productivity
The Aftermath of Superstorm Sandy
New York
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11. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
According to government officials:
• Residential damage is estimated at USD 9.7 billion, with over 100 homes burned in Breezy
Point.
• The MTA sustained USD 5 billion in damage and lost revenue, with the South Ferry –
Whitehall St. station requiring USD 600 million to repair.
• Historic Rye Playland lost its log flume ride and estimates USD12 million in damages.
• Total damages in New York City estimated at USD 19 billion.
– USD 13 billion in physical damage
– USD 6 billion in lost economic productivity
The Aftermath of Superstorm Sandy
New York
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12. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Created by Mayor Michael Bloomberg to address how to create a more resilient New
York City in the wake of Hurricane Sandy, with a long-term focus on preparing for
and protecting against the impacts of climate change
• A final report, released in June, presents actionable recommendations both for
rebuilding the communities impacted by Sandy and increasing the resilience of
infrastructure and buildings citywide.
The NYC Special Initiative for Rebuilding and Resiliency
(SIRR)
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13. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Hurricane models: Swiss Re has built a probabilistic tropical cyclone model based
on robust historical data. Swiss Re uses data from the National Hurricane Center that
includes nearly 1,200 observed tropical storms and hurricanes in the Atlantic Basin
between 1891 and 2008.
• Climate change scenarios: The City provided Swiss Re with guidance on projected
sea level rise in the 2020s and 2050s, based on work of the New York Panel on
Climate Change (NPCC). Specifically, the City instructed Swiss Re to assume of sea
level rise by the 2020s, and the 2050s, based on the NPCC’s climate projections. In
addition, Swiss Re adjusted the future frequency of different categories of hurricanes
(tropical storm through category 5) based on academic research.
• City-level asset and economic activity: The consultants worked closely with City
agencies to develop a working model of asset value divided into several categories,
including, among other things, buildings, transportation, telecommunications, and
utilities. These asset values were further broken down by zip code as was the city’s
economic activity (gross city product).
The Economics of Climate Adaptation
Methodology for the City of New York
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14. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Swiss Re uses HURDAT Best Track data set
from National Hurricane Center in Miami
(includes all tropical cyclones in Atlantic Basin
between 1851 and 2008)
• Each historical track perturbed 199 times via
direct random walk process
• 200 tracks result in a track set containing
223,400 tropical cyclones
• Holland model, coupled with a roughness layer,
produces a wind field for each track
• SLOSH model, coupled to a digital elevation
model, calculates storm surge for each track,
using atmospheric pressure, forward speed,
size, angle of landfall, and track data
• Approach did not consider Nor’easters
Swiss Re's Probabilistic Tropical Cyclone Model
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15. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
Quantity 2013 2020s 2050s
USD 19
billion
70
years
60 years 50 years
70 year
return
period
loss
USD
19
billion
USD 35
billion
USD 90
billion
Results
Loss Frequency Curve
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Source: A Stronger, More Resilient New York

16. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Average annual impact to
assets and GDP
• Some years will have a
single or multiple large
losses, other years will be
zero.
• Today: USD 1.7 billion
• 2050s: USD 4.4 billion
– USD 1.5 billion from sea
level rise
– USD 1.2 billion from
changes in storm
frequency
Results
Annual Expected Loss (AEL)
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Source: A Stronger, More Resilient New York

17. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Current drivers of loss: east and south shores of Staten Island, southern Brooklyn and Queens,
Brooklyn and Queens waterfront and southern Manhattan.
• Under future scenarios: Same geographic regions, plus northern Queens and the Bronx
• Under 2050s scenario: 400% increase in ZIP codes which have an AEL of USD 30 million
Results
Annual Expected Loss by ZIP code
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Source: A Stronger, More Resilient New York

18. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Model can be used to
assess the financial
savings from various
mitigation efforts.
• Combining the modeled
savings with cost
estimates can provide
helpful guidance for
decision makers when
selecting which efforts
to focus on.
• NYC decided to focus
on efforts where the
cost-benefit ratio was
less than 2.
Results
Cost-Benefit Analysis
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Source: A Stronger, More Resilient New York

19. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
• Increases in population in urban areas requires cities have a comprehensive
understanding of risks posed by the current climate.
• Climate change is set to alter the risk landscape, and these changes coupled with a
continually growing population, necessitates planning for future risks today.
• The ECA methodology developed by Swiss Re provides policy makers and decision
makers with an end to end risk analysis, from hazard to costs.
• The ECA methodology was successfully deployed for the City of New York, and
played an important role in shaping the City's fortification and rebuilding plans.
• The SIRR report focused on the five boroughs of New York City, but the ECA
methodology could be upscaled to perform a regional analysis
– Regional analyses already completed for South Florida and the US Gulf Coast
• An ECA-style analysis could assess the costs and benefits of the various regional
flood defense measures.
Concluding Thoughts
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20. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
Thank You
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For more information regarding the ECA studies and the Mind the Risk report,
please visit
http://www.swissre.com/rethinking/climate_and_natural_disaster_risk/
To read the SIRR report A Stronger, More Resilient New York, please visit
http://www.nyc.gov/html/sirr/html/report/report.shtml

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22. M. Linkin, Swiss Re | 6 February 2014 | 94th AMS Annual Meeting
Legal notice
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