Natural catrastrophe in China-flood and drought

China is characterised by enormous development
and economic growth during the last decade. This
growth comes with an increase in the development
of private and commercial properties as well as industrial
projects. The related increase in loss potential from natural
hazards, including but not limited to earthquakes and typhoons,
is substantial. Not only are megacities and coastal
areas affected, inland risks ie risks in rural areas must also
be taken into account.
The pattern of chronic flooding and chronic drought is
becoming increasingly familiar in China. In general, heavy
precipitation and floods affect the South, while the North
suffers from water shortages and droughts. There are also
areas suffering from both flood and drought within the
same year, like Chongqing in Sichuan province in central
China. The drought alone in this densely populated region
caused economic losses of US$1.3 billion in 20061.
The difference between flood and drought risk can be
seen in its real-time or delayed effects. Drought is usually
a slow onset and can take months or years to develop,
whereas flood generally shows an immediate, more sudden
and powerful effect. Nevertheless, both flood and drought
have an impact that can last several years, and can be seen
as a sustained anomaly of water resources.


Drought
The effects of drought can not only lead to a shortage of
water supply in rural and urban areas, but can also put a
heavy burden on industrial production. In the agricultural
sector, drought can mean a shortage of raw food or dairy
products, usually followed by an increase in the prices of
food to the consumer. Even the shipping industry is not
spared: Ships may be stranded due to low water levels in
major rivers. Furthermore, ground subsidence due to high
water consumption and decreasing groundwater levels can
also cause damage to buildings.
Serious droughts in China do not happen only in the
rural areas far away from the major cities. The Tianjin region
in the north of China often suffers from drought, and one
very long run lasted from 1996 to 2002. The city of Tianjin
as well as neighbouring Beijing had serious
water shortages. The severe droughts in 2006
and 2007 resulted in low groundwater levels
and there was no water available to fight a
forest fire in western Beijing. Significant
damage was averted only because the
wind blew in the right direction2.
Due to the unusually dry and warm
winter in the beginning of 2007, the
densely populated Shaanxi province in
northwestern China was also affected by
drought, with shortage of drinking
water in February this year3.


Flood
Compared to droughts, floods have
Droughts and Floods in China – A Vicious Cycle
Ms Tina Butzbach, who heads the Catastrophe Risk Management Department of Allianz SE Reinsurance
Branch Asia Pacific, looks at natural catastrophes in China as an example of the growing insurance risks in
emerging markets and some of the potential consequences for the insurance industry.
a more immediate effect and they are more powerful in
terms of obvious and direct consequences. Damage to
building contents in low-lying areas is very common, and
whole buildings can be totally destroyed due to powerful
streams and mudflow. Levee breaches can cause large areas
to be submerged and result in the pollution of drinking
water. In addition, there is a danger of the spread of infectious
diseases. Last but not least, the cost for cleaning flood
damage, debris and mud should not be underestimated.
The great flood of 1998 in the lower and middle Yangtze
basin affected around 240 million people. It was the
worst event since the 1954 flood. An event of this extent
today would cause even greater displacement and much
higher losses.
In 2005, the southern provinces of Guangxi and
Guangdong as well as Hong Kong were seriously affected
by flooding, while the central province of Anhui suffered
a record drought and Beijing a heatwave.
The following summer of 2006 brought severe flooding
to the Huaihe River basin, affecting more than 10 million
people, destroying 14,000 houses and causing estimated
economic losses of around US$663 million4. Furthermore,
in March 2007, the Yellow River experienced its worst
flooding since 19545.
Apart from severe river flood events, flash floods caused
by intense local precipitation might occur nearly anywhere
in China. Numerous events have caused many casualties
and serious damage in various regions in the country in
recent years.
Typhoons bringing intense rainfall have great potential
for causing damage not only due to strong winds, but also
because of the floods following the heavy precipitation.
The latest example is Typhoon Wipha which made landfall
on 19 September 2007 south of Wenzhou as a Category
3 storm on the Saffir-Simpson Hurricane scale. It moved
northward as a tropical storm, bringing heavy precipitation
to several provinces. The city of Shanghai and surrounding
areas were also severely affected by flooding.
Prior to landfall, more than two million people were
evacuated from the coastal and low-lying areas and around
40,000 vessels were recalled to the harbour. Even the
Women’s Football World Cup was affected, with delayed
or postponed matches.
Latest statistics showed that more than 6.5 million people
in Fujian and Zhejiang were affected by the typhoon
and the flooding, thousands of buildings were destroyed
and assumed economic losses amounted to more than
US$638 million – with figures expected to rise6.
Typhoon Wipha made landfall on the same location as
Super Typhoon Saomai in August 2006. Saomai was described
as the worst typhoon to hit the region in 50 years.
Inter-Governmental Panel on Climate Change
Report (IPCC)
According to the latest IPCC Report 20077, long-term
trends from 1900 to 2005 have been observed in precipitation
amount over many large regions. In Asia, significantly
increased precipitation has been observed in northern
and central Asia, and drying has been observed in parts
of southern Asia.
On the other hand, freshwater availability in Central,
South, East and Southeast Asia, particularly in large river
basins, is projected to decrease due to climate change.
Along with population growth and increasing demand for
water arising from higher standards of living, this water
shortage could adversely affect more than a billion people
by the 2050s.
IPCC has indicated the likelihood of more heavy precipitation
events in the future - which means increased frequency
or proportion of total rainfall from heavy precipitation events
over most areas in the world - as “very likely” (90-99%
probability of occurrence). In addition, the likelihood that
areas affected by droughts will increase is determined to be
“likely” (66-90% probability).