We’re writing from Singapore this week, covering the annual Bentley Awards and summit, where the focus was palpably on managing climate risk. This coincides with our next event, Nature First & Resilient Cities on 24 November.
Apparently, in the world of predictive capital and population flows across the globe, not everyone pays attention to climate risk.
Parag Khanna does.
In the keynote address to Bentley Systems’ annual event focused on digital infrastructure awards in Singapore this week, Khanna, author of “bestseller” Move and founder of specialist global economic and population trends analyst AlphaGeo, had the audience riveted.
That’s not an easy thing to do when the room is stacked with digital tech nerds working on some of the biggest and most important infrastructure projects around the planet.
Jobs such as shoring up a hydro power plant in a remote part of the Philippines that’s prone to landslides, where Aboitiz Renewables used predictive geospatial and reality modelling to work out exactly where to insert supporting concrete pipes or even tree planting to curtail potential landslides (ultimately winning in its award category).
Or a massive city-wide flood mitigation strategy across Delhi, which is hammered by increasingly aggressive storms, a finalist but beaten to the winner’s dais by other equally ambitious efforts to hold an angry nature at bay in renewable energy projects, or overcome construction challenges in ports, trains or major buildings.
Each time we looked around, we could see deep concentration on what Khanna had to say about the threats of climate change and how it would impact the regions these people worked in and the challenges that still lay ahead.
What Khanna did was to interpret the data and the science his team collects in fine demographic detail, to bring into full technicolour visuals the scale and urgency of what is now unavoidable.
If you want to know where the big infrastructure investment opportunities will be in the near future, he told the audience, don’t just look at capital investment or economic growth patterns.
You need to drill down into demographic population movements of young people in particular – such as high net worth investors, skilled professionals, students, and tourists.
“If you look at it as a time series, and you correlate also some of the policy changes in countries, you can make more robust predictions about where you would expect people to be going in the future, and that can help you prioritise your geographies of intervention.”
And some places are shrinking.
“When one young person leaves Russia or Italy or even China or elsewhere, there isn’t someone else replacing them. Their populations are in structural decline.” It’s the same for parts of Europe, across Russia, and other parts of the world.
“Why would you invest in places that are shrinking?”
On the other hand, most of the world’s population is concentrated in areas that are becoming “red” on the map, by which he means those that will suffer most in the coming years.
“Our demographic future, our civilisational future, is mostly trapped in the wrong places, and there we don’t have free labour mobility. We don’t have a playbook for this. “
But in trying to work out where the winners will be, following economic growth alone won’t help.
“Whether it’s the IMF, S&P, you name it, they make their forecast with no reference whatsoever to climate,” Khanna said:
The winners are preparing for change
In a world in flux, if not imminent chaos, preparation for climate challenges is a big indicator of potential winners. But among the world’s major regions, only Singapore stands out as an exemplar.
“Singapore has great climate adaptation plans. It has the only 100 year climate adaptation plans of any country in the world. Sea walls, raising the roads, linking all the reservoirs, flood control measures, desalination, greywater treatment-everything is being done here.
“Can you name me one other country in the world that has such a robust climate adaptation plan? Sadly, it’s zero.”
There’s been huge focus on decarbonisation. This is a “public good”, he said, but now the focus is increasingly on adaptation, which is a private good.
What Singapore does to protect itself will benefit Singapore “and nobody else”.
The lack of focus on resilience among so many other countries will come alongside a growing list of stranded asses – power plants, real estate – all under threat of inundation with most assets unable to be moved because of the dearth of capital.
But people are not so constrained. Their movements threaten the emergence of what Khanna calls “vacant states” with the population movements he referred to earlier.
“What happens when entire countries are just vacated because you just can’t live there anymore? And that’s something that tragically is going to happen in our lifetime and on our watch. “
The outmigration phenomena is already accelerating.
“This is not a hypothetical future scenario,” he said. “This is everyday life in about 50 countries around the world, and most of those countries certainly do not have the financial resources to invest in this kind of climate adaptation [that’s needed].”
Who will be the winners?
Those most well resourced to adapt are regions, rather than countries, where resources are complementary and that are investing in communications.
Khanna says Hong Kong, “and what used to be called the Pearl River Delta Region, all the way up to Guangzhou, is now called the Greater Bay Area.”
This area has overtaken Greater Tokyo in in population and by economic value, he said.
Singapore is also well placed because though it has little land and a lot of labour its neighbours have much more land, much more labour and a “bit less capital”. Singapore, together, with Johor, Riau Islands, the Riau Islands of Indonesia, Johor of Malaysia form the “Growth Triangle”.
Fast growing connectivity infrastructure will create another backbone to these regions, he says. There’s China’s emerging low altitude “drone economy”, rapid entry and exit tech for facial recognition and across border currency exchange along with other emerging facilities.
“So all of that is going to create this incredibly rich growth region.”
It all adds up to what Khanna calls a “suitability index” for those cities and regions that will survive the coming challenges and are likely to do well, at least in terms of surviving the forecast 2 degree warming and possibly 4 degrees that’s forecast.
Kanna said his company has interrogated “every single province in the world” to find out what the likely impact of drought and heat stress is likely to be on elements such as manufacturing and agriculture, to develop more than 100 variables that can indicate performance.
These add up to what he calls biomarkers of countries and regions.
But the biggest marker of all, he says, is where young people are moving to.
These are the places that have “climate resilient geographies or where they’re going to adapt, invest in adaptation to be resilient.
“They’re of course going to be open to flows of talent. They’re going to be politically stable. They’re going to have good infrastructure. They’re going to have affordable housing, education.”
The Fifth Estate was a guest of Bentley Systems for the Year in Infrastructure Awards hosted in Singapore.
