Insights
9 November 2022

Financing resilience in a climate breakdown

Iggy Bassi

By Iggy Bassi

Financing resilience in a climate breakdown

In a crucial move this year, Simon Stiell, the Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) put climate adaptation and loss and damage front and center on the COP27 agenda. The importance of this in supporting actionable outcomes is hard to understate, particularly given that to build social and economic resilience spending on climate adaptation needs to be on par with climate mitigation spending.

To achieve unity and cooperation among national governments that is necessary for both global climate mitigation and adaptation goals, the countries most impacted by climate change need clarity on the support they can count on to manage the loss and damage already occurring. In short, we can not have a meaningful conversation on mitigation without climate finance and without climate finance, we will not make meaningful change. Stiell’s decision feels like a positive indication of the intent for action at this year's COP.

Mobilizing finance for climate adaptation

At COP26 last year, governments acknowledged in the Glasgow Climate Pact the urgent need to scale up financing for climate adaptation and climate loss and damage. Developed countries have consistently fallen short on the goal to mobilize $100 billion annually for climate mitigation and adaptation. So far, developed countries have also resisted calls for the establishment of a dedicated fund for loss and damage.

But after record-breaking extreme weather in 2022, it’s become clear that this financing goal cannot continue to go unmet. These events - that we currently consider to be extreme - will only become more frequent, intense and prolonged. Extrapolate the impacts and consequences of these along a trendline to the future and it’s not hard to understand why so many scientists are expressing their fear at what is to come. From soaring temperatures in the polar regions, to extreme flooding in Pakistan, sustained drought across the US west coast and water rationing in China - this is a climate breakdown, not a change.

From soaring temperatures in the polar regions, to extreme flooding in Pakistan, sustained drought across the US west coast and water rationing in China - this is a climate breakdown, not a change.

Quantifying climate loss and damage

Climate loss and damage is inherently difficult to quantify because it involves the permanent loss of not only lives, livelihoods, homes, and land, but also culture, identity, and biodiversity. This goes beyond preparing for or recovering from extreme weather events; it is also needed for humanitarian efforts and the sustainable development that is necessary in the aftermath of climate disasters.

There are early signs of progress on financing for climate adaptation at COP. UK Prime Minister Rishi Sunak announced that the UK intends to triple its spending on international climate adaptation in the coming years. On loss and damage, Denmark became the first country to announce a financial commitment for loss and damage in New York Climate Week in September. Although Denmark's commitment is financially modest (on a global stage), it raises expectations for developed countries in the lead-up to COP27. So far, the US and the EU have agreed to discuss loss and damage and, with the strong urging of Stiell, perhaps this will give way to more formal support.

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The complexities facing climate finance

As always, it isn’t as ‘simple’ as just handing over the money. Financing the recovery from existing climate-related damages as well as investing in a more resilient future must be done through the right programs in the right places. Climate finance must work smarter, not harder.

Climate finance must work smarter, not harder.

For example, it is wholly counterproductive to talk about scaling up climate adaptation finance without also discussing the phaseout of inefficient fossil fuel subsidies. We must also avoid costly maladaptation through not-fit-for-purpose infrastructure by channeling mitigation dollars into resilient infrastructure projects that are built to withstand the impacts of climate change.

Climate risk is complex, encapsulating both direct physical risk and risk associated with transitioning to a more resilient future. This encompasses both decarbonization efforts and adaptation. Only by quantifying risks in a unified way at an actionable level can we make informed decisions on how to effectively and efficiently channel climate finance for mitigation, adaptation, and loss and damage. Transparent, comparable and shareable intelligence on climate risk will underpin the systemic behavioral change necessary to deliver Climate Action.

Transparent, comparable and shareable intelligence on climate risk will underpin the systemic behavioral change necessary to deliver Climate Action.

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