Counting the cost of global warming
From: Psalm 110 (Gods_Fist_at_sbcglobal.net)
Date: 09/29/04
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Date: 28 Sep 2004 18:55:45 -0700
Counting the cost of global warming
(Filed: 29/09/2004)
Britain's insurance bill for bad weather - now £6 billion a year -
could treble by 2050 as a result of climate change, writes Liam
Halligan
After a summer of floods, landslides and deadly hurricanes, the
weather is now serious political business. The wettest British August
in 50 years - with rainfall 77 per cent above average - means
mainstream political parties now sound as if they take global warming
seriously.
A warmer world could be bad news for homeowners
Michael Howard, the Conservative leader, is stressing the dangers of
carbon dioxide emissions - "which have risen under Labour". And at
last week's Liberal Democrat conference, Norman Baker, the party's
environment spokesman, dubbed climate change "the real weapon of mass
destruction".
Even Tony Blair has pledged to use the upcoming British presidency of
the G8 and the European Union to highlight global warming. "We need a
green industrial revolution for the 21st century," the prime minister
has said. "We cannot let the world of tomorrow pay for the price of
pollution today."
Many of the 1.7 million UK homeowners whose properties are prone to
flooding say this "price of pollution" is already being paid. In
England alone, buildings worth more than £200 billion are at risk from
river or coastal flooding, according to the Royal Institution of
Chartered Surveyors.
In a new report, the RICS reveals that those living in flood zones
have seen their property values fall by as much as 40 per cent. The
prices of homes in, or even near, danger areas have been marked down
by 15 per cent on average, the report says, drawing on a poll of
property experts along the Severn valley.
"There is clear evidence that the climate is changing in a way that
makes future
predictions much more problematic and inexact," RICS says. "And in
recent years there has been an increasing number of properties
inundated for the first time."
It goes on to warn that "new developments on flood plains, which are
themselves at risk of flooding, are increasing the risk of flooding
downstream".
This new RICS survey centres on Shrewsbury, which over the past six
years has been flooded no fewer than 12 times. For several decades
before that, the Shropshire town didn't flood at all.
"Shrewsbury is unfortunate to have flooded so often recently," says
David Brooks, a senior RICS official. "But that is now having a direct
impact on property prices."
As the RICS points out, several major insurers have identified
flood-prone postcodes - in Shrewsbury, along the Severn valley and
elsewhere - in which they refuse to provide insurance cover. "Given
that insurance is a prerequisite of new owners obtaining a mortgage,
this renders some properties unsellable," the report says.
Sheila Pengilly, the landlady of the Seven Stars pub in central
Shrewsbury, knows the reality of living without flood cover. After
repeated flooding, her insurer walked away.
"The water comes in and over the bar," she says. "It's devastating. We
lose custom, but we still have to pay our staff and for all the
repairs. There's nothing we can do as we can't get flood insurance."
While most politicians have only recently expressed their concern, the
insurance
industry has taken global warming extremely seriously for a long time.
The Association of British Insurers estimates that weather-related
claims on UK
property insurance doubled between 1998 and 2003, reaching £6 billion
- "with the prospect of a further tripling by 2050".
"The insurance industry is in the front line of climate change," says
John Parker, the ABI's head of general insurance. "Managing risk is
central to what we do and insurers must be equipped to analyse these
new risks."
Norwich Union has spent the past two years - and several million
pounds - creating a "digital elevation" UK flood map. The insurer used
an airborne radar system to measure the precise height above sea level
of each house in or near a flood zone.
Laurence Loughnane, head of underwriting at Norwich Union, says
insurers relying solely on postcodes to measure flood risk could
exclude some properties unfairly.
"As our map shows, in some flood-prone postcodes there are houses high
enough not to be in danger," he says, claiming that this allows NU to
offer insurance on some properties rejected by rivals.
Despite this, more flood-prone properties are likely to be rendered
uninsurable in the future, Loughnane warns. "Buildings that flood
regularly are going to find it increasingly difficult to get cover. As
the frequency of flooding rises, the number of people who can't get
insurance will increase."
The value of flood-prone properties could be especially vulnerable if
the housing market dips, he adds. "The true impact of flooding on
house prices has been masked by a generally buoyant market." The
implication is that the prices of properties that flood could fall
faster and further than the national average.
These words will bring little comfort to the residents of Shrewsbury
as they prepare for what the locals call "the monsoon season". After
all, most of the town is not densely populated enough to qualify for
grants to build permanent flood defences.
But some inspiration may be drawn from the experience of Ironbridge,
about 10 miles further along the River Severn, which has also suffered
serious floods since 1998. A world heritage site, Ironbridge is
celebrated for its unique role in sparking the Industrial Revolution.
This famous gorge is often dubbed the Valley of Invention because of
its record of technological innovation in the 18th century.
Back in February, when the Severn last burst its banks, Ironbridge
largely escaped flooding by erecting a temporary flood barrier several
hundred metres long. Flat-pack barriers were imported from Sweden.
"Organising it was a huge effort by residents and local officials,"
says Bob Herrick, who owns a beautiful Georgian house right on the
river. "But when the barrier was up, it was magnificent to watch the
water rush by knowing it wasn't flooding my house."
The Environment Agency, which helped fund the temporary barriers,
hopes Ironbridge residents who lost flood cover will now have more
chance of getting it back.
"This was a cost-effective technique which dramatically reduced flood
risks," says Peter May, a local Environment Agency official. "Maybe
the insurance companies will consider the reduction in risk, which
would have a knock-on effect for mortgage availability and house
prices."
Loughnane offers some encouragement from Norwich Union, but says it
depends on the type of flood. "If an area floods with plenty of
warning, so that temporary barriers can be erected, this could
certainly be helpful to insurers."
While temporary barriers have worked for Ironbridge, in other areas
they could prove controversial. When they were tried in parts of
Shrewsbury, many residents of areas outside the barriers felt that the
diverted water made the flooding there much worse. And a recent court
case suggests that newly flooded home owners will find it difficult to
sue either those erecting temporary barriers or developers building on
flood plains.
A summer of heavy rainfall has generated an expectation of more
serious floods this winter. So expect more misery for flood-prone
householders - not to mention a torrent of political rhetoric.
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