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The warming of the planet has led to more frequent cold spells and heat waves.¹ In India, one of the countries hit hardest, the number of officially recorded heatwaves reached 484 in 2018, more than 10 times the number during the entire decade of the 1970’s.² Similarly, Africa experienced 24 extreme heat waves annually in the period between 2006 and 2015 – more than double the pace for the 25-year period preceding it.³
ESG at PGIM Fixed Income
With rising weather variability and changes in rainfall patterns, some parts of the world are becoming markedly more arid. Southern Europe provides a compelling example. It is relatively common to hear warnings of the Sahara Desert creeping northwards and even jumping the Mediterranean Sea.⁶ In reality, this process is well underway, from Spain and Portugal all the way to Cyprus and Turkey. The eastern Mediterranean region has been in a near continuous drought since 1998 with 50% less groundwater than the driest period in the past 500 years.⁷
ESG at PGIM Real Estate
DESERTIFICATION, DROUGHT & WILDFIRES
EXTREME TEMPERATURES
There is growing evidence global warming is leading to an increase in storm severity. Warming oceans have created higher-intensity hurricanes in the North Atlantic and cyclones in the South Indian oceans, leading to more storms achieving category 3 or higher intensity.⁴ Indeed, the number of named storms in the Atlantic hit a new record in 2020.⁵
ESG at PGIM Fixed Income
Since 2015
GROWING INTENSITY OF STORMS & HURRICANES
Perhaps the most visible impact of climate change has been the increase in flooding – both coastal and inland. Hotter temperatures and melting polar ice caps directly contribute to the rise in average sea level, which has accelerated in recent decades. As a result, coastal ocean flooding has risen dramatically. This not only means stronger storm surges and rising saltwater contaminating groundwater, but also more frequent “sunny day floods” at high tide even without severe rain events.
ESG at PGIM Fixed Income
Since 2015
FLOODING
DESERTIFICATION, DROUGHT & WILDFIRES
EXTREME TEMPERATURES
STORMS & HURRICANES
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FLOODING
QMA
DESERTIFICATION, DROUGHT & WILDFIRES
EXTREME TEMPERATURES
STORMS & HURRICANES
PGIM PrIVATE CAPITAL
FLOODING
QMA
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QMA's long-term outlook
IN PURSUIT OF YIELD ACROSS ASSET CLASSES
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Total Officially Recorded Heat Waves in India by Decade, 2010-2018
Source: “Extreme Events and Disasters,” India Meteorological Department, Ministry of Earth Sciences, 2019.
Storms Are Getting More Intense
Proportion of Global Major Hurricanes (Category 3-5) to Total Hurricanes, 1979-2017
Source: James P. Kossin, et al., “Global increase in major tropical cyclone exceedance probability over the past four decades,” Proceedings of the National Academy of Sciences of the US, May 18, 2020.
Note: Points represent three-year averages.
Current Water Stress in the Mediterranean Region
Source: Gassert, F., M. Luck, M. Landis, P. Reig, and T. Shiao. 2014. “Aqueduct Global Maps 2.1: Constructing Decision-Relevant Global Water Risk Indicators.” Working Paper. Washington, DC: World Resources Institute. http://www.wri.org/publication/aqueduct-globalmaps-21-indicators. Accessed through PREPdata, 01/26/2021. www.prepdata.org. Note: Water stress measures the ratio of total annual water withdrawal (Ut) to average annual available blue water (Ba), a commonly used indicator also known as relative water demand.
Low
Low to Medium
Medium to High
High
Extremely High
Arid & Low Water Use
No
Data
More Frequent Sunny Day Floods in Major US Cities
Source: “The State of High Tide Flooding and Annual Outlook,” US National Oceanic and Atmospheric Administration, 2020
2000
2019
Current Water Stress in the Mediterranean Region
Low
Low to Medium
Medium to High
Extremely High
Arid & Low Water Use
No
Data
High
Low
Low to Medium
Medium to High
Extremely High
Arid & Low Water Use
No
Data
High