There’s a strong economic case for investing in climate adaptation: Across five sectors, every $1 invested in adaptation generates a return between $2 and $10. Despite these benefits, adaptation is not receiving finance at the necessary scale. Many governments, multilateral institutions and businesses are not yet factoring climate risks into their decisions, and many vulnerable countries lack the capacity to make these investments.

Climate risks and adaptation solutions should be built into all investment, budgeting and policy decisions. WRI is working with governments and the private sector to develop new tools and capacities to integrate climate risks throughout their decision-making. We also work with the IMF and the World Bank on diagnostics and actions to help developing countries better manage climate risks and build resilience as part of COVID-19 recovery stimulus spending.

Economic Benefits of Adaptation
Economic Benefits of Adaptation

Our work with adaptation finance includes:

1. Building Long-Term Capacity to Mainstream Adaptation.

WRI is developing a long-term capacity-building program to help finance, economies and planning ministries in V20 and African countries understand and manage climate risks. By focusing on central ministries, this program highlights how climate change must be reflected in a country’s nationally determined contribution (NDC) as well as its macro, fiscal, planning, budget and procurement policies. WRI is developing the program in partnership with the Coalition of Finance Ministers for Climate Action, the International Monetary Fund and the World Bank to help governments prepare for how the IMF is integrating climate change risks into its Article IV surveillance.

2. Supporting University Curriculum, Teaching and Research.

As part of the mainstreaming program, WRI is supporting university curriculum development, teaching and research in V20 and African countries in climate risk management. This university program will create a teaching network with academic partners in both developed and developing countries and promote centers of excellence in developing countries that train not only students, but also government officials and private companies in building climate resilience.

3. Scaling Private Adaptation Finance.

WRI co-founded the Coalition for Climate Resilient Investment (CCRI), now with 83 members of the private sector representing over $11 trillion in assets. CCRI, with leadership from WRI, is developing innovative instruments to mobilize private sector adaptation finance, such as the Systemic Risk Assessment Tool, Resilience Bonds Taxonomy and the Framework for Cash Flow Modeling. These efforts will lead to a multi-industry commitment at COP26 in the form of a League of Investment Funds for Resilience.

4. Finance and Economics Research

WRI has ongoing finance and economic research activities on quantifying the adaptation triple dividends, analyzing the economics of adaptation investments, and exploring how to make COVID-19 recoveries more climate resilient.

WRI is also working to help governments, civil society organizations and citizens better leverage climate funds to build resilience through the Adaptation Finance Accountability Initiative; craft next-generation guidance for the Green Climate Fund on adaptation; and in aligning their investments with their Paris Agreement goals.

Photo Credit: German Development Institute /Flickr