Directing finance to where it’s needed most – coastal cities

Last summer, the UN sounded the alarm: the planet is on track to exceed 1.5C of global warming. A second report, released on February 28, explains why it matters.

Scientists from 67 countries have assessed the latest climate science to evaluate who, what and where will be impacted by rising global temperatures, sea-level rise and biodiversity loss. UN secretary general Antonio Guterres called the report “an atlas of human suffering and a damning indictment of failed climate leadership”.

Across 3,500 pages, the Intergovernmental Panel on Climate Change (IPCC) provides policymakers with a handbook of tools to protect against and adapt to those already-occurring changes – and identifies their limits if humans fail to rapidly reduce emissions. At its core, the report highlights three key concepts for protecting people and planet in the immediate term:

• Coastal cities are ground zero. If sea levels rise an average of 0.15 meters, the population in coastal cities at risk of once-in-a-century flooding will increase by 20 per cent. Between $8 and $14 trillion of assets could lie in areas potentially vulnerable to the same fate. But the report also says urbanisation offers a priceless opportunity to advance “climate-resilient development”. “In Africa and Asia, urbanisation is happening so rapidly right now that if adaptation is not considered, the responses afterwards are going to be more costly and less effective,” said David Dodman, lead author of the chapter on cities.
• Biodiversity is our ally. “The DNA of the report is the argument that human social systems are closely intertwined with natural and biodiversity linked systems. And all of those are impacted by climate change,” said IPCC Working Group II Co-Chair Debra Roberts. Keeping those systems functioning and healthy will require conservation of 30 to 50 per cent of Earth’s land and sea area. The report also highlights the benefits of carbon-trapping wetlands over concrete seawalls, and the cooling effect of urban greenery over air-con.
• Climate risks are interacting in new ways. “Complex, compound and cascading.” This is the new lexicon for understanding climate risk. Examples include: heat and drought events causing declining crop yield and rising tree mortality; sea-level rise combining with heavy rainfall to worsen floods; and heat stress that hits productivity and exacerbates risks to food production.

The IPCC doesn’t tell policy makers what to do. Even so, several scientists involved in the process told us what sort of action they’d like to see. Funding for adaptation came up frequently – and no wonder:

• Adaptation finance is growing, but more is needed. Globally, finance for adaptation increased by 53 per cent to $46 billion in 2019/2020, according to Climate Policy Initiative. It needs to grow faster before warming exceeds 2 degrees – widely viewed as the threshold at which many adaptation solutions become redundant. The UN Environment Programme estimates that annual adaptation costs in developing economies alone will be from $155 to $330 billion by the end of the decade. At Cop26 developed nations pledged to double their collective provision of climate finance for adaptation to developing countries to $40 billion by 2025.
• Cities are major contributors… Over 800 cities have set up 3,177 projects aimed at addressing climate hazards, at a cost of $35 billion. So far, water and waste management has been the primary focus of funding, but Dodman says cities would do well to take note of an increasing focus in the science on heat islands and the compounding effect that high temperatures have on urban pollution.
• …but private capital isn’t interested. Despite insured losses from natural disasters reaching $105 billion last year, investors haven’t got the memo that adaptation pays. A dollar invested in adaptation today will save $5 in future losses and damages, according to the Grantham Institute at LSE. But the private sector provides less than 5 per cent of adaptation funds, even though it provides over half of global funding for mitigation. “The IPCC report provides a blueprint for investors. It’s effectively a risk management tool, and we should use it”, says Sean Kidney, CEO of the Climate Bonds Initiative.

At COP26, an alliance of climate-vulnerable countries made repeated requests that adaptation finance be put on par with funds for cutting emissions. But it can’t be a zero sum game. With every rise in temperature, adaptation measures become less effective. At the same time, adapting with natural solutions has big co-benefits: it sucks CO2 out of the atmosphere and supports livelihoods. This shouldn’t be a question of either/or but rather how fast and who pays. Directing finance to where it’s needed most – to coastal cities – is step one.

This article was first published by Tortoise Media.