Sea Level Rise: This Cycle Likely Matters Most For Policy & Insurance

Research evidence excerpt

Sea Level Rise: This Cycle Likely Matters Most For Policy & Insurance

expand to include prolonged or frequent inundation of coastal areas,

forced migrations and sovereign stress.

Regional Divergences: Asia and Africa bear the largest absolute and relative growth drag across

all horizons. North America faces the sharpest financial-channel impact in the near term due

to concentration of coastal wealth in repricing insurance/mortgage markets. This cycle, policy

responses are likely the key potential catalyst for shifts in chemical demand (particularly related to

construction and infrastructure investments).

Multiple Impact Channels...: Scenario analysis will be complicated by the range of impact channels:

Capital stock destruction & coastal real estate impairment; Insurance/reinsurance repricing and

coverage retreat; Agricultural productivity (salinization, delta stress); Tourism & coastal services

disruption; Port, logistics & trade infrastructure; Migration, displacement & labor reallocation;

Adaptation capex (partial offset); Sovereign risk premia & fiscal drag; Compound event frequency

(storm surge + SLR + tide). We believe the KISS approach is simply to roughly estimate a drag on

trend CAGRs based on a deviation in bps. Industries with sophisticated discounting mechanisms

likely react first as the scientific consensus evolves, which could lead to a significant period of

management priorities decoupling from investor concerns.

... Offset By Migration Triggering New Chemical Needs (And A Discrete TAM): Most studies on

climate-driven migration focus on the wet bulb temperature as a driver of larger-scale migration:

mean annual temperatures in the 11-15º C range provide a better explanation for where humans live

than precipitation, soil fertility or biomass productivity.