Water Risk-Return Modeling and Management: Threats and Opportunities

Excerpt

This edited book “Water Risk Modeling: Developing Risk-Return Management Techniques in Finance and Beyond” addresses the challenges posed to financial modeling by a rapidly changing water environment. Modeling challenges arise both from the translation of the multifold physical and transitional effects of water risk into a monetary framework, and from the evaluation of water risk for financial assets and institutions. This book provides a series of frameworks aimed at guiding the assessment of water-related opportunities and threats and offers a variety of strategies for coping with these challenges. The underlying assumptions are, first, that water-related risks exist in many dimensions and will further increase in the mid and long term; second, that changes in the hydrological and meteorological systems interact with multiple related ecological, economic, and social systems creating feedbacks and feedforwards with the financial system; and third, that changes in the water environment should not only be considered as negative or dangerous; rather, they also provide opportunities to prepare for situations which could pose potential risks. The term water challenges is thus a synonym for water-related opportunities and threats. …