As Paradise Properties CEO Ajanee Kallapur began thinking about what aspects of sustainability were most important for Paradise Cove, she realized that success of the hotel was critically linked to the environment and that climate change would potentially pose a huge risk for the hotel's future. Further, Miguel Solano, a large ESG fund manager, had contacted Paradise Properties because he was thinking of including Paradise Properties in a new sustainable investment fund. Miguel indicated that the resilience of companies to climate change was a key factor in deciding which companies to include in the fund. He suggested that Ajanee take a look at TCFD disclosure recommendations, particularly regarding scenario analysis, as a means of demonstrating Paradise Properties' resilience to climate change. After looking at the recommendations, Ajanee decides that as a new reporter, she should start slowly so that her company can both learn how to apply scenario analysis to the company for reporting and get the most out of the exercise in terms of thinking strategically about climate change.

Focusing on PC for her initial foray into scenario analysis, Ajanee believes that PC's coastal location near the Great Barrier Reef results in the potential for severe physical risks due to climate change. Ajanee decides to focus on scenarios that consider an extreme increase in atmospheric carbon, with an accompanying large increase in global temperature (i.e., RCP 8.5).

Risks under RCP 8.5 include the impact of extreme weather events on PC's infrastructure and beaches, as well as on the nearby coral reefs. In addition to these acute events, chronic impacts such as sea level rise, rising temperatures, changes in rainfall patterns, and ocean acidification would likely impact the hotel's infrastructure and the hotel's nature-based activities for hotel customers such as diving, nature walks, etc. These activities would not only be affected by changes in the physical environment, but also because hotel customers would be less interested in outdoor activities during high heat days.

Risk: Detail:

Loss of habitat	Encroaching seas reduce the size of wetlands and other coastal ecosystems that are the basis of nature-based tourism.
Loss of sand; beach erosion	The loss of sand is a major problem for the tourism industry (e.g. on the Gold Coast) and extreme weather events (e.g. tropical cyclones and their wider effects) exacerbate natural erosion rates, leading to amenity value decline and - in the worst case - loss of access to beach or dangerous beach profiles. Sea-level rise and extreme weather events combine to increase erosion risk.
Destruction of reefs	Damage from tropical cyclones reduces the resilience of reefs. Reefs are also vulnerable due to other pressures such as ocean temperature rise and acidification, which increase bleaching.
Damage to assets	More severe storms will put waterfront and coastal infrastructure at risk, including marinas, jetties, boat ramps, roads, restaurants, accommodation, and other buildings.
Bad weather	Weather can negatively impact the enjoyment of tourists through increased likelihood of seasickness and reduced visibility for sightseeing, snorkeling and diving. Sail boat operators in particular could be impacted by reduced demand due to an increase in the number of days with strong winds and rough seas.
Water shortage (drought)	Tourist businesses are often high water consumers.
Tourist comfort decreased and heat hazard	Increasing temperatures pose a challenge for tourism in destinations that are already classified as hot or potentially 'uncomfortable'. For example, tourists may alter their destination choices to avoid uncomfortably hot climates.
Impact on destination image	Extreme events can affect a destination for a long time, especially when impacts are handled poorly.

Required:

1. The table below lists several potential physical risk impacts that PCs might face in an RCP 8.5 world. For each risk, identify a way that PC management could try to address the risk. For each risk, briefly discuss challenges that PC management would face in implementing your suggestion. Are there any opportunities related to the risk?

Answer rating: 100% (QA)

Risk Loss of habitat Loss of sand beach erosion Destruction of reefs Damage to assets Bad weather Wa... View the full answer