Study shows that a 1-in-20 year flood in 2030 could erase up to 4.1pc of Malaysia's GDP in 2030 [BTTV]

KUALA LUMPUR: A joint study by The World Bank and Bank Negara Malaysia (BNM) has found that a hypothetical 1-in-20-year flood could cost Malaysia up to 4.1 percent of gross domestic product (GDP) in 2030, and up to a 2.2 percentage point increase in unemployment rate.

The 128-page report entitled "Managing Flood Risks - Leveraging Finance for Business Resilience in Malaysia" is a first attempt to assess the macroeconomic and financial sector impact of flood events, despite the limited availability of granular data.

Floods have been Malaysia's most frequent natural disaster, accounting for 85 percent of all natural disasters since 2000. Malaysia has one of the world's highest levels of exposure to flood-related disasters, ranking 12th in the world in terms of the frequency of events but 78th in terms of the average annual damages.

The report said the projected increase in precipitation means that what would historically have been a 1-in-100-year flood event could become a 1-in-50-year or 1-in-25-year event.


In December 2021, Malaysia experienced 1-in-100- year rainfalls, which resulted in disastrous flooding events across many parts of the country and caused significant economic losses, almost 50 deaths, and the evacuation of about 400,000 people.

At the national level, the Department of Statistics Malaysia (DOSM) estimates that damages caused by the flood events in December 2021 and January 2022 alone at RM6.1 billion, and equivalent to 0.4 percent of the country's nominal GDP, with business premises, manufacturing, and the agriculture sector accounting for RM1.5 billion or 25 percent of total damages.

The two scenarios examined in the report considers a hypothetical 1-in-20-year flood without adaptation efforts; and a hypothetical 1-in-20-year flood, with additional adaptation measures.

Adaptation refers to adjustments in ecological, social or economic systems in response to actual or expected climatic stimuli and their effects.

The first scenario has it that a hypothetical 1-in-20-year flood could cost Malaysia up to 4.1 percent of gross domestic product (GDP) in 2030.

These estimates consider historical data regarding flood hazard risks.

While the second scenario of a 1-in-20 year flood in 2030 with adaptation efforts, estimates that a comprehensive combination of regulatory measures (for example, on zoning, building regulations, and early warning systems), climate resilient infrastructure investments, and ecosystem improvements, could reduce the economic impact of floods by more than 40 percent.

Moreover, the estimates indicate that adaptation costs about 0.2 percent of annual GDP, making the measures likely cost-effective.

The World Bank and Bank Negara Malaysia report also includes a roadmap for policy action, highlighting the need for collaboration across a wide range of policy makers in Malaysia.

Short-term measures include the government of Malaysia publishing flood hazard maps to expand public access to information, as well as raising awareness on it, as well as coming up with a national adaptation strategy with a prioritised action plan that outlines clear adaptation goals toward flood risks.


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