In a 1789 letter, Benjamin Franklin referenced that nothing in this world is said to be certain, “except death and taxes”. As the impact of climate change intensifies – hotter temperatures, rising sea levels and more extreme temperatures that know no border – we are introduced to life’s third certainty, or better yet unavoidable truth. Climate adaptation.
We cannot talk about climate adaptation without first talking about climate change.
Drastic changes in climate are no longer a distant threat – they’re already happening everywhere. We’ve seen devastating floods in Spain, ravaging droughts across Africa, the destructive bleaching of coral reefs in Malaysia, stronger hurricanes in the Caribbean, and record hot temperatures in many places around the world. In Canada, we’ve witnessed wildfires across the country this summer and in 2023.
And these changes are costly.
According to the Adaptation Gap Report, the annual cost of adaptation is estimated between US$ 187 and 359 billion for developing countries this decade.
Exploring life’s third unavoidable truth
According to Canada’s National Adaptation Strategy, climate adaptation is planning for and addressing the anticipated impacts of climate change. This means changing our lifestyles and activities in advance of these changes, as well as preparing to respond to more frequent and extreme events. It involves seizing economically viable opportunities that enhance sustainable development, such as developing climate-smart agricultural and irrigation practices to protect against frequent and prolonged droughts, building flood protection systems and restoring animals’ natural habitats.
To address the unavoidable truth, we must understand that even if all collective efforts towards cutting greenhouse gas emissions were in place, climate change would still impact our planet and would continue to do so for many years due to the carbon that’s already been released in the atmosphere. Reducing emissions and mitigating climate are only part of the solution. That’s why adaptation is necessary to strengthen the well-being of humans and animals and reduce the detrimental impacts on nature.
Climate adaptation
As the planet continues to warm, the impacts of climate change will increase in frequency and intensity. Adaptation will become especially urgent for emerging markets and developing economies, which are particularly vulnerable and typically lack the significant financial capacity to implement sustainable solutions.
Responding to the nature and climate crisis is not confined to developing countries, it’s a universal challenge for all countries. Humans rely on a biodiversity for survival. It’s the baseline for everything on this planet.
The good news is we can tackle life’s third certainty, together.
Collaboration across the private and public sector is fundamental to facilitating climate adaptation solutions. While adaptation has historically been viewed as a public sector responsibility, private sector support is vital for scaling efforts. However, several barriers – such as insufficient data, unclear government investment needs and low perceived returns on investment – have limited private sector participation.
To overcome these challenges, Development Finance Institutions (DFIs) offer viable solutions and are uniquely positioned to work with and through the private sector. They can use their agility and financial and non-financial tools to de-risk assets and mobilize private capital in EMDEs. Accepting more risk allows DFIs, like FinDev Canada, to bring forward climate transactions to the private sector, thereby creating an enabling environment for the private sector to operate. For instance, GAIA, the recently launched US$ 1.48 billion blended finance platform co-led by FinDev Canada and MUFG Bank, Ltd. is mobilising the private sector at scale by creating climate adaptation pathways. GAIA emphasizes the critical need for adaptation by dedicating 70% of its efforts towards adaptation and 30% towards mitigation in EMDEs. One of the platform’s key features is its replicability – the platform serves as a blueprint for a range of development goals. The more its replicated, the more capital becomes available to developing countries.
Additionally, FinDev Canada, among other DFIs, is working on integrating the newly launched ARIC adaptation and resilience framework to measure and track climate adaptation and resilience within its investments. The framework aims to standardize the way DFIs characterize impact from a climate adaptation perspective.
There’s optimism among the clouds
As climate change intensifies, the annual cost of adaptation continues to rise. And the longer it takes to meet the annual needs, the wider the gap becomes. This is an undeniable truth – and DFIs play a critical role in tackling this truth. They must continue to foster collaboration between clients, public and private sectors and continue to find ways to mobilize more capital to address critical development needs across developing countries.