Investing $1.8 trillion globally in five areas to adapt to climate change can bring $7.1-trillion worth benefits
The costs of climate change on people and the economy are clear. Millions across the world recently united in a massive protest, urgently calling for action against climate change. But can adaptation measures help? According to experts, adaptation can deliver high rates of return, bringing multiple benefits to people and the economy.
Investing $1.8 trillion globally in five areas to adapt to climate change - from 2020 to 2030 - could generate $7.1 trillion in total net benefits, says the Global Commission on Adaptation report led by leaders in science, business, and politics.
“Adapting now is in our strong economic self-interest. The overall rate of return on investments in improved resilience is very high, with benefit-cost ratios ranging from 2:1 to 10:1, and in some cases even higher", says the report.
The leaders from the Global Commission on Adaptation have called on governments and businesses to take urgent action to innovate and advance climate adaptation solutions in light of their findings.
Led by Ban Ki-moon, who served as the eighth Secretary-General of the United Nations (UN), the Commission is guided by 34 commissioners, comprising leaders from political, business, multilateral, and scientific worlds; and it is convened by 20 countries.
“Climate impacts affect all regions of the world and cut across all sectors of society. People who did the least to cause the problem - especially those living in poverty and fragile areas - are most at risk. Without adaptation, climate change may depress growth in global agriculture yields up to 30% by 2050. The number of people who may lack sufficient water, at least one month per year, will soar from 3.6 billion today to more than 5 billion by 2050. This would cause unprecedented competition for water,” warns the report.
It says, “Rising seas and greater storm surges could force hundreds of millions of people in coastal cities from their homes, with a total cost to coastal urban areas of more than $1 trillion each year by 2050. Climate change could push more than 100 million people within developing countries below the poverty line by 2030.”
According to the researchers, failing to seize the economic benefits of climate adaptation with high-return investments would undermine trillions of dollars in potential growth and prosperity. The experts selected five areas for investing $1.8 trillion, which includes early warning systems, climate-resilient infrastructure, improved dryland agriculture crop production, global mangrove protection, and investments in making water resources more resilient.
“Climate change does not respect borders: it’s an international problem that can only be solved with cooperation and collaboration, across borders and worldwide. It is becoming increasingly clear that in many parts of the world, our climate has already changed, and we need to adapt. Mitigation and adaptation go hand-in-hand as two equally important building blocks of the Paris Climate Change Agreement. Adaptation is not only the right thing to do, it is also the smart thing to do to boost economic growth and create a climate-resilient world,” says Ban Ki-moon.
What can be done?
The Commission’s report highlights many economic, social, and environmental benefits of adaptation. For example, says the report, reducing flood risks in urban areas lowers financial costs, increases security, and makes investments that would otherwise be too vulnerable to climate risks more viable. London’s Canary Wharf and other developments in East London would have been impossible without flood protection from the Thames Barrier, the findings state.
Similarly, restoring mangrove forests, in places like Thailand, India and the Philippines, protects coastal communities from deadly storm surges while providing critical habitat to local fisheries, boosting the regions’ prosperity, say experts.
The researchers have focused on multiple solutions to accelerate adaptation and transformation in critical systems so that they become more resilient and productive. However, they say, while many improvements in adaptation and resilience will come from investments in key systems, investment decisions in both government and private markets do not yet systematically take physical climate risks into account, though they are starting to do so.
“Efforts to take climate risk into account and to improve the pricing of climate risk will help both the public and private sectors acquire a better technical and financial understanding of risk, establish priorities, and develop instruments to improve risk-pooling and contingency finance. Using better science and methodologies to provide information on hazards, exposure, and the vulnerabilities of people and assets can result in better investment decisions,” says the report.
The report calls for revolutions in three areas - understanding, planning, and finance - to ensure that climate impacts, risks, and solutions are factoring into decision making at all levels. It explores how these significant changes can be applied across interlocking systems: food, natural environment, water, cities, infrastructures, disaster risk management, and finance.
Stating that globally much of the infrastructure is crumbling, aging, or simply missing, the report says that tackling the infrastructure challenges will require significant investment. Simply repairing bridges, roads, ports, sewers, runways, and other vital public works in the US will cost an estimated $4.5 trillion, the experts say.
Accordingly, to ensure countries build infrastructure that can adapt to a changing climate, the report recommends undertaking inclusive and climate-informed planning for new and existing infrastructure, besides developing and updating national technical codes and standards to account for physical climate risks, adapting international best practices to local conditions. Climate-proofing existing infrastructure and building new infrastructure that is more climate-resilient makes sound economic sense, on average, the benefits outweigh costs by 4:1, it says.
Similarly, to tackle the water challenge, the Commission recommends governments to invest in healthy watersheds. Stating that wetlands, upland forests, and other crucial ecosystems - including 90% of the watersheds for large cities - are in serious trouble, the researchers warn this is compromising water security, increasing pollution, and raising the cost of water.
“A vital first step, therefore, is reversing the current degradation of these areas through new investments and better policies. Such actions would bring major ecosystem benefits, including more reliable water supplies and reduced flood risks. In Chile, the Santiago Water Fund is an innovative public-private partnership working to protect 80% of the city’s freshwater by securing new investments in conservation, natural infrastructure, and restoration in the Maipo River basin,” the findings state.
Vast amounts of water around the world are wasted through inefficiencies, with some of the worst problems in countries that are the most water-scarce. Accordingly, the experts say that water-resource agencies must develop fair and transparent mechanisms to guide reallocation to higher-value uses and provide the flexibility to deal with climate uncertainties.
The report also calls for cities to become water-smart. The researchers say that 14 of the world’s 20 megacities currently face severe water shortages that threaten economic productivity and quality of life. Water utilities and their regulators can make the available water go further by reducing demand through appropriate pricing and incentives for conservation, they recommend.
According to the experts, another critical aspect that can help tackle the water challenge is by preparing for a changing climate via planning for floods and droughts. “Since the future will not be like the past, water resource agencies to take new climate risks into account at every level of planning and operations. Planning can be improved via closer collaboration with meteorological and disaster management agencies,” they suggest.
As managing water effectively requires enormous amounts of information and analysis, the experts recommend that agencies must develop ground- and satellite-based monitoring systems, coupled with “advanced hydro-informatics.” Such measures, they say, will help provide enhanced weather, flood, and drought forecasting, to monitor environmental conditions and improve water management.
Investment in each of the five areas, will bring “triple dividend,” says the report. “The first dividend is avoided losses, that is, the ability of the investment to reduce future losses. The second is positive economic benefits through reducing risk, increasing productivity, and driving innovation through the need for adaptation; the third is social and environmental benefits,” it says.