62643 CLIMATE RISK AND BUSINESS PORTS Terminal Marítimo Muelles el Bosque Cartagena, Colombia Executive Summary Acknowledgements © 2011, International Finance Corporation First printing, March 2011 Authored by Vladimir Stenek, International Finance Corporation Jean-Christophe Amado, Richenda Connell and Olivia Palin, Acclimatise Stewart Wright, Ben Pope, John Hunter, James McGregor, Will Morgan and Ben Stanley, WorleyParsons Richard Washington and Diana Liverman, University of Oxford Hope Sherwin and Paul Kapelus, Synergy Carlos Andrade, EXOCOL José Daniel Pabón, Universidad Nacional de Colombia The authors wish to thank the owners, management and staff of Terminal Marítimo Muelles el Bosque (MEB) for their support and cooperation in this study, especially Gabriel Echavarría, Alberto Jimenez, Carlos Castaño Muñoz, Rafael Zorrilla Salazar, Alan Duque, Humberto Angulo, Manuel Otálora Gomez, Andres Burgos, Elizabeth Pedroza Arias and Juan Casilla Vergara. The authors also wish to thank the following institutions for their valuable contributions to the study: Alcaldía de Cartagena de Indias - Secretaría de Infraestructura; Centro de Investigación de la Caña de Azúcar de Colombia (Cenicaña); Centro de Investigaciones Oceanográficas e Hidrográficas de la Dirección General Marítima (CIOH); Centro Internacional de Agricultura Tropical (CIAT); Centro Nacional de Investigaciones de Café (Cenicafé); Corporación Autónoma Regional del Canal del Dique (CARDIQUE); Corporación Colombiana de Investigación Agropecuaria (CORPOICA); Departamento Nacional de Planeación (DNP); Dirección General Marítima (DIMAR); Federación Nacional de Cafeteros; Fundación Natura; Instituto Colombiano Agropecuario (ICA); Instituto de Hidrología, Meteorología y Estudios Ambientales de Colombia (IDEAM); Instituto de Investigaciones Marinas y Costeras (INVEMAR); Ministerio de Agricultura y Desarrollo Rural; Ministerio de Ambiente, Vivienda y Desarrollo Territorial (MAVDT); Puerto de Mamonal; Sociedad Portuaria Regional de Cartagena (SPRC); Universidad de Cartagena; Universidad de los Andes - Centro Interdisciplinario de Estudios sobre Desarrollo (CIDER); and Universidad Nacional de Colombia. Reviewers We thank Lisa Wunder (Port of Los Angeles), Ahmed Shaukat (IFC) and an anonymous reviewer for their critical comments and suggestions. This work benefited from support provided by the Trust Fund for Environmentally & Socially Sustainable Development (TFESSD), made available by the governments of Finland and Norway. Designer Studio Grafik CLIMATE RISK AND BUSINESS PORTS Terminal Marítimo Muelles el Bosque Cartagena, Colombia Executive Summary Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Foreword The adverse effects of climate change on human welfare are becoming more apparent worldwide, particularly in developing countries. In the past year, climate related impacts caused economic damages amounting to tens of billions of dollars, displaced millions of people and contributed to the looming food crisis. Scientists expect the physical impacts of climate change, along with its direct and indirect economic, social and environmental consequences, to continue increasing in intensity and frequency. Developing countries and the poorest populations are particularly vulnerable to temperature extremes, droughts, floods and storms. Unless the risks are addressed, climate change will reverse de- velopment progress and increase the hardship for the poor. Incorporating climate change concerns in current and future activities is not only about managing risks, but also about the necessity to create robust and resilient economic and social environments for the future. Starting in 2008, IFC initiated a series of case studies that analyze climate risks to various sectors and projects located in different countries, while offering practical approaches for the assessment of relevant impacts and adaptation options. As no project or sec- tor exists in isolation, they necessarily looked more broadly at a wider range of climate-related economic, social and environmental factors, with input from diverse national stakeholders. Infrastructure and transport are among the sectors most exposed to climate change, which in turn are critical to national eco- nomic performance, growth and development. Ports in particular play a vital role in the world economy. More than 80% of goods traded worldwide are transported by sea. Ports in developing countries handle more than 40% of the total containerized traffic, of which a significant portion relates to materials and export of goods produced in the country. Hence, the impacts of climate change on ports will have much wider socio-economic ramifications. This study analyzes climate related risks and opportunities facing IFC’s client, Muelles el Bosque, and provides a quantitative as- sessment of climate impacts and related adaptation responses. While the work focuses on the impacts on this specific port and its surroundings, it also briefly explores how other ports in Colombia and elsewhere in the world can expect to be affected by climate change. Through this study, the fifth in the Climate Risk series, IFC hopes to continue its contribution to the knowledge base for under- standing the impacts of climate change and adaptation responses needed by our clients and the private sector in general. I would like to personally thank Muelles el Bosque for their cooperation and support in this important work. Mohsen A. Khalil Global Head Climate Business Group International Finance Corporation 2 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Foreword Many corporations and governments are concerned with climate change, however, individually we are not yet aware of the spe- cific effects that global warming has or will have on our immediate surroundings. Last year Colombia suffered the worst floods in 60 years with 2 million people displaced in a space of 3 months, a large part of this occurred in the coastal delta of the Magdalena River. Coincidentally, this study, which was carried out by the International Finance Corporation with a view towards understanding the effects of climate change in the region, will have an important im- pact on how future climate change studies will be made in Colombia, because it is one of the first, if not the first to analyze how businesses and commerce will be affected by the changing environment in our country. The study has helped Muelles el Bosque develop its long term strategic planning and investment priorities and it is hoped that the discipline and content of the study will serve as a pilot model and guide for future efforts in our region. One of the most important results of the study is the changes that will occur in commercial opportunities and agricultural products by region as a consequence of changes in weather patterns. This not only will affect the ports and Cartagena but also the country as a whole. It is urgent that Colombia undertake a long term view on how our lives will be affected and begin to plan accordingly. In this sense this study is just the beginning. On behalf of Muelles el Bosque, its shareholders and employees, I would like to thank the International Finance Corporation for having taken the initiative to implement the study. Gabriel Echavarría President Muelles el Bosque 3 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque This publication provides a summary of the findings of the climate The methodologies employed to undertake the assessments for risk study. The full report, available for download from IFC’s web- MEB are spelt out in detail in the full report, with the aim of facili- 1 site, analyzes in depth the climate-related risks and opportunities tating similar assessments being conducted for other ports. Finally, facing Terminal Marítimo Muelles el Bosque (MEB). Wherever the report identifies the gaps and barriers constraining action possible, the analyses include estimates of the financial impacts on adaptation, and discusses the work on adaptation underway of climate change on MEB over the coming decades. For some of within the public sector in Colombia. the more significant risks, the report also provides assessments of the costs and benefits of adaptation investments, and evalu- Supplementary material is also provided in a set of annexes, and ates approaches to adaptation decision-making that are robust to includes a detailed analysis of climate change projections for Co- uncertainties. lombia as a whole and Cartagena specifically. Introduction In general, the physical infrastructure at ports, and port activities, in Cartagena, Colombia. Where possible, the study estimated the may be highly vulnerable to changes in climate. For instance, the financial impacts of climate change for MEB and evaluated actions risks could manifest through changes in the level or patterns of that the company can consider to manage them. shipping, increased flooding affecting movements within ports and causing damage to goods stored, reduced navigability of ac- The analysis undertaken for the study found that the materiality of cess channels and business interruption. Some ports will also see climate change impacts will vary greatly from one port to another, opportunities as a result of climate change. A port’s reputation for though there are some key risk areas that all ports should consider. reliability is key to its success, so ports that are more resilient to Due to climate change, the oceans are expanding as they warm disruption from climate events should fare better. Higher tem- and land-based ice is melting into the sea. Around the globe, peratures may benefit ports in cold regions where navigation is mean sea levels are rising as a result, and this will affect vulner- currently restricted by ice, through increasing the length of the able ports in low-lying coastal locations. In some areas, it is also shipping season.2 Changes in trade flows driven by climate change expected that storm intensities will increase. The combined effects will also see winners and losers. To understand the significance of of mean sea level rise, high tides, extreme waves and storm surges these risks for a given port, it is necessary to analyze the factors could overwhelm a greater number of coastal ports and disrupt affecting the success of that port and evaluate climate-related operations, unless actions are taken to increase their resilience. Cli- impacts, taking account of existing vulnerabilities, critical climate- mate change will lead to changes in the areas suitable for produc- related thresholds and climate change projections. ing certain goods (such as agricultural products) and in demand for goods (such as fuel for heating), and will thus affect trade flows. Recognizing the potential significance of climate change to ports, Wider impacts of climate change on the global economy, as noted the IFC Adaptation Program commissioned a study to assess the in the Stern Review on the Economics of Climate Change,3 will risks and opportunities for ports in general, and specifically for a affect overall trade and hence port revenues. private port company, Terminal Marítimo Muelles el Bosque (MEB), 1 www.ifc.org/climatechange 2 USTRB (U.S. Transportation Research Board). 2008. Potential Impacts of Climate Change on U.S. Transportation. Committee on Climate Change and U.S. Transportation. Transportation Research Board Special Report 290 and USEPA (U.S. Environmental Protection Agency). 2008. Planning for Climate change Impacts at U.S. Ports. White Paper. Fairfax, p. 16. 3 Stern, N. 2006. The Economics of Climate Change: The Stern Review. Cambridge University Press. [Online]. Available at: http://www.hmtreasury.gov.uk/ independent_reviews/stern_review_economics_climate_change/sternreview_index.cfm (accessed 2/03/10). 4 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Climate change risks to ports Climate change will increasingly affect public and private sec- MEB consists of two separate legal entities. Terminal Marítimo tor organizations, especially those reliant on long-lived fixed Muelles el Bosque, S.A. (TMMEB) holds the concession (expiring in assets and complex supply chains. Port facilities are likely to be 2032) from the Government of Colombia to develop and man- particularly at risk for a number of reasons: age Cartagena’s second largest port. Its sister company, Muelles el Bosque Operadores Portuarios, S.A. (MEBOP), provides the port t %VFUPUIFJSMPOHMJGFUJNFT UIFZXJMMGBDFTFWFSBMEFDBEFTPG operations.4 accelerating climate change, t #ZWJSUVFPGUIFJSMPDBUJPOTPODPBTUT SJWFSTPSMBLFTUIFZ MEB currently employs approximately 250 people and handles four are often exposed to a range of climate-related hazards such types of cargo: containers, grain, bulk materials and coke (in de- as sea level rise, storm surges, extreme wind and waves and creasing order of average throughput for the period 2005–2009). river flooding, and Between 2005 and 2010, containers represented the largest share t 1PSUTSFMZGPSUIFJSTVDDFTTPOFDPOPNJDTUBCJMJUZBOEHSPXUI  of MEB’s revenue. In 2008, MEB moved 1% of Colombia’s interna- as well as on third party infrastructure (such as inland trans- tional trade (in tonnage). portation networks), both of which are sensitive to changes in climate conditions. MEB’s 10 ha terminal is located in a mixed industrial and residential zone of Cartagena. It is composed of two sites, an island named Clearly, there will be considerable differences in the nature and Isla del Diablo (shown in Figure 1) and an adjacent mainland area level of climate change risks and opportunities between ports linked via a causeway road. depending on the characteristics of their locations – be they in regions prone to tropical or extra-tropical cyclones, in areas Cartagena is too close to the Equator to be prone to tropical where permafrost is thawing, or on lakes or rivers whose levels storms, and MEB is located in the natural harbor of the Bay of are changing. Cartagena, which is one of the most secure on the Caribbean coast of Colombia. It is sheltered from high winds, waves and Further, ports vary considerably in the functions they perform. storm surges. This natural resilience brings advantages compared Climate change will have different implications for ports to its competitor ports in Colombia and the Caribbean. with cargo handling and warehousing functions compared to those providing exclusively pilotage, navigation and dredging MEB’s competitor ports in Colombia services, or for cruise/passenger ports. The port system in Colombia currently has 122 facilities, including five regional port societies, or Sociedades Portuarias Regionales (SPRs), which are MEB’s principal competitors. Of these, Bue- naventura SPR took the greatest share (8%) of the international trade by tonnage in 2008, followed by Santa Marta SPR (6%), Cartagena SPR (3%) and Barranquilla SPR (3%). Buenaventura on the Pacific coast benefits from being the closest port to the main Colombian production and consumption centers, which favors its use, despite it being one of the rainiest places in the world, with around 6,000 to 7,000 mm of rainfall annually. Santa Marta, east of Cartagena on the Caribbean coast, exports mainly coal and has a deep natural access channel suitable for Post-Panamax vessels. The port of Barranquilla handles mostly grain, steel and coal and is approximately 22 km from the Caribbean Sea, in the Magdalena River. Limited depth causes navigation limitations for Barranquilla, and dredging and construction works are ongoing to improve ac- cess by larger vessels. 4 For simplicity, both entities together are referred to as MEB in this report. 5 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Figure 1 – Aerial photograph of MEB’s Isla del Diablo (island site). On the photograph, the following elements of the port can be seen: A) Quays 4, 1 and 2 (from top to bottom); B) Quay 3; C) Grain silos; E D) Coke storage area; E) Patio for containers; F) Part of the causeway that connects to the mainland site; and G) the mangrove around the D A causeway. F G C B Climate variability, climate change, adaptation and businesses Climate change is underway. Increased global average In Cartagena, average temperature varies little from month to temperatures and rising sea levels have been observed and month, generally lying in the range of 27 to 29°C. Projections droughts, floods, heat waves and storms are becoming more from 10 General Circulation Models (GCMs) for three greenhouse common. Even if emissions of greenhouse gases are signifi- gas emission scenarios (A2, A1B and B2) point at future increases cantly reduced, the world faces inevitable changes in tempera- between 0.7–1.2°C and 1.2–2.2°C from the 1961–1990 baseline ture and precipitation for decades to come, and sea levels will to the 2020s and 2050s respectively.5 However, empirical down- continue to rise for centuries. The climate is also naturally scaling of 14 GCMs for the A2 greenhouse gas emission scenario variable and man-made climate change will superimpose on shows possible temperature increases of 6°C by the 2050s in all natural climate variability. seasons.6 For this study, a broad set of climate models and green- house gas emission scenarios were considered, to capture the If the risks are left unmanaged, the implications of climate range of uncertainty in future climate change. variability and change for businesses, their investors, custom- ers, workforce, local communities and the environment could Average precipitation on wet days has increased by 0.6% per year be significant. in Cartagena between 1941 and 2009. There is also evidence that precipitation is becoming more intense in some parts of Colombia.7 Adaptation is the general term used to describe the range of actions that can be taken to reduce vulnerability to climate Making resilient decisions in the face of uncertainty requires change. For instance, adaptation can include increasing a port’s managing gaps in knowledge and data. For example, there is 5 GCMs are climate models that provide global climate change projections with coarse resolutions of hundreds of kilometers (typically 2.5o x 2.5o). The A2, A1B and B2 greenhouse gas emission scenarios were developed by the Intergovernmental Panel on Climate Change (IPCC) in 2001 to represent different plausible future pathways for greenhouse gases. While all scenarios are considered equally sound by the IPCC, some scientists have warned that greenhouse gas emissions are currently rising at a rate above the highest scenario trajectory (the A1FI scenario). 6 Empirical downscaling is a method through which high resolution climate change projections are derived from a statistical model which relates large-scale climate variables obtained from global climate models to regional and local variables, based on site-specific observed data. 7 Aguilar, E., et al. 2005. “Changes in precipitation and temperature extremes in Central America and northern South America, 1961–2003”, J. Geophys. Res., 110, pp. 1–15. 6 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque coping ranges related to climatic conditions, such as raising poor agreement between climate models over future precipitation the height of a quay exposed to rising sea levels, or diversify- changes in Colombia, due to the complex topography and the lack ing port income streams away from those which are highly of understanding of how tropical cyclones might change in the climatically-vulnerable. future. No credible daily or peak rainfall projections are available. A checklist of climate risks and adaptation actions for ports is Thermal expansion of the oceans due to higher temperatures, and provided at the end of this Executive Summary. increased melting of glaciers, ice caps and the Arctic and Antarc- tic ice sheets all contribute to sea level rise. To capture the range Scientists and practitioners have developed approaches to of possible future sea level rise over the 21st century, this study decision-making on climate change adaptation that take into considered: account the varying levels of uncertainty about climate change risks. For example, for risks which are highly uncertain (e.g., t "OPCTFSWFETFBMFWFMSJTFTDFOBSJPPGNNQFSBOOVN 8 and those related to changes in extreme climatic events), it can be t "OBDDFMFSBUFETFBMFWFMSJTFTDFOBSJP PGVQUPNCZ  useful to apply an adaptive management approach. This in- starting from the current rate of sea level rise (5.6 mm) and fol- volves adapting incrementally over time in light of experience lowing a quadratic equation that approximates the exponential of how risks are changing, rather than undertaking expensive sea level increase projected by many studies. one-off up-front adaptation investments. Winds are predominantly from the north and north east in Carta- gena and are either calm (21% of the time) or between 1.6 and 13.9 m/s (69% of the time). These wind speeds are below the op- erating thresholds of MEB’s cranes. However, no data is available on observed wind gusts. Cartagena is located south of tropical cyclone tracks and is protected by its location in the northeastern corner of the South American land mass. No significant change in wind speeds and storminess are projected by climate models, though this is an area of uncertainty. In countries such as Colombia, where climate models perform poorly, there is a role for the public sector to support develop- ment of improved high resolution climate change projections. For instance, the Instituto de Hidrología, Meteorología y Estudios Am- bientales (IDEAM, the Colombian Institute of Hydrology, Meteorol- ogy and Environmental Studies) has been working with scientific experts to develop regional climate projections using the PRECIS modeling system.9 For a summary of the climate information used in this study, see Table 1. 8 Sutherland, M., Dare, P and Miller, K. 2008. “Monitoring Sea Level Change in the Caribbean”. Geomatica, 62 (4), pp. 428–436. 9 Precipitation projections for Colombia obtained from PRECIS are quite different from the projections of the majority of the other global climate models. PRECIS is a regional climate model developed by the UK Met Office’s Hadley Centre that provides high resolution climate data (at a 25 kilometer square spatial resolution). 7 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Table 1 – Summary of present-day conditions and future projections for the key climate variables considered in this study Climate and climate- Observed conditions recorded by meteorological Future scenarios from related variables stations and tidal gauges in Cartagena climate model projections Mean temperature Between 26.7°C and 28.5°C (average monthly) Increases of 0.7 to 1.2°C by the 2020s, 1.2 to 2.2°C by the 2050s and 1.7 to 3.7°C by the No obvious trend in temperature over the last 70 years 2080s (projected by an ensemble of GCMs)10 Potential increases up to 6°C by the 2050s (projected by an ensemble of downscaled GCMs)11 Mean precipitation Annual average rainfall was about 600 mm per year in the Assumed yearly increase of 0.6% on wet days, 1940s and has risen steadily, to about 1100 mm per year based on continuation of observed trends12 in the last decade Climate models perform poorly at projecting Increase of 6 mm per year in 1941–2009; corresponding to future rainfall in Colombia a 0.6% increase per year on wet days Sea level rise Rising at 5.6 mm per year (± 0.008 mm) Observed sea level rise scenario: 5.6 mm per year, i.e., 504 mm by 2100 Accelerated sea level rise scenario: 1,300 mm by 2100 Wind Calm or between 1.6 and 13.9 m/s for most of the time Increases by up to 0.2 m/s by the 2020s and 0.5 m/s by the 2050s and 2080s (projected by an ensemble of GCMs)13 Winds in the range 3 to 10 m/s could become more frequent (projected by the regional climate model PRECIS)14 Storminess and Not affected by tropical cyclones Little to no change storm surges Storm surge height up to 171 mm for a 1 in 300 year event 10 See footnote 5. 11 See footnote 6. 12 Due to the lack of good agreement between climate models on future precipitation changes, the study considered a future scenario whereby the yearly trend in average precipitation observed between 1941 and 2009 continues in the future. 13 See footnote 5. 14 See footnote 9. 8 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Port success criteria at risk from climate change It is useful to take a generic view of the various success criteria In the case of MEB, the climate change risk analysis found that for ports which can potentially be affected by climate change, only a small number of these success criteria are likely to be signifi- as presented in Figure 2. cantly affected by climate change. These include: These relate to the chain of external systems and internal assets t 3FEVDFEWFIJDMFNPWFNFOUTJOTJEF.&#EVFUPJODSFBTFETFB- and activities on which a port’s commercial success relies: water flood risk, t %FDSFBTFEHMPCBMUSBEFBOE64HSBJOFYQPSUTBOEBTTPDJBUFE t 5SBEFMFWFMTBOEQBUUFSOTBOEUIFDPOTFRVFOUEFNBOEGPS shipping movements, with consequences for MEB’s revenues, port’s services, t *ODSFBTFESJTLPGEBNBHFUPHPPETTUPSFEJOTJEFQPSUTEVFUP t /BWJHBUJPOJOBOEPVUPGQPSUTBOETIJQCFSUIJOH seawater flooding, with potential reputational consequences, t (PPETIBOEMJOHJOTJEFQPSUT and t .PWFNFOUTPGHPPET WFIJDMFTBOEQFPQMFJOTJEFQPSUT t %FHSBEBUJPOPGUIFNBOHSPWFTMPDBUFEBSPVOEUIFDBVTFXBZ t (PPETTUPSBHFJOQPSUT BOE due to sea level rise. t *OMBOEUSBOTQPSUBUJPOCFZPOEQPSUTGFODFMJOFT In the case of materials handling and surface flood risk, climate change does not appear to challenge the operational threshold of MEB’s cranes or its drainage capacity, though there is some uncer- tainty about this. For instance, while precise data was available on the operational limits of MEB’s cranes, information on observed extreme winds was uncertain and there were no credible future extreme wind projections. However, given that the climate models do not project significant changes in winds, and because Carta- gena lies too close to the Equator to be significantly at risk from hurricanes, the study discarded this as a significant risk to MEB. The absence of risk to navigation and berthing relates to MEB’s fa- vorable location on the Bay of Cartagena, where extreme climatic hazards are limited. The generally low risk of social or environmen- tal issued driven by climate change (with the exception of impacts on the mangrove, see Figure 1) can primarily be explained by MEB’s existing management systems. In some cases, the available information was too limited to assess risk accurately. This was the case for assessing climate change im- pacts on the transportation network outside MEB. Quality elevation data for the city of Cartagena could not be obtained, which led the study to consider potential sea level thresholds above which flood risk of the roads used by MEB and its customers increases. 9 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Figure 2 – Conceptual model of a cargo handling port and the main success criteria that can be affected by climate change NAVIGATION & VEHICLE MOVEMENTS TRANSPORTATION OF DEMAND MATERIALS HANDLING GOODS STORAGE GOODS OUTSIDE MEB BERTHING AT MEB MEB MEB MEB MEB XXXXXXX MEB MEB Demand, trade levels and patterns Commercial ports rely on the vitality and growth of the ship- The study adopted a practical approach to assessing the potential ping industry, which is very sensitive to fluctuations in world implications of climate change for MEB’s imports and exports, BOEDPVOUSZHSPTTEPNFTUJDQSPEVDU (%1 BTTIPXOCZUIF aiming to provide insights into these potentially significant im- recent economic downturn. pacts to MEB. For some products, climate change will influence market con- For the period 2005–2010, MEB’s revenue and world GDP appear ditions which can translate either into risks of decreased trade closely related: on average, a 1% change in world GDP is cor- through ports or opportunities for new exports or imports. For related with a 0.7% change in MEB’s revenue. The study acknowl- example, the supply of agricultural and forest products is very edges that this relationship could be different in the future. sensitive to climatic conditions. The Stern Review on the Economics of Climate Change estimated %FNBOEGPSBQPSUTTFSWJDFTDBOBMTPCFBĊFDUFECZQPQVMBUJPO that the average costs of climate change could be up to 1.25% of movements and changes in the locations of industrial centers, global per capita consumption by the 2050s. The implications of as well as by the way port customers perceive its reliability in such global GDP reductions for MEB could amount to an annual the face of extreme weather events. Those that suffer major revenue loss of about US$640,000 by 2055. The effect on MEB’s disruptions during storms or other climatic events may experi- annual revenue under different climate change scenarios is shown ence decreased throughput. For example, following Hurricane in Figure 3. Katrina some customers shifted to alternative ports on the U.S. East Coast. Projected increases in imported grain prices and impacts on land suitability for the Colombian crops that are exported through MEB The potential impacts of climate change on international trade are not expected to affect MEB’s revenue significantly. are difficult to quantify with confidence over coming decades, due to the interactions between future climate change impacts, economic performance and trade, the number of other factors that significantly influence trade and the unstable nature of trade itself. However, trade is a potentially significant climate- related risk area for ports, and merits further research. 10 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Figure 3 – Potential global economic impacts of climate Customer demand for MEB’s services could benefit from climate change on MEB’s annual revenue between 2035 and change: 2055 (in US$) 73,000,000 t 8IFOUSPQJDBMDZDMPOFTEJTSVQUPUIFSQPSUTJOUIF$BSJCCFBO  MEB has observed a 2% increase in its total income on average, 72,500,000 due to its reputation as a safer hub than other Caribbean ports. 72,000,000 Research has shown that tropical cyclone intensity may increase Annual Revenue (US$) 71,500,000 in the Caribbean (though not at Cartagena, which is too close to the Equator to be at significant risk). 71,000,000 t $PNQBSFEUPPUIFSNBKPS$PMPNCJBOQPSUT .&#JTOPUWVMOFS- 70,500,000 able to disruption from intense precipitation and fluctuations in 70,000,000 water depth. In contrast, Buenaventura is known to face opera- tional restrictions due to heavy rainfall, and shipping from Bar- 69,500,000 ranquilla is limited by depth. Therefore, future climate change 69,000,000 could create a competitive advantage for MEB if it exacerbates 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 2051 2052 2053 2054 2055 existing problems in these competing ports. Year Mixed Climate Scenarios High Climate (Market Impacts + (Mitigation and Adaptation) Risk of Catastrophe) High Climate (Everything) Baseline Climate Scenario High Climate (Market Impacts + Risk Baseline without Climate Change of Catastrophe + Non-Market Impacts) Navigation and berthing In general, as a result of sea level rise, navigable water depths The Bay of Cartagena has limited openings to the sea via two sea are likely to increase in many coastal ports and shipping chan- channels: Bocachica and Bocagrande (Bocachica is the only entrance nels. The increased available draft also generally equates to for commercial shipping) (see Figure 4). Seawater flows in and out decreased dredging maintenance requirements. of the bay through these two channels and there is a freshwater input from the Canal del Dique (see Figure 4). The bay offers protec- However, changes in rates of coastal erosion and deposition tion against waves and storms surges; it is also characterized by low will affect the depths of some navigation channels, and lead to tidal ranges and little congestion or navigation difficulties. increased dredging costs. Because of the characteristics of the Bay of Cartagena, climate Furthermore, capital expenditure may be necessary in ports change is not expected to represent a considerable risk. A number where sea levels rise above the operability range of infrastruc- of issues were considered during the assignment: ture and equipment. For instance, reduced clearance under some bridges will restrict the low water level windows available t 5IFUPQPG.&#TRVBZTBOEUIFPQFSBCJMJUZSBOHFPGDSBOFTBOE to large vessels. fenders are able to cope with the rise in sea levels projected this century in both the observed and accelerated sea level rise Climate change will lead to reduced river flows or lake levels in scenarios. some areas with severe implications for navigation and port ac- t .&#POMZESFEHFTUXPTIPSUDIBOOFMTFWFSZmWFZFBSTBQ- cess. Increased shipping or improved inland transportation in proximately. The increased draft caused by higher sea levels is areas where higher temperatures will increase ice-free periods likely to reduce maintenance dredging requirements. A gross is likely to benefit some ports. For instance, the opening of estimate of the total savings to the end of the century is from UIF/PSUIXFTU1BTTBHFDPVMEQSPWJEFBDPNNFSDJBMBMUFSOBUJWF US$325,000 to US$400,000. MEB has no plans to accommo- to using the Panama Canal, which would decrease shipping date vessels with a draft above 12 m. movements in Central America. 11 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque t 5IFSFJTOPFWJEFODFUIBUTFEJNFOUBUJPOJOUIFCBZXJMMDIBOHF Further, because other port terminals located in the bay (So- ciedad Portuaria Regional de Cartagena and Contecar) are in charge of dredging the channels closest to the mouth of the Canal del Dique and have plans to accommodate Post-Panamax ships, the depth in the bay will be maintained at a level signifi- cantly greater than that required by MEB. t 4JODFXBWFIFJHIUJTMJNJUFEJOUIF#BZPG$BSUBHFOB BOZ increases in wave height due to greater water depths (driven by sea level rise) is unlikely to have a significant effect on MEB. The municipality of Cartagena has been reviewing options to reduce the volume of sediment discharged by the Canal del Dique into the bay. Figure 4 – The 2D hydrodynamic model grid of the Bay of Cartagena developed for this study MEB Bocagrande Bocachica Canal del Dique 12 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Goods handling and storage High winds, extreme rainfall and lightning can restrict port The study assessed future surface flood risk on MEB’s island site operations. For instance: considering both changes in surface water runoff and sea level rise which can lead to seawater surcharge of drainage pipes. t $SBOFTDBOOPUCFNPWFEPSVTFEBCPWFDFSUBJOXJOETQFFET and heavy rain can affect crane’s electrical systems. When rainfall is considered alone, the amount of rainfall required t 4PNFPQFSBUJPOTDFBTFJOUJNFTPGTUSPOHXJOET JODMVEJOH to overwhelm MEB’s drainage pipes on the quay is 639 mm per tugboat and ferry movements. day. The maximum daily rainfall recorded between 2000 and t %VSJOHIFBWZSBJOGBMM UIFMPBEJOHPSVOMPBEJOHPGXFBUIFS 2008 in Cartagena was 158 mm and daily rainfall only exceeded sensitive goods or material also ceases. Usually rainfall limits 50 mm for about 1% of this time. Future precipitation changes in are set by ports on a case-by-case basis. Cartagena are uncertain, so to assess the capacity of the drainage system to cope with future rainfall changes, the observed rate of Higher temperatures are expected to lead to some improve- increasing rainfall was extrapolated into the future and applied ments in port operating conditions in cold regions. to the maximum daily rainfall observed between 2000 and 2008. Thus, considering a possible future scenario in which the observed Risk of spoilage of goods stored is likely to increase because of 0.6% yearly increase in average rainfall during wet days continues, increased temperature and changing rainfall and their effect on and peak rainfall increases by as much as average rainfall, no risk pests, diseases, rust and mold, as well as increased flood risk. to MEB’s required drainage capacity is expected, unless the future maximum daily rainfall calculated for 2100 (of 245 mm in a day) Changing climate conditions can also have implications for port falls within less than 9 hours. energy and water requirements. At the same time, electricity and water supplies may become increasingly unreliable due to When the additional effect of seawater ingress is considered, climate change. Countries heavily reliant on hydropower may be surface flood risk could increase. For instance, mean sea level most vulnerable to power shortages, but thermal power plants during the highest spring tide is expected to reach the critical limit cooled by river or lake water can also be affected. above which the drainage system cannot cope with both seawa- ter ingress and increased rainfall towards the end of the century Risks of dust explosions associated with grain handling and in the accelerated sea level rise scenario (estimated to be 1.7 m storage may increase in areas which become hotter and drier. above the port plan datum). If the effect of storm surges is added, seawater ingress is expected to be critical to drainage earlier in the century in the accelerated sea level rise scenario. Figure 5 – Projected sea level and flood risk in different parts of the port (including the mainland storage patio) under the observed sea level rise scenario. Three sea levels No adaptation action appears to be necessary to prevent an are presented in this figure: 1) mean sea level; 2) mean sea increase of surface flood risk due to climate change. However, level at the highest spring tide; and 3) mean sea level at the because of the uncertainty of future precipitation changes and highest spring tide and with a 1 in 300-year high storm surge. The horizontal lines represent the level of the causeway (red the possibility of occasional flooding due to heavy rainfall events, line), mainland storage area (blue line) and quay (green line). a few steps are recommended including: regular maintenance, inspections and fitting valves to all drainage sea outlets. Towards 2.0 the end of the century, it could be necessary to raise the drainage Surface Elevation Above 1.5 outlets to avoid seawater surcharge, which would be best done Port Datum (m) when quays are replaced. 1.0 Water-sensitive storage areas at MEB (namely the warehouses and 0.5 the storage area on the mainland site) are likely to be flooded under 0.0 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 the compound effect of rising sea levels and storm surges between Year 2040 and 2050, and 2030 and 2040 in the observed and acceler- Quay Mainland Storage Area ated sea level rise scenarios respectively (see Figure 5 and Figure 6.) Causeway Highest Spring Tide + 300 Year Surge Without knowing the value of the goods stored on the mainland Mean Sea Level Highest Spring Tide site, it is difficult to assess the potential loss. However, it could 13 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque represent a significant risk to MEB’s reputation as a reliable port. To Figure 6 – Projected sea level and flood risk in different avoid such impact, MEB could add emergency flood protection or parts of the port (including the mainland storage patio) reorganize their storage areas in order to ensure that water-sensitive under the accelerated sea level rise scenario. Sea levels and port levels shown on this figure are the same as Figure 5. cargo is stored in less vulnerable areas. Raising the height of the mainland patio to avoid regular flooding is necessary from the 2.0 2080s and 2050s onward in the observed and accelerated sea level Surface Elevation Above 1.5 rise scenarios respectively. The total associated paving and drain- Port Datum (m) age costs (approximately US$1.1 million and US$2.2 million in the 1.0 observed and accelerated sea level rise scenarios respectively) are lower when the patio is raised incrementally by 20 cm (three and six 0.5 times are necessary over this century in the observed and accelerat- 0.0 ed scenarios respectively) compared to when the patio is raised only 2010 2020 2030 2040 2050 2060 2070 2080 2090 2100 Year once in the 2030s (for MEB’s discount rate of 16%, see Figure 7). Quay Mainland Storage Area Causeway Highest Spring Tide + 300 Year Surge It is possible that water consumption for coke spraying could Mean Sea Level Highest Spring Tide decrease if the observed trend of increasing rainfall continues in the future. Savings appear to be modest and could amount to US$14,000 per year. In contrast, higher temperatures will increase electricity consumption of refrigerated reefers; this could cor- respond to a 30% (or 84 kW) increase in MEB’s annual electricity consumption for a 6oC increase in temperature. The risk of grain dust explosion is expected to be relatively low at MEB at present, provided grain dust and fire risks are adequately Figure 7 – Costs of raising the height of the mainland managed. Climate change is not expected to lead to any signifi- storage patio by 1.2 m for a range of discount rates. cant change in risk. Two adaptation scenarios are considered: 1) an adaptive management scenario (blue line) whereby the patio is raised by 20 cm six times between 2050 and 2100; and 2) a one- Hourly average wind speeds of between 13.9 and 17.1 m/s, that off adaptation scenario (red line) whereby it is raised all at prevent cranes from being moved, only occur about 2% of the once in 2050. (Although difficult to notice in this graph, the cost of adaptive management is lower than the one-off time in Cartagena at present. Hourly wind speeds above cranes’ option for all discount rates higher than 10%. At DR=16%, operational mode threshold (20 m/s) are rare. Gusts can also affect it is approximately 60% of the one-off option cost.) port operations, but no data is available for Cartagena. 14,000,000 No significant risk to MEB’s material handling and storage activities Cost of Adaptation (US$) 12,000,000 due to climate change is expected: 10,000,000 8,000,000 t $MJNBUFNPEFMTQSPKFDUNPEFTUXJOETQFFEJODSFBTFTJO$BSUB- 6,000,000 gena, at most 0.5 m/s in July–August by the 2080s. 4,000,000 t 5IFSFJTVODFSUBJOUZBCPVUGVUVSFJODSFBTFTJOUIFJOUFOTJUZPG 2,000,000 tropical cyclones in the Caribbean; however, Cartagena will 0 most likely not be affected due to its proximity to the Equator. 0% 5% 10% 15% 20% 25% Discount Rate t *OUFSSVQUJPOTUPMPBEJOHPSVOMPBEJOHPGTIJQTEVFUPIFBWZ One-off Adaptation Adaptive Management rainfall seldom occur at MEB. Future precipitation increases are anticipated, but in the case of MEB it is not expected that the frequency of disruptions to materials handling will increase sig- nificantly, based on assuming the observed 0.6% yearly increase in average rainfall continues in the future. 14 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Vehicle movements inside ports Increases in mean sea levels, storm surge heights and changes MEB’s lowest area is the causeway road linking its mainland and in wave regimes will increase flood risk for many coastal ports. island sites, which lies at 0.6 m above the port plan datum. With a continued sea level rise of 5.6 mm per year, the highest spring tide Ports on rivers and lakes could also face increased flood risk in is likely to exceed the height of the causeway by 2018. Under the areas where river flows or lake levels will change. accelerated sea level rise scenario, this is likely to occur as soon as 2015. Beyond this time, the causeway and surrounding areas will Ports’ drainage systems can be overwhelmed by intense be subject to shallow flooding on a weekly basis during the high precipitation, leading to surface flooding. tide period (September to December). The levels of operation interruptions, road closures and delays The analysis considered that when flooding is above 30 cm in caused by flooding will depend on flood duration and depth. depth, vehicles with high clearances (such as trucks) cannot move across it, which leads to business interruption costs. Frequent flooding of the causeway of more than 30 cm in depth is likely to occur from 2050 and 2080 onward under the accelerated and observed sea level rise scenarios respectively, although this does not include the effects of possible storm surges. Storm surges represent a far more unpredictable source of flooding which will act, in combination with tidal flooding, to overtop the causeway. Storm surge heights observed in Cartagena are low (171 mm for a 1 in 300 year event). The flood analysis carried out in this study is illustrated in Figure 8 and Figure 9. The financial analysis of seawater flooding to MEB demonstrates that this threatens MEB’s business continuity over the longer term, if no action is taken. By 2032 the cost of flooding of the causeway is estimated to be between 3% and 7% of MEB’s annual projected earnings in the observed and accelerated sea level rise scenarios respectively. In the accelerated sea level rise scenario, all earnings Figure 8 – 3D model of MEB showing projected seawater flooding during the highest spring tides (and the highest water level on the bay attributed to wind set up and rainfall) in 2050: under the observed sea level rise scenario (left) and the accelerated sea level rise scenario (right). Blue areas are underwater. In both cases, the causeway road is projected to be flooded. The inset map shows the mainland storage area in the foreground and the island in the background. Water level Water level +0.78m +1.06m Causeway flooded Causeway flooded Bulk cargo Bulk cargo storage flooded storage flooded Mainland Mainland storage entrance flooded flooded Mainland storage flooded 15 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque are wiped out by about 2065 and in the observed sea level rise Figure 9 – 3D model of MEB showing projected seawater scenario significant losses are incurred from 2060 onwards (repre- flooding by 2100 during the highest spring tides (and the highest water level in the bay due to wind set up and senting more than 10% of MEB‘s annual projected earnings). rainfall) under the accelerated sea level rise scenario and with the additional effect of a 1 in 300-year storm surge. To ensure that the causeway road is not flooded this century, rais- ing its height by 60 cm and 1.2 m is necessary in the observed and Water level +1.95m accelerated sea level rise scenarios respectively. It is expected that the cost is relatively small. MEB has two options: either raise the Causeway flooded causeway by the required amount at once or raise it incrementally Bulk cargo storage flooded this century as required. Overall, it appears cheaper for MEB to raise the causeway in increments under both sea level rise scenarios for discount rates above 0.2%. This adaptive management approach also has the advantage of allowing MEB to monitor the rate of ris- Mainland Mainland storage flooded entrance ing sea levels and adjusting adaptation decisions accordingly. flooded Mainland storage flooded Infrastructure, building and equipment damage Increased flood risk will have implications for port infrastruc- It is not expected that climate change (including seawater flooding) ture, building or equipment damage. For instance, increased will cause significant damage to MEB’s infrastructure, buildings and seawater flooding could lead to higher rates of metal corrosion equipment, or threaten MEB’s employees. This is due to both the on ports, especially as temperatures rise globally and salinity types of assets and construction materials present on the port and increases in some locations.15 the relatively low storm surge heights. While damage by shallow and temporary flooding is likely to For instance, the electricity sub-station on MEB’s island site is at the be limited in most ports due to the construction materials used same level as the quays and is not projected to be flooded by 2100 in ports, electrical equipment is very vulnerable with risks of (even by a 1 in 300-year storm surge). arcing and short-circuits. However, towards the end of the century, increased frequency of Fast-moving water associated with storm surge flooding can flooding could cause higher corrosion rates. dislodge containers and other cargo, knock down buildings, and damage equipment and port infrastructure such as piers, pave- ments and foundations. High winds can have similar impacts. Increased sea levels, changes in wave activity and river flows can aggravate coastal and soil erosion. With rising sea levels, the standards of protection of natural and man-made sea defenses will be reduced. 5FNQFSBUVSFTFOTJUJWFQPSUTUSVDUVSFT TVDIBTDSBOFT XJMMCF increasingly stressed by higher peak temperatures. 15 Increases in salinity have been observed in tropical surface waters. See IPCC WGI (Intergovernmental Panel on Climate Change Working Group 1). 2007. Climate Change 2007: The Physical Science Basis; Contributions of Working Group I to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change, ed. S. Solomon, D. Qin, M. Manning, Z. Chen, M. Marquis, K. B. Avery, M. Tignor, and H. L. Miller. Cambridge: Cambridge University Press, pp. 996. 16 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Inland transport beyond the port Ports rely on the efficiency and resilience of inland transporta- Most goods to and from MEB are transported by truck, though wa- tion networks and assets to move import and export goods and terway transport is also available. Transport cost is a decisive factor connect to major economic centers. that influences decisions on which Colombian ports customers use. Road, rail and waterway transportation systems can be affected Trucks coming in and out of MEB use a limited road network: by climate change in a number of ways. t 5ISFFUXPMBOFSFTJEFOUJBMTUSFFUTPSJFOUFEFBTUXFTUDPOOFDUJOH Higher temperatures and longer periods of extreme heat can: the port terminal gates and the highways, and t 5XPGPVSMBOFIJHIXBZTSVOOJOHJOUP&M#PTRVFHPJOHTPVUI t "ĊFDUSPBETVSGBDFT (Avenida Crisando Luque) or north (Avenida Bosque). t $BVTFSBJMUSBDLTUPCVDLMFBOEEBNBHFPWFSIFBEDBCMFT BOE t *ODSFBTFmSFSJTL Some flooding in Cartagena has been known to be caused by high sea levels. The roads neighboring MEB, assumed to be at 1.6 m In areas with frozen ground, rising temperatures will increase above the port plan datum, are projected to be at flood risk in the land instability. Where winters will be less snowy as well as accelerated sea level rise scenario by 2080 during the highest tides warmer, transport system winter maintenance requirements of the year and in the event of a 1 in 300-year storm surge. Flood could decrease. maps of the city produced using a Light Detection and Ranging (LiDAR) elevation dataset (which was not available for use in this Changes in rainfall regimes and extreme rainfall, and the as- study) indicate that roads outside MEB are at flood risk when sea sociated effects on soil moisture, will increase flood risk and levels reach 1 m. impact on ground stability. This will have consequences for the structural integrity of assets such as roads, bridges and Surface flooding is known to frequently affect parts of the city SBJMXBZT%BNBHFXJMMJODSFBTFJOBSFBTPGJODSFBTFEIVSSJDBOF (Castillo-Grande, Bocagrande and the old part of Cartagena). intensity. However, it is not known how El Bosque, as well as the roads used by MEB and its customers, are affected. In 2008, the University of In some areas, cargo transported on waterways will be affected Cartagena found that El Bosque had high levels of material dam- by reduced flows in rivers or water levels in lakes due to the ming its drainage channels causing localized siltation and structural compound effect of higher rates of evaporation and plant flaws. Due to the fact that the municipal drainage system in El transpiration, decreased surface water runoff and increased Bosque is already experiencing strain and that increased heavy droughts or dry spells associated with changes in land use. precipitation is expected, it would appear that surface flood risk of the local road network is increasing. It is recommended that MEB All of these potential impacts on transportation can cause de- monitors progress of the various ongoing studies into the issue and lays, traffic interruptions or transportation restrictions on the supports better drainage maintenance by the City. It is worth not- transport routes taking goods and materials to ports. They can ing that the large drainage channel built to the north of the port by affect port revenues significantly. For instance, inadequate rail MEB helps to manage surface flood risk. capacity in Australia caused severe bottlenecks for ship loading at major coal-exporting Australian ports. Outside Cartagena, much of the road network is already in a state of disrepair. Over 50% of it is classified as bad or very bad. The analysis of government data on hazards recorded in 2008 identified storms and floods as the major hazards affecting roads around Cartagena. Climate change could increase the rate of flood-related incidents. 17 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Insurance availability and costs Ports may face changes in insurance terms and costs as the MEB’s insurance covers damage related to typical weather-related incidence of severe weather events increases and knowledge of perils, such as floods, heavy rains, wind storms, tropical cyclones climate change impacts in the insurance industry improves. and extreme temperatures. For those ports that are most vulnerable to future extreme However, MEB does not have an ingress/egress policy, so that the climatic hazards, it is likely that insurance premiums and revenue consequences of business interruptions due to increased deductibles will increase at least proportionally to port claim flooding (e.g., between 3 and 7% of MEB’s projected earnings losses. by 2032 because of flooding of the causeway road as outlined earlier) will not be covered, unless it relates to damage or loss of Insurers commonly agree that port operators with robust insured assets. climate risk management strategies in place could avoid some of these impacts. Changes in MEB’s insurance conditions because of climate change cannot be excluded since: t $PMPNCJBJTBMSFBEZDPOTJEFSFECZUIFJOTVSBODFNBSLFUBThighly to very highly exposed to a number of climate-related hazards which are projected to further increase (such as floods), and t 5IFTUVEZGPVOEUIBUnPPESJTLXJMMDPOTJEFSBCMZJODSFBTFBU MEB, unless adaptation measures are taken. In 2010, MEB’s annual insurance premium was US$122,877. The study showed that raising the height of the causeway is economically beneficial from the 2040s and 2030s onwards for the observed and accelerated sea level rise scenarios respectively. Discussion with insurers conducted for this study indicate that some insurers would consider offering more favorable insurance to customers who have undertaken similar actions that reduce future risk. It is recommended that MEB considers raising the causeway, rather than contracting an ingress/egress insurance policy. Social performance Changing climatic condition can aggravate or create additional Overall it is thought that climate change will pose little, if any, safety risks to port workers related to cargo handling and use health risks to MEB’s workforce. There is a small chance that of machinery, vehicle movements and flammable materials. climate change could lead to an increase in eye, skin and cardio- vascular complaints among the workforce due to higher exposure Exposure to pollution may also increase under certain circum- to ultraviolet radiation in sunnier conditions and increased peak stances, for example if changes in sea conditions affect the risk temperatures in Cartagena. However, present-day costs to MEB for of chemical or oil spills. There could also be new pests and absenteeism due to these conditions are very small. diseases present in ports. Despite the limited risk, it would be useful for MEB to raise aware- Increased tensions in the relations between ports and surround- ness among staff that certain health and safety conditions can be ing communities is possible if the combined effects of climate influenced by climatic changes. change and port activities have negative community impacts. 18 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque There are very few people living in the vicinity of the port and MEB itself has limited impacts on these surrounding communities. MEB’s leadership is committed to good social management and main- tains good relations with the surrounding communities. It has been found that climate change is unlikely to create new problems for these communities or aggravate existing ones. For instance: t 8IBUFWFSQSFDJQJUBUJPODIBOHFTPDDVSJOUIFGVUVSF .&#QMBOT to pave the unpaved areas of the port, which will reduce the likelihood of mud spray on local roads. t 5IFVOGPVOEFEDPNNVOJUZQFSDFQUJPOUIBU.&#IBOEMFTDPBM which produces dust detrimental to human health (it handles coke) will not be affected by climate change. In fact, if the ob- served trend of increasing rainfall continues, coke dust genera- tion could be reduced. Environmental performance #ZJOnVFODJOHQPSUESFEHJOHSFRVJSFNFOUT DMJNBUFDIBOHFDBO MEB is certified according to ISO14001, which demonstrates a disturb sea beds and areas important to marine life. Increased commitment to environmental protection. temperatures, sea levels and storminess, as well as modified salinity, sea currents and water runoff, will have implications for The environmental impact of MEB’s operation is not expected to seabed conditions and sedimentation. be significantly affected by climate change, except for: Some of the major sources of port air pollution, as well as the t "JODSFBTFJOFOFSHZVTFGPSSFGSJHFSBUJPOBOEBTTPDJBUFE ways port air pollution is dispersed into the atmosphere, will greenhouse gas emissions, be affected by changes in factors such as wind, humidity and t "QPTTJCMFJODSFBTFPGUIFSJTLPGPWFSnPXPGTFEJNFOUUSBQTBOE temperature. Higher frequency and intensity of poor air quality oil/water traps due to seawater flooding at the port, and episodes, which can lead to restrictions to port operations, could t "MJNJUFE CVUOPUJNQPTTJCMF JODSFBTFESJTLPGQPMMVUBOUSVOPGG increase as a result. during episodes of surface flooding. Future increases in precipitation intensity will increase the risk In and around Cartagena, sea level rise and rising temperatures are of on-site or off-site pollution due to pollutant runoff, in par- expected to further degrade corals, mangroves and seagrass. ticular for ports with limited drainage capacity or with low levels of maintenance of sediment traps and oil/water separators. Works to raise the height of the causeway are likely to damage the surrounding mangrove. MEB could be required by the environmen- Waste reception and management facilities at ports could have tal agency of Cartagena (CARDIQUE) to pay for mangrove limited capacity to cope with future climatic changes. (re)generation elsewhere. Ports located near protected habitats or species could see their Sea level rise is also expected to have an impact on the mangrove. reputation challenged if changes in climate negatively impact Due to its location on the narrow tidal fringe against the port, these natural assets. it is not possible for the mangrove to retreat as sea level rises. Therefore it must move upward out of the water. To do this, the Overall, port environmental impact assessment and environ- sediment substrate must increase in height and it may be possible mental management plans which do not consider future changes for MEB to assist this process, for example through the use of in climate could be inadequate. dredge material. 19 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Climate risk and adaptation checklist The analyses undertaken for MEB in this study have shown that t (JWFTBOPWFSWJFXPGUIFDMJNBUFSFMBUFETFOTJUJWJUJFTBOEUISFTI- climate change can have material business implications for ports. olds of cargo ports in general, and also outlines some impacts Though some of the risks analyzed in this study are likely to be which are specific to ports in particular environments (e.g., specific to MEB and may not apply to other ports, a number of tropical and polar regions). them will be of broad relevance to the industry around the world. t 1SPWJEFTBMJTUPGBEBQUBUJPONFBTVSFTXIJDIDBOCFDPOTJEFSFE by port operators in response to climate change risks and op- The existing climate change research base often addresses port portunities. These include actions which help to build adaptive cities, rather than operational ports themselves. To help port capacity (such as improved monitoring of climate impacts) as operators and their stakeholders to identify climate-related risks well as the implementation of physical adaptation measures and possible adaptation options, a checklist is provided below. It is (such as modifications to port infrastructure). based on the findings of the study on MEB and a comprehensive literature review. While it is focused on cargo ports, many of the Notes on the checklist: issues it raises will be relevant to other types of port facilities. 1. The climate-related sensitivities and critical thresholds for which This checklist: the MEB study undertook risk assessments are highlighted in blue. For more information refer to the full study report. t $BUFHPSJ[FTDMJNBUFJNQBDUT SJTLTBOEPQQPSUVOJUJFT BDDPSEJOH 2. There is not a one-to-one mapping between columns 2 and 3. to the key operations undertaken at cargo ports (navigation, For instance, for some climate-related risks, the checklist pro- berthing, goods handling, etc.), along with other factors related vides more than one adaptation option. to port performance, such as demand, insurance availability and environmental and social performance. Risk areas Port sensitivities and Adaptation options and for ports potential climate change impacts opportunities for ports Demand, trade Supply and demand for products traded through Monitor impacts of climate change on supply and levels and ports is sensitive to climate change impacts on the demand for traded products (e.g., on production and patterns global economy, production, commodity prices and price of existing or potential products) buyers (e.g., increased temperatures may reduce Consider updating assumptions used in business crop yields, affect price and contribute to trade forecasting and strategy planning fluctuations) Over the longer term, identify opportunities for creating Port import and export markets are likely to shift in new or expanded port facilities in response to population response to climate-driven population movements. movements (Climatic changes such as increased flood and drought incidence may lead to substantial population movement Explore diversification of product lines in response to over the longer term) positive or negative climate change impacts on supply/ demand Customers’ perceptions of port service reliability Monitor customer expectations of reliability and concerns may change in response to increased climatic about disruptions, and inform them of plans to address disruptions these issues Navigation, Navigation depths in coastal ports and shipping Monitor changes in sea level and review dredging plans shipping and channels are sensitive to changes in sea level and schedules berthing Engage with those responsible for dredging to ensure changing risks are being managed appropriately Identify opportunities to accommodate larger ships due to sea level rise 20 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Risk areas Port sensitivities and Adaptation options and for ports potential climate change impacts opportunities for ports Navigation, Vertical operability range of quays, piers and Conduct berth operability assessments in light of shipping and material handling equipment may be affected by projected changes to sea level and, potentially, berthing changes in relative sea level storminess. Review suitability of berthing equipment or (continued) operations based on research outputs Consider sea level rise in refurbishment or replacement programs for infrastructure with a long design life (e.g., quays, docks, bridges) Clearance of vessels under bridges may be more difficult Monitor frequency of bridge openings. Where bridges due to sea level rise are operated by others, engage with them on their plans for addressing climate change impacts Maximum cargo limits, ship navigability and berthing Monitor customer responses to reduced cargo loads, restrictions at ports on rivers and lakes are sensitive to navigability and increased berthing restrictions, and changes in water level inform them of plans to address these issues Sedimentation in enclosed bays, rivers and lakes Monitor levels of sedimentation and review dredging is sensitive to climate impacts on runoff and soil plans and schedules conditions. Dredging requirements may be affected Engage with those responsible for managing changes in Ports on rivers, lakes and enclosed bays with large river sedimentation influx may be increasingly affected by debris build-up Engage with waterborne transit and navigation following extreme rainfall authorities to ensure changing risks are being managed appropriately Review contingency plans for delays and loss of traffic caused by reduced navigability Levels of protection for port access channels may be Review levels of protection for port access channels in affected due to climate impacts on man-made or natural light of climate change defenses Engage with relevant authorities on design and construction of climate change-resilient protection schemes Choice of port (and thus port competition) is sensitive Monitor research on climate change impacts and to the impacts of climate change on shipping costs. For shipping routes instance, as Arctic ice is melting to record levels, ships are Monitor changes in regional and international shipping beginning to use the Northern Sea Route from Europe conditions and costs to Asia. It offers significantly lower fuel costs than the southern route via the Indian Ocean Northern latitudes are seeing some of the most rapid Identify shipping routes and ports that are projected to changes in climate. Increasing seasonal and year-to- see the most significant changes, and take advantage of year variability in ice conditions will bring both risks and opportunities for new trade or longer access periods opportunities for shipping, access to ports and berthing operations Goods handling Crane operability will be affected if wind speed Review climate resilience of material handling systems in and storage thresholds are exceeded more frequently and/or if the light of climate change (e.g., use of closed areas for lightning incidence increases cargo handling) More frequent and intense heavy downpours may Review choice of material handling equipment on lead to greater disruption to operations involving renewal or purchase, taking account of climate change weather-sensitive cargo projections Goods may be spoiled if flooding increases due to Consider reorganizing storage to ensure perishables are sea level rise and/or increased storminess in less vulnerable areas Increases in peak rainfall intensity may exceed Measures to manage flood risk are described under drainage design standards, causing surface flooding Vehicle movements inside ports below and goods spoilage Security of supply of water and electricity utilities may Engage with utilities providers to understand their level decrease (e.g., due to climate change impacts on water of preparedness for climate variability and change, and resources affecting water supplies and power production, the conditions under which they would cut off supplies and increased energy demand for cooling) to the port 21 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Risk areas Port sensitivities and Adaptation options and for ports potential climate change impacts opportunities for ports Goods handling Energy costs for refrigeration are likely to increase Investigate opportunities for reducing energy and storage in response to higher temperatures consumption (e.g., more energy efficient reefers) (continued) Consider passing on increased energy costs to customers If conditions are becoming drier, needs for dust Review dust mitigation measures in light of changing suppression may increase, and at the same time, conditions water availability may be reduced Maximize opportunities for water recycling and harvesting Perishable goods may spoil more quickly in response Review frequency of quality checks/controls for stored to temperature increases and rainfall changes (e.g., perishable goods due to increased mold, mycotoxin, mites, sprouting) Consider putting refrigeration, cooling, insulation and ventilation systems in place. (Note that this could conflict with greenhouse gas emission reduction targets, so where possible systems should be energy efficient or powered by renewable energy) Risk of dust explosions may increase in areas Review dust mitigation measures in light of changing where climate change is expected to lead to lower conditions humidity Review plans for managing explosion risks Handling operations may be affected by changes in ice Review measures for managing operations during icy conditions at the port periods Vehicle Standard of coastal flood protection provided by Review standards of protection from flood risk on site in movements man-made or natural defenses may be reduced due light of knowledge about climate change impacts and inside ports to mean sea level rise and increased storminess. upgrade where necessary Low-lying port areas are more vulnerable to these Review evacuation and business continuity plans for impacts coastal flooding Ports located on estuaries, rivers and lakes may be at Avoid new development in low-lying areas increased risk of flooding due to the combined effect of changes in rainfall, sea level rise, tidal surge and Retrofit infrastructure or assets vulnerable to flooding storminess if cost-effective to do so (e.g., use water-resistant materials, insulate electrical equipment or move it out of flood risk areas, raise height of low-lying areas) Engage with public authorities responsible for flood protection to ensure that climate change resilience is being built into their investment planning Review insurance coverage for coastal flood risk In extreme cases where flood risks cannot be managed, consider relocating Increases in peak rainfall intensity may exceed Review on-site drainage system capacity and elevation drainage design standards, causing flash flooding of outlet pipes above sea level, in light of increases in and restricting vehicle movements precipitation intensity and sea level rise Sea water ingress through drainage outlets due to Consider need to increase drainage system capacity sea level rise may occur, leading to surface flooding and/or to fit one-way valves on drainage outlets to sea Review evacuation and business continuity plans for flash flooding Increase frequency of maintenance for drainage systems Review insurance coverage for surface flood risk On-site road conditions may be sensitive to rainfall Monitor changes to on-site road conditions and changes and higher temperature extremes associated maintenance costs Consider upgrading road surfaces to make them more climate-resilient 22 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Risk areas Port sensitivities and Adaptation options and for ports potential climate change impacts opportunities for ports Infrastructure, Coastal erosion and under-scouring of quays, pier Increase monitoring of infrastructure condition building and foundations, breakwaters, revetments and sea walls may Review and upgrade maintenance programs equipment be exacerbated by climate change damage If necessary, strengthen infrastructure foundations, stabilize slopes / embankments, taking account of climate change projections Restrict new development in low-lying areas In extreme cases, where risks cannot be managed, consider relocating Risk of water damage to electrical equipment may Measures to manage flood risk are described under be sensitive to changing rainfall conditions Vehicle movements inside ports above Containers, cargo and equipment may be dislodged or Consider use of water-resistant materials and equipment damaged by fast moving sea water or tidal river water Review and upgrade maintenance programs Quay and pier structures, pavements and buildings may be damaged by fast moving sea water or tidal river water Unreinforced terminal structures and equipment may be Monitor exceedance of wind-related thresholds for light vulnerable to damage in high winds structures and sensitive assets Review design standards for wind-sensitive equipment Review emergency and business continuity plans Temperature-sensitive structures and equipment may be Monitor performance of temperature-sensitive structures at risk from higher temperature extremes due to climate and equipment in extreme temperatures change Review design standards for temperature-sensitive structures and equipment If necessary, upgrade equipment to be able to cope with higher temperatures Corrosion rates are sensitive to flooding and water spray Monitor corrosion rates and temperature (which affects microbial activity) Consider use of corrosion-resistant materials Inland transport Reliability of inland transportation to and from Monitor levels of disruption to inland transport due to beyond port ports may be affected by higher temperatures climatic conditions (e.g., buckling of rails, melting of road surfaces), Monitor research on climate change impacts on transport changing rainfall (e.g., surface flooding, erosion of systems in regions of interest embankments) and sea level rise (coastal flooding and erosion). Inland transportation costs may Engage with public authorities or transport infrastructure change as a result companies on actions they are taking to build climate change resilience If possible, identify alternative transport routes which can be used if needed for business continuity Insurance Insurance terms and costs for weather-related losses Implement cost-effective measures to prevent weather- availability and are sensitive to changes in climate related losses, as outlined above costs Insurance underwriters may direct more climate change- Prepare for questions from underwriters by undertaking related questions at ports risk assessments and updating management and business continuity plans Insurance cover may become prohibitively expensive or unavailable in high risk areas. This can have Engage with insurance providers on actions being taken consequences when seeking finance to build resilience to weather-related events 23 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque Risk areas Port sensitivities and Adaptation options and for ports potential climate change impacts opportunities for ports Social Occupational hazards related to extreme weather Review health and safety policies and standards, and performance conditions may increase (e.g., heat stress, high emergency evacuation plans winds, heavy rainfall, lightning, flooding) Review storage and handling protocols for flammable Potential for increased risks of fire and spontaneous and explosive materials ignition due to higher temperatures and solar radiation Provide training to workers on changes in weather- Climate change impacts may increase worker exposure related risks to pollution (water, land and air) Monitor correlations between occupational health and Changing disease patterns due to climate change may safety incidents and weather conditions expose workers to new diseases Measures to manage changes in environmental risks are described below under Environmental performance Potential for increased conflicts with surrounding Understand vulnerability of surrounding communities to vulnerable communities whose livelihoods are climate change adversely affected by climate change (e.g., artisanal Maintain good relations with surrounding communities fishing) and engage with them on climate change issues Identify and implement actions which can have co- benefits for the port and surrounding communities (e.g., malaria control programs). These can be integrated into corporate social responsibility programs Climate change may lead to changes in country Engage with national government to understand impacts socio-economic conditions (e.g., through loss of of climate change on country socio-economic conditions, land and water stress leading to increased poverty and actions being taken to manage these and unrest) with consequences for business at the port In extreme cases, if climate change leads to environmental refugees, there could be mass migrations through ports (especially non-cargo ports) Environmental Risks of water, land and air pollution may increase due to Review and revise environmental management and performance changes in temperature, rainfall and storms monitoring plans and GHG emission reduction plans in light of climate change risks Energy use and greenhouse gas (GHG) emissions may increase due to temperature increases Dredging requirements may change due to changes Review and revise dredging and environmental in sedimentation rates and flows management plans Sensitive or protected habitats and species in the Monitor research on climate change impacts on sensitive vicinity of a port may become stressed due to habitats and species found in the vicinity of the port changing conditions, e.g.: Monitor the condition of surrounding habitats and Coastal habitats can be squeezed between rising species sea levels and man-made coastal defenses Engage with environmental regulator on climate change Coral reefs are under threat from increasing ocean impacts acidity (as higher levels of carbon dioxide in the Examine benefits provided to ports by surrounding atmosphere drive the oceans to absorb more carbon ecosystems and consider ecosystem-based adaptation dioxide) and rising ocean temperatures (e.g., mangroves for coastal protection) In response to climate change, protected species may Identify opportunities to improve the adaptive capacity migrate away from a port’s zone of influence (e.g., cold- of vulnerable species and habitats (e.g., facilitating their loving fish species are already migrating polewards), and migration) the port may be wrongly viewed as responsible for local species losses Adaptation actions being considered by a port may have Consider environmental implications when appraising adverse environmental implications (e.g., creating habitat potential adaptation actions squeeze as outlined above) Seek adaptation actions that have environmental co- benefits 24 Climate Risk and Business: Ports, Terminal Marítimo Muelles el Bosque C International Finance Corporation 2121 Pennsylvania Ave. NW Washington, DC 20433 Tel. 1-202-473-1000 www.ifc.org/climatechange The material in this publication is copyrighted. IFC encourages the dissemination of the content for educational purposes. Content from this publication may be used freely without prior permission, provided that clear attribution is given to IFC and that content is not used for commercial purposes. The findings, interpretations, views, and conclusions expressed herein are those of the authors and do not necessarily reflect the views of the Executive Directors of the International Finance Corporation or of the International Bank for Reconstruction and Development (the World Bank) or the governments they represent, or those of Terminal Marítimo Muelles el Bosque, S.A.