Investing in resilience and making investments resilient
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Abstract
The recently published 6 Assessment Report of the IPCC Working Group II further confirms rapid and widespread impacts of climate change on human wellbeing and the natural systems around the world which were well documented in the previous climate assessments [1]. While the world needs to implement ambitious greenhouse gas emission reductions to avoid catastrophic impacts, the effects of climate change are felt acutely today and the poor and the most vulnerable people and regions are disproportionately affected [2, 3]. In this context, scaling up climate adaptation and resilience actions and finance across all countries and at all scales becomes critical to protect populations and accelerate poverty reduction. Such a scale up requires targeted interventions purely focused on resilience, such as flood management infrastructure or efficient irrigation systems. But targeted investments cannot be successful if other investments and development trends are continuously increasing risks. No level of investment in flood defense can contain or reduce economic losses from floods if urbanization in flood zones continues at current pace [4]. Progress on resilience requires more than specific investments. It requires that all the decisions and investments take current and future climate risks into consideration, so they are designed to be resilient in the face of today’s climate risks and future disaster risks. Making all investments more resilient and investing in adaptation and resilience measures have been found to yield significant economic, social and environmental benefits. Take infrastructure investment as an example. Ensuring that all new infrastructure assets include resilience best practice would incur a small incremental cost (3% of total investment needs) while yielding large benefits: an average of $4 in benefit for every $1 invested, with a total of $4.2 trillion in benefits over the lifetime of new infrastructure [5]. The large, positive economic benefits of resilience measures are similarly demonstrated in early warning systems, climate-smart agriculture, water resources management, and nature-based solutions [6]. With such a relatively small additional cost, adaptation and resilience is often about spending better, not about spending more. Despite the economic rationale and the potential benefits, resilience investments and decisions often do not take place. That’s because individuals and households face barriers such as the lack of risk information, behavioral bias toward status quo, and financial constraints to invest in resilience. In particular, poor households often have to make difficult trade-offs between food security, jobs, education, and investing in adaptation even though disaster shocks have long-term impacts on human capital accumulation and poverty reduction [2]. Similarly, firms also face information asymmetries, market failures, financial constraints, short decision horizon, and inability to fully capture the value of resilience in cash flow [7]. Governments also face challenges with coordination failures, conflicting interests and policy priorities, and often underinvest in adaptation and resilience capacity and underprice climate hazards in policies, regulations and fiscal planning [8, 9]. PLOS CLIMATE