Potential Impact

In this stage, users assess the impact that exposure to climate and geophysical hazards (identified previously) may have on their project’s physical investments (but not on project outcomes).
The potential impact from these hazards on the physical and structural components of the project is assessed for each sector or subsectors addressed in the project. This potential impact is assessed as the combination of the exposure and sensitivity of the physical assets, resources, and systems. The potential impact ratings rely on the user’s subject matter expertise and contextual understanding.
The General tool includes 7 defined sectors as well as additional subsectors, as follows:
  • Non-Road Transportation
    • Multi-modal and transit systems
    • Rail
    • Aviation
    • Marine transportation
    • River transportation
  • Information and Communication Technology (ICT)
  • Mining and metals
  • Solid waste
  • Industry
  • Natural Resources
    • Fisheries
    • Forestry
    • Biodiversity
  • Urban Development
  • Education
  • Finance
  • Community Development
  • Social Development
  • Other
Selection of sectors and subsectors: These sectors and subsectors align closely to World Bank internal coding systems. In order to reduce the burden on users, and because the sectors and subsectors under the General tool are rather distinct, the tool allows users to select up to three sectors and/or subsectors combined. Users are advised to select the three sectors and/or subsectors that cover the majority of their project investments.
As the nature of physical investments and associated potential impacts vary significantly from one sector/ subsector to another, this organization allows the user to capture the particular sensitivities within each sector/ subsector. In addition, the assessment results can be displayed by sector/ subsector, enabling users to identify which specific elements of their project are subject to high potential impacts.
Evaluating by time frame: Potential impacts are evaluated separately for the Historical/Current and Future time frames because the level of potential impact may change as exposure changes over time.
Historical and current. It is important to first evaluate historical trends and current baselines to understand the conditions and trends under which the project is currently operating. For example, recent trends may indicate that temperatures are rising and drought is increasing in frequency and severity, reducing the health of forest ecosystems and negatively affecting investments in forestry.
Future. Then, using the projections for future climate in that location and relating them to the relevant time scale (see Figure 2), users can focus on the aspects of their project that will be relevant to the outcome of the project in the Future time frame.
For investments with long lifetimes, such as physical infrastructure, considering future conditions is critical to avoid “locking in” designs that are not suited for higher sea levels or warmer temperatures. For example, rail track can be subject to buckling in the future if the materials are not designed to withstand extreme temperatures greater than recent or historical. Buildings may be damaged if they are located in areas that will be more exposed to sea level rise and storm surge, or if they are not designed to withstand more frequent or severe flooding.
Combining impacts from multiple hazards: The potential impact assessment is rated against multiple hazards, drawing on all of the exposure information and the expert judgment of the user. Displaying all of the hazards portrays a more integrated picture of climate in the project location and how that may affect the project.
For example, the combined impacts of increased temperature and drought on forests can be greater than the individual effects of each hazard – higher temperatures can increase the extent, intensity, and frequency of insect outbreaks, while drought can weaken trees and make them more susceptible to insect infestation. By viewing all of the hazards together, the user can identify these potential interactions and rate the impact accordingly. Alternatively, in some cases, the user may be able to quickly identify the key hazards that drive potential impact and prioritize those in selecting a rating.
Selecting ratings: The rating scale for potential impact looks like this:
Insufficient Understanding No Potential Impact Low Potential Impact Moderate Potential Impact High Potential Impact
In selecting these ratings, users combine sensitivity considerations with the previous exposure ratings to assess potential impact. Therefore, the potential impact ratings may or may not align with the exposure ratings. For example, even if drought-tolerant trees in an afforestation project are highly exposed to drought, the potential impact may be low due to the trees’ extremely low sensitivity to drought.
Furthermore, these ratings depend on subject matter expertise and contextual understanding. For more information on the potential impacts referenced in this tool, refer to the Resource Annex.