Making the case for investing in adaptation
There have been a slew of announcements this year which all point to one thing: business has figured out that there’s a lot of money to be made in the transition to a Green Economy. Be it record low costs for solar and wind energy, huge commitments to clean energy in both China and India, announcements from Volvo and BMW that herald the beginning of the end for petrol and diesel cars, or climate commitments from investor after investor, the message is clear. The momentum being generated as the global economy creaks into gear with the aim of decarbonisation means that the picture with regards emissions is brighter than it has been for years. And, while this shift has been encouraged by important policy commitments on reducing emissions, it is being driven by the fact that the economics make sense and there is money to be made from the transition – making the change we are currently seeing much faster and more sustainable than it would otherwise be.
For me this highlights what I see as the critical question for adaptation at the moment; how do we encourage private sector investment in adaptation in a way that doesn’t exclude those most in need? Finance for adaptation from developed countries is important, but won't be anywhere near enough to meet the adaptation finance gap. What we’ve seen very clearly over the last two years is that once the business case is made for investment in clean energy, finance can move very quickly. What we need to do now is make that same case for investments which build resilience to climate change. As ever, this is more complex for adaptation than it is for mitigation, with key issues being how to identify the expected return on investments in products and services, and, crucially, how you make those accessible for the large number of people who have very little access to capital and/or credit. Solutions that are only accessible for mid-sized commercial famers but exclude smallholder or subsistence farmers, for example, will only exacerbate existing inequalities.
These are some of the questions we are exploring in our Private Markets for Climate Resilience project, and there are interesting models emerging for harnessing finance in an accessible way. We’ll be releasing initial briefs and products from the project over the coming months, so keep your eyes peeled!
As ever, if you’d like to engage on any of these issues we’d encourage you to get in touch, or better still join us in Oxford for next year’s Adaptation Academy!