The report ‘Guide for Adaptation and Resilience Finance’ (April 2024) figured that extreme weather and climate-related natural hazards have increased in frequency and intensity over the last decade, negatively impacting communities, businesses, the financial and natural assets
By Salam Rajesh
Economic losses resulting from natural hazard events during last year are estimated to be a whopping 250 billion US Dollars, a new report of the Standard Chartered, KPMG (Klynveid Peat Marwick Goerdeler) and the UNDRR (UN Office of Disaster Risk Reduction) said.
The report ‘Guide for Adaptation and Resilience Finance’ (April 2024) figured that extreme weather and climate-related natural hazards have increased in frequency and intensity over the last decade, negatively impacting communities, businesses, the financial and natural assets.
While underlining that climate change is considered a high-risk driver for meteorological, hydrological and environmental hazards, the report stressed that climate-related hazards impact natural assets, and subsequently the degradation of natural assets in turn increases the frequency and impact of climate-related hazards.
Re-emphasizing the hard fact that climate change is altering the frequency and intensity of hazard events, affecting vulnerability, and changing exposure patterns, KPMG International’s Global Managing Director (Climate Risk, Decarbonization, Nature & Adaptation) David Greenall says, “Climate change is transforming the risk profile of nations, communities, natural systems, and businesses”.
Greenall stressed that the UAE Framework for Global Climate Resilience recognized that ‘adaptation is essential for protecting lives, livelihoods, and economies. Implementing measures that both directly and indirectly reduce vulnerability and bolster resilience to climate and other natural hazards is critical. There needs to be a rapid move towards adaptation and resilience action’.
Marisa Drew, Standard Chartered’s Chief Sustainability Officer, while sharing on the financial implication of climate-related risks, emphasized on the need to ‘embed adaptation and resilience into financial decision-making to manage risks and identify new opportunities, given that every dollar spent on adaptation could generate up to USD 12 of economic benefit’.
The report while stressing on the integration of natural hazard risk measurement and management into the mandates and decisions of central banks and other financial and regulatory authorities to incentivize investments in risk reduction and resilience, categorically states that engagement with governments and regulators in promoting adaptation and resilience financing, business models, and data collection is the need of the hour.
The annual climate adaptation financing gap in developing countries is between USD 194 to 366 billion, approximately 10 to 18 times more than the current financing flows. This gap is expected to increase to USD 315 to 565 billion by the year 2050, the report stated. Further, development financing for disaster risk reduction as a whole has barely increased over the past 30 years, it added.
Aggregating over the period 2025 to 2100, the report is critical in pointing out that the total cost of inaction is estimated at USD 1266 trillion, that is, the difference in losses under a business-as-usual scenario and those incurred within a 1.5 degree Celsius pathway.
Natural hazard events are seen from three perspectives, which are (a) meteorological and hydrological events, (b) geological or geophysical events, and (c) environmental events, all factors responsible for adverse impacts on both the human and the natural environments.
The meteorological and hydrological events are primarily extreme weather and climate events such as drought, heat (extreme heat, heatwave), cold (extreme cold, cold wave), precipitation (riverine and pluvial flooding), wind (tornadoes, tropical storms), snow and ice, and coastal or oceanic (storm surge, ocean heatwave). The geological or geophysical events are rapid onset events such as earthquakes, landslides, tsunamis, and volcanic activity.
Environmental events are cited as the slow onset processes such as biodiversity and ecosystem loss, deforestation, soil degradation, desertification, land salination, loss of permafrost and sea ice, and disturbances (wildfire, forest dieback, eutrophication).
Citing examples illustrating indicators to assess the adaptation and resilience impact of specific investments, the report suggests resilient agrifood systems that would encompass an increase in agricultural land using more drought-resistant crops, bringing more area under climate-smart sustainable fisheries management, and ensuring a decrease in climate-related risk insurance premiums.
On resilient health systems, the report cites the example of the reduced number of people suffering from flood-related infections; the reduced number of people suffering from water-borne diseases; and, importantly, the reduction in people’s years lost or deaths due to vector-borne diseases related to climate change, respiratory distress and heat stroke, of various demographic groups within the population during extreme weather events.
The example of an impact indicator for resilient nature and biodiversity under the climate resilience theme focuses on the increase in area under sustainable or certified management, and a wider area of wetlands restored and covered under sustainable conservation practices.
On the example of impact indicator on resilient infrastructure, the suggested pathway is a visible increase in the number of households with access to resilient energy systems, the extent of infrastructure protected by land-use buffers and vegetation management, and an increase in the number of urban residents with access to thermally safe conditions in buildings, and increase the number of people benefitting from measures to mitigate the consequences of floods and droughts.
Adaptation and resilience investments include practices that belong to two broad categories, namely, adapted and enabling, and which are aligned with several climate resilience themes. These look at the processes for assessing and selecting eligible investments, including the assessment of substantial contribution, avoidance of maladaptation and significant harm to sustainability objectives.
This further translates to the analysis that adaptation and resilience strategies and plans refer to the investments that are consistent with the nationally or locally defined adaptation and resilience strategies and plans, while maladaptation and significant harm refers to the potential for maladaptation and significant harm to other sustainability objectives adequately mitigated.
In re-emphasizing resilience pathways in climate change discourse, the report stressed on resilient agrifood systems, resilient cities, resilient health, resilient infrastructure, resilient industry and commerce, resilient nature and biodiversity, and resilient societies, with a broad spectrum on Nature-based Solutions (NbS) in achieving the outcomes across all seven climate resilience themes.
NbS can play an important role in protecting the resilience of natural systems via the restoration, conservation, or sustainable management of ecosystems, that is, working with nature for positive nature outcomes, the report stated. The restoration of degraded forest and wetland ecosystems is vital NbS strategy.