Failure to invest in adaptation this decade could lead to significant damages and lost opportunities for growth in emerging markets
All nations will need to make significant adjustments to adapt to climate change – particularly emerging and fast-developing markets, which often have less developed infrastructure and greater exposure to extreme weather events.
This will be the case even if nations succeed in limiting global temperature rises to 1.5°C above pre-industrial levels as outlined in the Paris Agreement. As extreme weather events and other climate effects become more prevalent, climate resilience will need to be integrated into every facet of the economy.
Examples of adaptation measures include flood defences; research and development to improve the drought-tolerance of crops; or the planting and protection of existing nature-based solutions, such as coastal mangrove forests. Without such measures, lives and livelihoods will be at greater risk.
The Paris Agreement
The Paris Agreement is a landmark global pact on climate change, drafted in 2015 and signed by more than 190 nations. Its aim is to keep the global temperature rise this century well below 2°C (above pre-industrial levels) and to try to limit the temperature increase to 1.5°C. Although this temperature rise would still cause disruption, limiting warming to this level should help to mitigate climate change impacts.
Scientists estimate that global greenhouse gas emissions will need to be reduced to net zero by around 2050 to meet the 1.5°C target and minimise climate risk. These risks depend on the magnitude and rate of warming, geographic location, levels of development and vulnerability, and on the choices and implementation of adaptation and mitigation options.[1]
The cost of inactionClimate adaptation measures are urgently needed to conserve environments, protect populations, and safeguard livelihoods. For the 10 markets in this study, the cost of inaction could amount to an estimated USD376.6 billion (in a 1.5°C warming scenario) by the end of 2030.
[1] https://www.ipcc.ch/sr15/chapter/spm/Without an estimated minimum investment in adaptation of just USD30.4 billion, the 10 markets would face projected climate damages of USD338.8 billion, while missing out on a potential boost to GDP of USD37.8 billion.
In other words, the economic benefits of minimum adaptation in the 10 markets this decade are 12 times greater than the investment required. Reduced risk to life, property destruction, ecosystem degradation and displacement will be additional benefits.
Three key factors dictate the varying cost of inaction for the 10 markets in this study:
Projected climate damage: the projected economic damage to the market from climate change in the years to 2030 under a 1.5°C warming scenario. This considers gradual risks, such as the impact of temperature changes on labour productivity, and immediate risks, such as extreme weather events (including floods, droughts and storms) that can cause damage to infrastructure.
Adaptation investment impact: the ability of a market to translate adaptation investment into economic benefits. This measures how effectively adaptation investment can translate into more climate-resilient infrastructure, reflecting the specific nature of the adaptation measures required in each market and how well these measures mitigate the climate risk within the market.
Existing climate resilience: the existing level of adaptation measures within a market. The more resilient the market is to climate change today – based largely on its existing levels of adaptation measure – the less economic benefit that can be derived from new adaptation investment.
Each of the 10 markets within our study has a unique blend of these three characteristics.[2]
[2] See market spotlights in part four
Estimated economic benefit of adaptation investment in a 1.5°C warming scenarioUSD billions, by market
