Just Adaptation – An Urgent Imperative in Global Climate Action

An insightful African proverb reminds us that “equality can’t wait”. This is a wake-up call to the globe’s collective conscience that the time for climate action that delivers equality for all is now. This message is particularly reinforced by the adaptation outcome at the COP28, which seemed to subject the world’s most vulnerable to an even longer wait for equality in adaptation. While the hope going into the negotiations was a fully-fledged consensus on the “how” of enhancing global adaptive capacity in line with Article 7.1 of the Paris Agreement, it was not entirely achieved. The “Global Goal on Adaptation (GGA)” was mooted and proposed by the African Group of Negotiators in 2013 and established in the Paris Agreement in 2015 to make adaptation a global priority, including in finance and investments, to be at par with mitigation. In 2015, when it was established, there was no definite framework for understanding it, including clear targets and how they would be measured. COP28, coming eight years later, moved the needle, agreeing to global time-bound targets for specific sectors and the adaptation policy process. However, the targets were not quantified. In addition, financial and other support for developing countries that stand out for being disproportionately vulnerable was not included. The implication is that the staggering 3.6 billion people , representing over 40% of the global population, that are currently highly vulnerable to climate change impacts – be it droughts, floods, storms, heat stress, ?food insecurity, etc. – are, once again, banished to the waiting list. The latest science, including from the 2023 UNEP Emissions Gap Report, tells us that the world is on a path to a 2.5-2.9°C temperature rise this century – meaning that this list will only grow longer as global temperatures rise. This reality means that the urgency for action cannot be understated.

Globally, an estimated $143 billion of the total cost of extreme events is attributed to climate change, with the most vulnerable bearing the largest burden. In 2022, over 110 million people in Africa were directly affected by weather, climate, and water-related hazards, causing over $8.5 billion in economic damages. From 2020, Africa has been losing an estimated $7 billion to $15 billion every year because of climate change, and this cost is expected to reach $50 billion annually in just 7 years, an average of 7% of the continent’s GDP. Africa deserves a mention because 8 of the top 10 worst affected countries are from that continent. Going forward, these ten most vulnerable countries face GDP damage exceeding 70% by 2100 under current global climate policy trajectories and 40% damage if the world keeps the best-case scenario of 1.5oC warming.?

Notwithstanding all this analysis, adaptation continues to play second fiddle. An urgent paradigm shift is required towards two distinct outcomes.

The first is the need to achieve much-needed parity in adaptation prioritisation as underpinned by the GGA discussed earlier. The second is the need to ensure that, in addition to this parity, adaptation actions across the globe lead to equal and just outcomes for all – that actions to adapt to the changing climate in one locale do not occur at the expense of others.

Achieving justice and equity in adaptation will be underpinned largely by the extent to which adaptation can unlock a tangible return on investment. Currently, market-driven finance for mitigation outpaces that for adaptation 300 times, primarily because of a clearer and more certain financial return on investment. More recently, at COP28, UNEP launched the “State of Finance for Nature” report , which noted that nature-negative investments were up to 30 times higher than nature-positive investments. The report indicated that up to $7 trillion of global GDP was invested in nature-negative areas, with only about $200 billion invested in nature-positive areas.????????

This would mean that regions and countries most vulnerable need to frame adaptation policies and programmes in a way that offer a more competitive and tangible financial return on investment to catalyse a shift in investment preferences from nature-negative to nature-positive investments. Furthermore, there is a need to enhance economic participation among the most vulnerable groups to enable them to tap into areas that can generate more financial options and returns to allow them to safeguard their earning potential better. To this end, the following is key:

Making Just Adaptation a Reality – from Talk to Action

a) Embrace a narrative change. Across the globe, climate action is projected from the risk lens rather than the income opportunities that climate action represents. For example, it is estimated that every $1 invested in adaptation actions unlocks a return of between $2 and $10 – from food systems, infrastructure, water, etc. In addition, every $1 invested in nature-based solutions can create up to $30 in economic benefits – a 30-fold return. In Africa and other developing regions, an investment of $800 million on nature-based solutions would result in benefits of $3 billion to $16 billion annually. This includes actions in inclusive, non-capital-intensive areas like organic fertiliser production. Such an action can create up to 560% in profitability, substitute 40-50% of chemical fertiliser needs, and offer a growing market estimated at 5.9% between 2020-2025 while decreasing emissions and reducing the risk of agrochemical pollution that can exacerbate health risks like antimicrobial resistance. Furthermore, every $1 invested in green infrastructure, which is most effective against climate extremes like floods, can generate up to $4 in economic benefits. For example, implementing green infrastructure solutions to control flood water in cities – e.g., planting urban forests, rehabilitating wetlands, rehabilitating mangroves in coastal areas to act as storm breakers, etc.- has proven cost-effective. It is over six times cheaper and provides up to $1.5 billion in savings while being much more effective than alternative grey infrastructure-engineered solutions.

Beyond these adaptation-centric opportunities, investing in clean energy solutions to power value-added actions in adaptation-centric sectors like agriculture offers significant returns. Decentralising solar solutions such as solar cold storage, solar-powered processing, etc., – which is mitigation - to power value addition in the inclusive agricultural sector can add up to $320billion in new business opportunities to Africa – the most vulnerable region each year and cumulatively create a ?1 billion industry by 2030. Projecting such enterprise opportunities needs to be a core strategy of climate adaptation in the most vulnerable regions because, in the long run, the one thing that can close implementation gaps is clearly defined investment opportunities and not a projection of liabilities alone. Therefore, formulating policy and incentives around climate action should be premised on unlocking the enterprise opportunities that can be tapped from adaptation and climate action. ?

b) Prioritise climate adaptation investment planning. It is estimated that up to 177 countries globally have submitted updated climate commitments, popularly called Nationally Determined Contributions (NDCs), that cover adaptation and mitigation priorities. In 2023, a record number of National Adaptation Plans were submitted to the UNFCCC. Up to 170 countries now include an adaptation dimension in their climate policies. However, all these plans lack a complete investment plan – beyond their costing, that elucidates the investment potential of climate adaptation and the enabling environment already in place in terms of policy incentives, markets, and social enablers that investors can tap. Countries urgently need to project the enabling policy, market, social, and financial environment for climate adaptation enterprises. Furthermore, this analytical approach allows countries to leverage the Sustainable Budgeting Approach (SBA) to enshrine this opportunities-driven dimension, where national budgets can be applied to align socio-economic development with climate adaptation and climate action in general. This entails analysing trade-offs between sustainable and their equivalent unsustainable approaches and allocating tax incentives to those sustainable approaches that provide the highest fiscal return. Impact data from operationalising investment plans will go a long way to inform a more targeted allocation of climate incentives to ensure they prioritise proven highest growth areas.??

c) De-risk climate finance. Most of the time, the most vulnerable who need enhanced adaptation also have the least access to much-needed finance and capital. This is because adaptation actions and those who may be engaged in them are perceived as high risk. De-risking financing for climate adaptation is, therefore, an urgent priority. Implementing de-risking tools that combine several de-risking strategies – including cash guarantees to cover against payment default risk of beneficiaries, training & capacity enhancement in climate adaptation enterprise engaged in by finance beneficiaries to lower the risk of their enterprises failing, favourable market access of products and services resulting from climate adaptation enterprise to increase liquidity of beneficiaries, fiscal incentives such as tax breaks that lower the cost of investing in climate adaptation enterprise solutions – among key ones. These de-risking tools lower the default risk and hence the cost of capital for climate adaptation enterprises to increase finance access.

d) Prioritise skills retooling. There is a need to develop the much-needed human capital to undertake climate adaptation actions from an enterprising lens. One of the core determinants of justice and equality is the enhanced capacity to tap into available opportunities. The enterprise opportunities that can be tapped from climate adaptation and climate action call for a skilled populace to be able to tap. For example, in Africa’s agro-value chain, which is most vulnerable to the changing climate with an estimated 30% yield decline since the 1960s, yet engaging most of the working population and holding up to 45% of the global arable land, prioritising value-added actions in climate resilient value chains, e.g., cassava can see an additional 300 value-added products being developed cutting across different sectors – food & beverage, pharmaceuticals, cosmetics among key ones. Such will create a diversified income stream, which underpins adaptation. But the first step is the training and development of requisite manpower.?? ??

e) There is a need to Optimise climate policy incentives for finance. One of the notable aspects of COP28 was the fact that finance issues, including adaptation, were delayed to COP29. Accordingly, a New Collective Qualitative Goal (NCQG) — was billed as the big-ticket item for next year’s negotiations at COP29. This new goal is meant to replace developed countries’ current commitment of providing $100 billion annually in climate finance to developing nations, which while first agreed to in 2009, never materialised and reached a best of $80billion annually. This new goal is projected to cover developing countries’ needs and priorities, estimated at $5.8 trillion - $5.9trillion up until 2030. To raise the bar in these negotiations, vulnerable countries will need to include the monetary impact of their policies as a demonstration of the unconditional contribution they bring to the fore in driving climate action. The fiscal value of climate policies, especially fiscal incentives, needs to be analysed and accounted for because it amounts to a country denying itself public revenue to enhance climate action. For example, in the 2021 Finance Act, Kenya exempted clean cooking fuels, such as biogas and fuel briquettes, from value-added tax. In the 2022 Finance Act, Kenya provided a highly discounted corporate tax rate – from 30% to 15% - for the first ten years for companies operating emissions trading systems to grow carbon markets. Cameroon was in the headlines for boldly slashing taxes to drive investments in the solar power sector for the next ten years. Furthermore, in the 2023 finance law , Cameroon has reduced fuel subsidies , introduced a special tax on petroleum products on one hand, and created a set of fiscal incentives in the form of tax exemptions for value-added processes in the agriculture, livestock, and fisheries sectors – all of which are climate adaptation sectors. These fiscal incentives entail a financial investment by the government to drive climate action and need to be quantified as part and parcel of unconditional contribution to climate action. In this way, it will raise the bar in negotiations in the international climate finance space by making an objective and moral argument that the most vulnerable countries, like in Africa, have already done all they could and present a clear gap that can only be filled through international support.

f) enhanced data and monitoring. One of the critical aspects of enhanced climate action is early warnings and monitoring. However, sadly, less than 50% of least-developed countries have a multi-hazard early warning system. In Africa, which also hosts most of the least developed countries, only 40% of the population has access to access to early warning systems – the lowest of any region globally. ?However, the impact of these systems on enhanced climate adaptation cannot be understated. An estimated $3 – $16 billion in losses can be avoided each year across the globe by investing about US$800 million in early warning systems. Early warning systems provide an over tenfold return on investment, and just 24 hours' notice of an impending hazardous event can cut the ensuing damage by 30%. However, there remains a gap in translating such early warning into early action. In addition, current early warning systems cover meteorological and climatological risks and leave a gap in forestalling and minimising risks arising from nature/biodiversity loss and pollution – yet they are all interrelated. For example, deforestation as a risk depletes the globe's forest carbon sinks, resulting in an enhanced climate change risk. At the same time, increased carbon emissions from burning fossil fuels exacerbate climate change and cause acid rain, which is injurious to biodiversity. The changing climate also drivers a shift in biodiversity. There is a need for more holistic early warning systems that cover not only climatological risks but also nature/biodiversity loss and pollution, as well as their cascading effects when combined with climate change. In addition, there is a need to strengthen the monitoring of risks and solutions to optimise them and the investment potential of such solutions to attract implementation investments. As part of just adaptation is, therefore, the need for a holistic, value chain approach to early warning and monitoring that covers not only climatological risks but also nature/biodiversity loss and pollution as cascading risks, as well as the monitoring of solutions and their investment potential to attract investments in actions that translate the early warnings into early action. Such a holistic approach will also provide a very timely opportunity for the engagement of communities, especially from the lens of solutions, where systems that are deployed for early warning also include a projection of potential solutions to risks, including accessible solutions that communities can engage in – such as the recovery of waste to clean cooking fuel briquettes and biogas, to forestall the risk of deforestation for fuel wood. In this way, these early warning systems enhance just adaptation not only from the point of view of risk coverage but also by providing market opportunities for solutions developed at the community level to improve community incomes.

Conclusion

For regions that bear the brunt of climate change most disproportionately, waiting even longer for justice and equity in adaptation is simply unaffordable. For the most vulnerable, the time for taking steps towards just and equitable adaptation is now, and the points shared herein provide a timely start because we all know that “once you carry your water, you’ll remember every drop”