The climate change story is dark, grim, and unfortunately, also real. One that moved beyond the threshold of deniability long ago; one that is invariably told in the language of threats and implications, woven in numbers that refuse to camouflage or cloak themselves in shards of hope.
A world that continues to emit 1,337 tonnes of carbon dioxide every second, and is inching towards a 2°C hotter fate, must brace itself to pay in terms of lives and livelihoods. If projections by the recent ‘2023 Lancet Countdown’ report hold true, climate inaction is likely to cause a three-fold increase in heat-related deaths by mid-century. There is no denying that climate change concerns have moved beyond ecological paradigms and have come too close for comfort.
Clearly, it is time to recalibrate the strategy and reimagine the approach to solve the climate change conundrum. Taking a cue from the Lancet study which points out how the “pace and scale of mitigation efforts” have been “woefully inadequate” to safeguard people’s health and safety, one can assert that the holy grail of climate action, apart from mitigation, must imperatively include climate adaptation. In evolutionary terms, this adaptation can range from drought-resistant crops, heat-resistant building materials, storm-proof resilient housing, flood defense systems, robust disaster management technologies, to innovative insurance schemes.
In fact, research studies, over the years, have built up a strong business case for adaptation financing. The Global Commission on Adaptation has found the overall rate of return on investments in improved resilience—in early warning systems, climate-resilient infrastructure, improved dryland agriculture, mangrove protection, and adaptation of water resources—to range from 2:1 to 10:1. And in some cases, even higher.
Another study, ‘The Adaptation Economy’, by Standard Chartered, also merits mention here. The Bank investigated the need for climate adaptation investment in ten markets including India, China, and Bangladesh and found that failing a minimum investment of $30 billion in adaptation by 2030, these markets could face estimated damages and lost GDP growth of $377 billion. Interestingly, the $30 billion adaptation investment accounts for just 0.1% of the combined annual GDP of the 10 markets and weighs much less than the estimated $95 trillion they’d require to transition to net zero using mitigation measures. Of the 10 markets, India is projected to benefit the most from adaptation investment—with a $11 billion investment estimated to prevent climate damages and lost growth of $135.5 billion—giving a favorable thirteen-to-one return.
Climate Adaptation has achieved several milestones in the last couple of years—the ‘Adaptation Action Coalition’ formed in 2021, the ‘Call for Action on Resilience and Adaptation’ in 2019, and the ‘Global Commission for Adaptation’ in 2018–2020. Five out of six parties to the United Nations Framework Convention on Climate Change (UNFCCC) have a national adaptation plan or strategy in place; 25% of the countries even have legal instruments to create mandates for their respective national governments to plan for adaptation.
Yet another perspective in this context is anything but impressive. Studies point out that while 27 Asia-Pacific countries have updated their adaptation plans, only 8% of the regional finance for climate change is devoted to adaptation. In fact, and unfortunately so, the adaptation financing gap is unapologetically glaring. UNEP’s ‘Adaptation Gap Report 2023’ pits the adaptation financing costs of $215 billion-$387 billion against the finance flows of $21.3 billion to reflect a deficit ranging between $194 billion-$366 billion per year. Even if finance flows from developed to developing countries double to reach $40 billion by 2025, as pledged at COP 26 in Glasgow, it will reduce the gap by no more than 10%.
With the poorest of countries at the forefront of the risk, it is time to reiterate the need for developed countries to deliver the promised $100 billion a year in climate finance for developing countries, with half of the capital flow directed to the adaptation economy. Extreme weather events such as hurricanes, floods, and heat waves, have cost the world an estimated $2.8 trillion in the last two decades. Given the severity of climate change impact is on the rise, this cost may shoot up to $3.1 trillion per year by 2050.
With the burden of climate inaction compounding at an exponential rate, it is time to take charge lock, stock, and barrel. Even as leaders and multilateral organisations tried to identify and address the gaps in the adaptation economy at the recently concluded C0-28, there is still scope for concerted efforts to streamline the Loss and Damage Fund negotiated at COP 27 and bolster it with its predecessors, including the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts (WIM) at COP 19, and the Santiago Network for Loss and Damage set up at COP 25. It is equally crucial to harness the potential of instruments such as the ‘Systematic Observations Financing Facility.’ Given the magnanimity of the challenge at hand, it is equally imperative for the private sector to step in and support the public sector through adaptation investments.
While the climate change story may be dark and grim, its end is yet to be penned. Adaptation financing is certainly worthy of transforming the script to an optimistic note.
The author is Director, Thematic Collaboration at Asian Venture Philanthropy Network (AVPN)
