In February 2023, China’s weather agency China Meteorological Administration (CMA) asked the country’s regional authorities to prepare for more extreme weather during the year.

According to media reports the CMA spokesperson said that country’s southern regions need to brace for more persistent high temperatures and ensure that energy supplies are available to meet the summer demand peak, while northern regions will have to prepare for heavy floods.

Floods are man made

Speaking with Asia Insurance Review, Asian Risks Management Services founder and general manager Marc Burban said, “In some way, floods are not a natural phenomenon They are a man-made catastrophic event.”

According to Swiss Re (Sigma 1/2022) there is an upward trend in the occurrence and severity of floods and the total insured losses due to floods during the decade to 2021 were about $80bn.

Floods are considered as one of the deadliest perils after earthquake and on average claim more than 2,500 victims annually and a little more than 20% of these are from China.

The overall economic losses for China in 2021 due to floods were around $25bn with only $2.4bn covered by insurance. The Henan floods took place in July 2021.

Mr Burban said, “Munich Re, in its publication The growing threat of floods and typhoons in an underinsured China, has confirmed the upward trend of floods in China with a low ratio of insured losses (only about 2%) due to low level of awareness and poor penetration of insurance. The Chinese population traditionally relies on the government’s relief and rehabilitation efforts.

“This practice, however, is not sustainable in the long term. To assess the severity of floods and forecasting their occurrence becomes more and more difficult, to some extent due to climate change.”

Mr Burban said, “No doubt climate change is making natural events more regular and catastrophic, however, it is also due to the development and growth of urbanisation, at times in a haphazard manner, and at times unbridled economic activities. As an example, to allow the development of urban areas and industrial development, many lakes were dried and filled up.”

Human contribution to catastrophes

Speaking about urbanisation and how it adds to flood risk, Mr Burban said, “Urbanisation is often combined with the expansion of reclaimed land from backfills of rivers and lakes. During monsoon the water cannot be absorbed by the land and just flows over large built up areas with roads, pavements and other structures. The high volume of water falling down in a short period of time, creates devastation across the area.”

The rainfall that occurred across China’s Henan province in July 2021 literally poured 364mm of rainfall over Zhongshan within 24 hours in 2021 while the city of Zhengzhou recorded 201mm of rain in one hour. These torrential downpours led to direct economic losses of more than CNY65.5bn ($10bn) and over 290 deaths.

He said, “Insurance is a response to cope with these kind of events, however, due to the size of losses, the increase in frequency and intensity of such catastrophic events, we should consider risk mitigation and loss prevention aspects too to mitigate the devastating outcome of such events.”

Risk management should apply to the ecosystem and urbanization on the top of traditional measures already in place. One way to do so is the concept of sponge cities.

According to the Munich Re publication, “A primary reason for low insurance penetration level in China is a lack of risk management awareness.”

Mr Burban said, “Communities, financial institutions and government are often not familiar with the benefits of the insurance options available to them, or the fact that insurance solutions can be customised to the specifics of a given certain situation, so-called scenario-based insurance.”

Concept of sponge cities

Mr Burban said, “Restoring the laws of nature is the only way to mitigate losses from flood. China has initiated a project of sponge cities where priority is given to retain the water mainly to the expansion of land free from grey infrastructure, to restore lakes, rivers and ponds.”

According to a World Bank document China loses an estimated 1% of its GDP every year on average due to floods, with more than 640 cities subject to flood risks, and 67% of its population living in flood-prone areas.

The document says conventional urban flood management approaches alone may no longer be sufficient to provide the climate resilience and level of services required to address the heightened threats. Increasingly, cities are exploring the integration of natural or semi-natural measures, such as permeable roads, rain gardens, green roofs, and constructed wetlands, among others, to mimic natural water cycles to mitigate the effects of human development.

These nature-based solutions have emerged as important tools along the continuum of grey, green, and blue solutions that can help to build resilience, develop sustainable adaptations.

Mr Burban said the idea behind this is to let the water flowing being recaptured through infiltration in the soil. The water retained can be used to fill up aquifers, cleansing the soil and recharging the ground-water. This is, probably, the first step to re-use the rainwater to develop agriculture, providing water to other human activities even drinkable water.

“The Chinese government had launched two batches of sponge cities pilot projects in 2013 and 2014, in cities such as Wuhan, Xiamen, Nanning, Beijing, Tianjin. The aim is to develop infrastructure allowing the capture of water through building parks, restoring lakes, rivers and even railway tracks free of impermeable soil. At some stage, instead of fighting against the force of nature by not letting the water permeate into the ground, the concept of a sponge city is based on cooperation between the natural elements, creating identity, harmony,” said Mr Burban.

The port city of Ningbo in China was perhaps among the earliest sponge city in the country. A 3km strip of brownfield was transformed into an eco-corridor and public park. This and other sponge cities use nature to absorb, clean and distribute water, rather than using concrete to channel rainwater away.

China plans to turn 80% of its urban areas into ‘sponge-like’ by 2030. It is expected to address surface-water flooding, enhancing water conservation while improving environmental quality, community health and economic prosperity.