THE Philippines will suffer an average annual gross domestic product (GDP) loss of 0.7 percent due to water-related disasters such as droughts, floods and storms, according to new "Aquanomics" research from global professional services company GHD.
In its "Aquanomics: The economics of water risk and future resilience" report, which was issued to the press on Wednesday, GHD revealed that floods and tropical storms globally are predicted to amount to over 90 percent of direct losses (around $89 billion) between 2022 and 2050.
The study highlights the potential impact of extreme weather events on five critical sectors within the global economy: agriculture, banking and insurance, energy and utilities, FMCG and retail, and manufacturing and distribution. "While these sectors are diverse, with very different types and levels of water risk, they are all expected to face significant output losses in the years up to 2050," GHD said.
In the case of the Philippines, the Aquanomics research highlighted that the country's agricultural and retail sectors could be hit hardest, and that these rising threats need to be tackled now with greater focus on water recycling, desalination and smarter irrigation.
The study cited that the Philippines's agricultural sector is particularly vulnerable, with projected annual output losses of over 5 percent by 2030 and 8 percent by 2050. In 2020, the sector generated a gross value added of about P1.78 trillion, or 10.2-percent share of the country's GDP.
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"Storms are expected to have the greatest direct impact on the Philippine economy ($47 billion), followed by floods ($42 billion) and droughts ($3 billion)," it said. This is the first time that the economic impact of these water-related disasters have been calculated at a GDP and sector level.
Rod Naylor, global water lead of GHD, emphasized improved sanitation, water supply and sanitation services as key focus to address accelerating climate risks in the Philippines, with 3 million Filipino citizens currently relying on unsafe water sources and 7 million lacking access.
"The Philippine Water Supply and Sanitation Master Plan calls for a total investment of around P1.1 trillion to achieve universal access to water and sanitation for all Filipinos by 2030. GHD partners with the country's major water utility providers to achieve universal access to safe, sufficient and sustainable water supply," Naylor said.
As water is a crucial connector between sectors, no matter what size, enabling circular economies and global supply chains, the Aquanomics study pointed out that no sector is protected against operational disruption in the face of water-related disasters.
"By focusing on economic impacts, as we have done with this study, we aim to help identify and unlock the social and environmental benefits of tackling water risk head-on. As well as highlighting risk, this study explores some of the ways in which our focus countries can adapt to change and build resilience in their water systems. With water risk on the rise, we need to adopt a proactive, holistic and inclusive approach in understanding and addressing fast-developing challenges," Naylor said.
To improve flood management in the Philippines, investment needs to be targeted to building infrastructure in the right areas and working with nature to channel water away, the study noted.
"At GHD, we are focused on working with stakeholders to develop and implement integrated solutions to this challenge.
This means understanding and optimizing the infrastructure already in place and collaborating with our clients and industry peers to consider different kinds of assets that work in harmony with communities and nature," explained Naylor.