Resilient Economies Strategies for Sinking Cities and Flood Risks 2025

Introduction: Sinking cities While the world’s attention is often drawn to the visible impacts of climate change, another crisis is unfolding beneath our cities. From Jakarta to New Orleans, Bangkok to Mexico City, urban areas are experiencing land subsidence, sinking at rates that, in some cases, outpace global sea-level rise. Land subsidence – the gradual or rapid downward movement of the Earth’s surface – is estimated to affect two billion people worldwide.1 Commonly referred to as “sinking cities”, when applied to urban locations, subsidence is prevalent across continents with impacts observed both in coastal and inland cities. This phenomenon is primarily driven by human action, often resulting from a combination of unsustainable water and land use, rapid urbanization and underlying geological processes. The implications of sinking cities are far-reaching. Land subsidence alone can amplify flood risks, damage infrastructure and displace businesses and communities, resulting in economic losses. The economic exposure to potential land subsidence is estimated at $8.17 trillion, representing approximately 12% of global gross domestic product (GDP).2 Annual global economic losses attributable to subsidence are estimated to be in the billions of dollars.3 The negative impacts of land subsidence can compound when combined with climate risks, further undermining the stability of cities, communities and economies.4 The interaction between subsidence, sea-level rise and extreme weather (such as intense rainfall or heatwaves) can create threats, transforming what might have been a manageable or long-term risk into an immediate risk. This combination poses high risks for coastal areas, many of which are experiencing subsidence and are also affected by sea-level rise and extreme weather events. For instance, subsiding land reduces natural defences against storm surges, while rising sea levels push water inland.5 Extreme rainfall exacerbates flooding in areas compromised by land subsidence. In California, US, land subsidence relative to sea-level rise is projected to impact 4.3–8.7 million people across coastal communities.6 Although the root causes of these factors may vary, their impacts are converging, making it essential to integrate subsidence in urban resilience strategies, including flood and infrastructure management.7 One of the most striking examples is in Jakarta, Indonesia, where parts of the city are sinking by up to 200mm per year. Land loss and flooding have partly prompted the government’s decision to relocate the capital to Nusantara, Borneo Island. In the US, localized areas of New Orleans have subsided by more than 50mm over the past century, with hurricanes and sea-level rise compounding flood threats. Some areas of Mexico City were built on an ancient lakebed, parts of which are sinking at a rate of 350mm per year. These places have consequently experienced land loss, infrastructure damage and service disruptions. These challenges are also mirrored in other cities worldwide, highlighting the need for coordinated action. For the private sector, the risks are immediate. Industries such as real estate, agriculture and critical infrastructure face operational and supply chain disruptions, threatening profitability and business continuity. Companies with assets in sinking cities can face unaccounted costs, stranded assets and regulatory pressures. Flood damages in subsiding areas, for instance, can drive property devaluation and widen protection gaps in insurance coverage. Governments, meanwhile, are confronted with unaccounted costs for infrastructure repair, strained public services and the diversion of resources from other priorities. The compounding effects of subsidence, sea-level rise and climate extremes can trigger social disruptions, population displacement and public health challenges. For global leaders, proactive identification of and tackling such risks is essential for ensuring economic, social and environmental resilience and stability.Beneath the world’s cities, sinking land is undermining urban foundations and accelerating flood and infrastructure risks. Why should governments and businesses care? The interaction between subsidence, sea-level rise and extreme weather can create threats, transforming what might have been a manageable or long-term risk into an immediate risk. Resilient Economies: Strategies for Sinking Cities and Flood Risks 5