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The natural need for climate-change adaptation

The need for climate-change adaptation

Combined, all emissions-reduction commitments are setting the world on course for a 3°C rise in global temperature by 2050. Even if humanity succeeds in achieving the Paris Agreement target of limiting climate change to 1.5°C, we will still definitely face the adverse impacts of a hotter world.

There is a clear need for nations, businesses and communities to prepare for, and adapt to, extreme weather events at a higher frequency and perhaps fiercer intensity, and changes in local climates that will disrupt economies. This involves investing in the technologies and solutions that can enable greater resilience to the physical risks climate change.

In this Q&A, Head of Sustainability Research, Thomas Höhne-Sparborth and Quantitative analyst Laura Garcia discuss the cost-effectiveness of investing in adaptation solutions – especially those rooted in nature.   


What is physical risk and adaptation?

LG: Physical risks involve natural hazards that are influenced by the weather. They can be meteorologically related, like tropical cyclones, or ecologically related, like floods and soil erosion. Adaptation involves the adjustments we need to make within the ecological, social and economic systems in response to the changes that climate change is bringing. It also must take into account their frequency and severity.


The United Nations Environment Programme recognises four main types of climate-related hazards: coastal hazards, intense precipitation, droughts and rising temperatures. How can adaption serve as a solution to all of them?

LG: Adaptation has been historically focused more on engineering solutions, which cover mostly acute natural hazards such as floods and tropical cyclones. A good example is the Delta Works in the Netherlands, which was designed to protect 60% of the country’s surface area from coastal flooding.

However, adaptation should not be seen only as a solution that primarily relies on engineering because the trends that we are facing from climate change are much more existential. There will be climatological change in agricultural areas. So, for instance, countries that have relied on growing coffee may find that they might not be able to continue growing this crop.

We need to think more broadly around what kind of ecological and social measures we need to put in place, to help people and businesses adapt to changes that local economies will face.


How do the economics of investing in adaptation and preparedness stack up? Is the cost of implementing safety measures prohibitive?

THS: If we compare investment in adaptation to traditional investment, the occurrences are comparatively superior. Today, only around USD $30bn per year is being invested into adaptation.  This is far from sufficient. We probably need to increase this five- or ten-fold on an annual basis just to be able to prepare us for the changes we are expecting to see.

What you get out from adaptation is, firstly, reduced losses. Simply insulating ourselves from the damage that we see occurring already through wildfires and hurricanes around the world and adapting infrastructure and making sure we are prepared for those types of events will help protect against physical damage and economic disruption. In addition, many of these resilience measures improve productivity and efficiency, so you get some immediate returns there. This is especially the case when nature-based solutions are used to improve adaptation, as they can directly benefit to ecosystems and communities.

Generally, on average, from these investments you receive two-to-10-times the benefit compared to the original cost of some of these adaptation measures. It is worth doing, but it requires foresight, adequate planning and understanding of the real nature of some of these physical risks.


Currently, the estimate is that 5% of climate-change investment is spent on adaptation efforts. Why is the proportion so low?

THS: I think there are a few reasons. Psychologically, as a species we are not very well adapted to thinking about probabilities and risk. With physical risk, the probability of any particular event happening might be low, but the potential impact is very significant, which is sadly difficult to deal with and comprehend in the way our decision-making processes primarily work. A lack of awareness of the need for adaptation is probably a second factor in this. The costs are also significant to invest in adaptation measures, but the long-term returns can be even greater.


What are some adaptation projects that exist today and what may some look like in the future?

THS: In New York, there has just been an announcement of a USD 10bn plan to prepare the city for coastal flooding through engineering structures and natural solutions. In China, there is a pilot project focused on 30 cities around the development of so-called ‘sponge cities’. The idea is that instead of having hard infrastructure where water does not easily drain away, they are looking at making the cities more permeable. This involves more green space and natural drainage systems to introduce a type of resilience that is more natural. Often, natural solutions are more cost-effective than engineered solutions as well. For instance, mangrove forests are estimated to be two-to-five-times cheaper than the equivalent engineered solution for promoting stable and healthy waterways. And they provide other benefits too: mangroves are often called ‘fish factories’ due to their contributions to local biodiversity.


Are nature-based solutions becoming more common?

THS: At LOIM, we focus on natural capital. We believe the value of nature today is underappreciated. Nature produces a wealth of products and services, and supports the majority of our economy. It can also play a critical role in how we address these environmental challenges.

What is interesting about many of the nature-based solutions is that they deliver the same outcomes in terms of improved resilience to different types of physical risks and often do sell at a fraction of the cost. So, some of the most powerful tools we have are restoring some of these natural defences and protecting the ones we still have today. For example, forests help protect us from flooding and soil erosion, improve air quality and help manage the volume of carbon in the air.


If the world successfully achieves net-zero emissions by 2050, would this limit most of the physical risks we potentially face?

LG: No, we cannot avoid the problems of physical risks. Emissions in the past have already set huge volumes of carbon dioxide into the atmosphere, so even if we stop emitting by tomorrow, there will still be some physical risks, but it will be lower than what is predicted by most extreme scenarios. However, we are hopeful that adaptation methods for extreme weather conditions and risks will advance with more education.


This is an extract from CLIC™ Conversations, our podcast on sustainability and investment. The full episode can be heard here.

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