Financing climate adaption and nature-based infrastructure

Climate change is already exerting substantial impacts on people, economies, and the environment. These effects are anticipated to intensify as global temperatures continue to rise in the coming decades. For instance, the rapid decline of Arctic sea ice, which has been diminishing by 12 percent per decade since 19806, is altering global weather patterns and contributing to rising sea levels. In the Amazon rainforest, deforestation is posing a threat to a crucial carbon sink, potentially converting it into a carbon source and exacerbating global warming. Coral reef bleaching, driven by increasing sea temperatures and ocean acidification, has resulted in widespread coral mortality, affecting both biodiversity and the effectiveness of natural coastal storm buffers.
The impacts of climate change will be felt hardest in Emerging and Developing Economies (EMDEs). Poorer countries are structurally the most vulnerable to climate change due to factors such as lower average incomes and high dependency on climate-sensitive sectors (agriculture, fisheries). The expected impacts of climate change on the bottom 40 percent of households are projected to be 70 percent larger than those in the average population. The impacts of climate change are expected to be felt primarily through increased hydrological variability (e.g., a higher incidence of flooding and droughts), intensified coastal storms and floods (e.g., hurricanes, other coastal storms, and sea level rise), and more frequent heatwaves.
While these impacts are expected to become more frequent and more severe over time, it is still uncertain as to where and when these impacts will occur, which makes planning more difficult. To address climate risks, not only will existing infrastructure need to be more resilient, but additional infrastructure both grey and green will be essential to protect against the impacts of flooding, drought, coastal storms, and extreme heat. Estimates suggest that US$212 billion/year is needed by developing countries to finance adaptation; however, current levels of financing (in 2022) are only a fraction of this at US$76 billion/year.
In tandem with and connected to climate change, economic and population growth across the world are also leading to unprecedented impacts on nature (which includes biodiversity, ecosystems, and the services they provide). For example, a 69 percent decline in monitored wildlife populations was witnessed between 1970 and 2016, driven primarily by human activities and related changes to the natural world induced by climate change. While more than half of the world’s GDP is generated in industries that depend on nature and its services, paradoxically, this economic activity is undermining the biodiversity and ecosystem services on which the collective economic future depends.

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