Climate change will test our infrastructure and require increased focus on adaptation and resilience. Our economy and society will need to prepare for climate impacts as we face more extreme weather events and disasters.
That requires a shift in thinking. The majority of climate activism and investment has focused on mitigation – slashing greenhouse gas emissions to head off continued warming before it leads to catastrophic climate change.
To properly address adaptation and resilience, one must accept that the climate is already changing and action is needed to protect against a warmer, wetter world and more powerful disasters. For some climate activists, adaptation may feel like a concession.
But mitigation-only strategies are not really an option anymore. In March 2023, the IPCC science panel found that the global effort to hold warming to 1.5 C is falling behind, and urged policymakers to accelerate and prioritize adaptation in this decade to avert rising climate change impacts and risks.
“We know that climate change is the defining challenge of our time,” said Satya Rhodes-Conway, the mayor of Madison, Wisconsin and chairman of Climate Mayors. “We have to focus on mitigation, but also on adaptation. We have to build, and rebuild, infrastructure and the built environment to be resilient to our changing climate and to climate disasters. That is a big task.”
In coming months we’ll take deeper dives into numerous facets of the climate adaptation gap in 2023. But let’s start with a high-level overview and some definitions:
Climate adaptation is the long term modification of systems and structures to help avoid disaster. That includes altering behavior and infrastructure to protect our families, economies, and the environment from the impacts of climate change.
Climate resilience is the ability to bounce back from disaster. It aims to reduce climate change vulnerability, and typically considers climate justice and equity in developing community-level responses.
These issues are closely related, and many initiatives to harden infrastructure will incorporate elements of both.
The Risk
Because climate impacts are so far reaching, the range of things considered climate adaptation are quite broad. It can include everything from building seawalls to reinforcing the electric grid, to shoring up housing and infrastructure in areas vulnerable to flooding or sea level rise, to adding more trees on streets and air conditioners in schools to combat urban heat islands.
For businesses, adaptation includes developing a full understanding of their vulnerabilities and creating a plan to manage that risk.
Preparing for the climate adaptation gap in 2023 is a big task. Real estate is a major component of any adaptation strategy. For example, you can move your key business management tools to the cloud, but you also must consider whether your cloud data center is in a flood plain or earthquake zone. Branch offices, factories and supply chain operations should be part of any analysis of climate risk and resilience.
In a report released this week, the UN warns that progress on climate adaptation is slowing on all fronts, especially in governments keeping up with the financial commitments made at the global COP summits.
The UN Environment Program (UNEP) warns that the climate adaptation gap – the difference between government funding and actual need – is estimated to be between $194 billion to $366 billion per year. UNEP also says adaptation planning and implementation appear to be plateauing. “This failure to adapt has massive implications for losses and damages, particularly for the most vulnerable,” the agency says.
As government adaptation falls behind, what about the private sector?
The Adaptation Opportunity
Climate adaptation is a huge business opportunity, as recently noted by Harvard Business Review. In an analysis titled It’s Time to Invest in Climate Adaptation, HBR concludes that adaptation projects “deserve far greater business investment, especially because they represent near-term opportunities at lower capital expenditures that offer faster paybacks. Bank of America analysts estimate that the climate adaptation market could be worth $2 trillion a year within the next five years.”
Investment in adaptation reached $46 billion in 2021, but that represents just 7% of the overall investment in climate solutions, according to the Climate Policy Initiative.
There are signs that this is beginning to change in the private sector. Last year the Lightsmith Group created the $186 million Lightsmith Climate Resilience Fund, calling it the first private equity fund targeting climate adaptation and resilience.
“Climate resilience technologies are an overlooked, multi-billion dollar investment opportunity that will just keep growing,” said Jay Koh, a founding partner in Lightsmith. “Increasing drought, agriculture stress, and supply chain disruption linked to climate change will drive demand for data and analytics to understand those risks and for the solutions to manage them.”