The Bill & Melinda Gates Foundation and the McKinsey Global Institute convened a roundtable of business leaders from across industries and development practitioners alongside UN Climate Week on the topic of climate adaptation. Key takeaways from the discussion include:
1. Action to increase resiliency is happening today and includes driving inclusive economic development, incorporating resilience into ongoing projects, and making specific adaptation investments.
The roundtable discussion highlighted work ongoing to build resiliency to today’s climate and continue to adapt to changing climate conditions expected in future. Historical emissions, combined with emissions projected under most likely future trajectories, point to a 1.5°C increase above global preindustrial temperatures by around 2030 and a 2°C increase by 2050. These global temperature increases are expected to increase the frequency and severity of many existing climate events in future. One event participant described a US city where the heat index reached 105°F (40.5°C) for 55 days this year and noted that its denizens rank heat impacts as their number one resilience related concern.
Adaptation and resiliency encompass an expansive set of activities, described by one participant as “faster development, better development and targeted adaptation interventions”. Multiple comments demonstrated that increasing incomes, particularly in the lowest-income settings, will inherently increase resilience and adaptation. Participants also stressed the importance of ensuring that new development and renewal investment is made with the climate of the future in mind, one example being the incorporation of increased resilience into long term investment cycles. Finally, the expected future impacts also highlighted the need to invest in targeted “adaptation solutions” today.
Many good examples of such adaptation solutions were discussed. Participants offered examples of irrigation and precision agriculture, buried power lines and microgrids, and disaster-proofed housing, cool pavements, and urban greening. Examples differed across sectors and country contexts and encompassed both structural solutions and behavioral changes.
Participants highlighted that to be successful, adaptation solutions must work across the value chain, be cross-sectoral and integrated with development efforts, involving multiple stakeholders in their design. Many participants also noted the value of promoting examples of successful adaptation to help share ideas about “what works” in different contexts.
2. Continued work is needed to unlock, direct, and make best use of various financial flows for adaptation purposes.
Overall, participants agreed that while there is perhaps more investment in adaptation measures than is currently “counted”, spending needs to increase. Additionally, the breadth of potential solutions requires a diverse range of financing types, such as private investments (often by individuals), public sector spending, and different blended forms of the two.
Specific barriers to each source of financing were discussed. Multiple participants noted that low-income individuals are unable to prioritize spending on targeted “adaptation-only” activities over other, more fundamental human needs. Human behavior being what it is, even well- resourced individuals tend to put off investments in adaptation to by nature uncertain events (like floods and storms), underestimating risks or assuming they’re unlikely to manifest soon, if at all.
Investments in adaptation by large scale public and private investors could be accelerated by better defining and structuring projects, including adopting an expansive view of returns beyond just financial impact. Among the other obstacles large investors face are a lack of project pipeline, the relatively small ticket size of many opportunities, and a lack of clarity about what constitutes an adaptation investment.
Participants highlighted opportunities to make better use of scarce capital by lowering the cost of individual adaptation activities through scale, mandates and subsidies, and regulation. Rethinking rules about how disaster funds are allocated to allow preventative adaptation was another opportunity mentioned to decrease costs borne by an individual.
3. Social and operational constraints also need resolution to accelerate adaptation.
Increasing physical impacts of climate events will increase demand for adaptation and therefore for some specific products. Participants noted that supply chains—for example, for inputs to air-conditioning units, water pipes, steel electricity poles, and building insulation—will need to scale in response. Other participants noted that regulation and red tape can impede adaptation. The “high touch” nature of adaptation activity (insofar as it exists today) was also described as a challenge – these are often small-scale solutions that need to be deployed individually, which requires a large effort to make a large-scale impact.
4. A variety of data gaps and needs exist, and although work is underway to resolve them, more effort is needed.
Data on climate risks is increasing, but more could be done to translate it into information useful at a local level. Participants noted that a lack of localized information was hampering rapid assessment of new development and specific adaptation solutions. Many participants highlighted the need for guidance to assess the impact and “returns” of adaptation activities, with potential frameworks, such as the “triple dividend”, suggested. Arriving a consensus on how to define an adaptation investment would help investors know where to direct capital (for example, towards companies who do not directly purport to be working on climate change but form a key part of an adaptation solution value chain, or towards companies that meet some definition of “resilient”).
5. Over time, adaptation and development are seen as synergistic, but tradeoffs were identified in the near term, given capital limitations and the need for upfront investment.
Participants stressed the high degree of overlap, particularly over the long term, between thoughtful development and adaptation to a changing climate. However, there was also an acknowledgement that the paucity of capital available for adaptation and development objectives, combined with the potentially high upfront costs of many solutions could require prioritization of activities in the near term.
6. Our discussion raised many questions, and we look forward to continuing to explore them with you in subsequent discussions.
Examples include:
- What are the tradeoffs between localization and standardization? How much ‘best practice’ can be quickly shared?
- How much adaptation is happening that simply isn’t captured in typical tracking of activities and finance?
- How much innovation is needed in adaptation solutions and where?
- How to account for uncertainty in climate models when planning adaptation?
- How to convey what adaptation action is happening “on the ground” into formal international climate negotiations?