Real-world return on climate adaption investments wildly underestimated, report finds

This restoration project in Costa Rica was part of a country-led effort to change the dynamics of land degradation in Latin America and the Caribbean. Countries, financial partners and technical partners set the goal of bringing 20 million hectares (49 million acres) of degraded land in the region into restoration by 2020. Ancillary benefits such as job creation, improved public health and greater carbon sequestration are often not factored into the monetary benefits of these kinds of grant-funded projects. Image courtesy of Luciana Gallardo Lomeli/WRI.  

From one U.N. climate summit to the next, the struggle has intensified to secure sufficient financing from wealthy, industrialized nations to aid the world’s poorest, climate-vulnerable countries in their efforts to avoid climate catastrophe — even as the gulf widens between what has been paid out for climate adaptation and resilience, and what is truly needed.

The U.N. in 2024 estimated this gap now totals as much as $359 billion in annual unmet requirements.

But a new report by the World Resources Institute (WRI) argues that nations and financiers have been thinking all wrong about adaptation and resilience: By evaluating it only as a means to avoid potential climate losses, it grossly underestimates the true value of each dollar spent.

The authors found that the investments now being made are far more valuable to countries and communities than previously understood or acknowledged. To prove this valuation, WRI analyzed 320 adaptation and resilience investments across 12 countries (mostly in tropical Asia, Africa and Latin America) totaling $133 billion between 2014 and 2024. The final WRI report estimates that when evaluated far more broadly, every $1 invested yields $10.50 in benefits over a decade — an aggregated potential worth for those 320 projects totaling $1.4 trillion.

Calculating the ‘triple dividend of resilience’

This groundbreaking finding is based on what WRI dubs the “triple dividend of resilience.” As with traditional valuations, WRI researchers calculated anticipated avoided losses from climate disasters.

But they then went much further, accounting for economic gains made through improved infrastructure, risk management and job creation. They also assigned a dollar value to social and environmental enhancements, such as improved public health and biodiversity protections tied to the investments.

The latter two elements are typically not among the goals measured, or even discussed, when adaptation and resilience financing is sought. Yet the benefits accrue just the same.

The authors argue that countries and global financiers — many of whom will gather in Bonn, Germany, on June 16 for mid-year U.N. climate negotiations — should take all three elements into consideration when determining the true return on resilience investments.

“What we’re trying to do here is close the gap on what are good investments, and making the case for these investments,” Carter Brandon, WRI economist and co-author of the report, told Mongabay. “In essence, these investments are more profitable than you think they are, and here’s the methodology you can follow to convince yourself.”

Brandon, formerly with the World Bank’s division on environment and climate change, will be in Bonn to make the case for the WRI report findings with global policymakers and financiers.

“This research has pried open the lid of what resilience is truly worth. And even that first glimpse is staggering,” Sam Mugume Koojo, co-chair of the Coalition of Finance Ministers for Climate Action from Uganda, said in a statement. “It’s time for leaders to recognize climate adaptation is not just a safety net, but a launch pad for development.”

In 2023, Brazilian officials and representatives from several other cities around the nation met for a workshop in Niterói, Rio de Janeiro state as part of the “Nature-Based Solutions Accelerator in Cities” project. Participants discussed ways for improving adaptation and nature-based solutions projects in order to better access climate finance. Image courtesy of Diego Padilha-Yantra Imagens/WRI Brasil.

Turning climate finance assumptions on their head

Last November, in advance of COP29 in Azerbijian, Andrew Deutz, a WWF finance expert, told Mongabay that “people keep talking about this COP as being the finance COP. But to be honest, from this meeting going forward, every COP will be a finance COP.”

This will be particularly true when the world convenes in Belém, Brazil, this November for COP30, a critical moment in time when the WRI report could help make a difference.

At past COPs, wealthy, industrialized countries — those most responsible for the emissions driving climate change — failed to contribute significantly to a host of climate mitigation funds, with the billions paid out always falling hundreds of billions short of what’s needed. That, despite ever-louder demands from climate-vulnerable nations.

WRI says it hopes the evidence in its report will encourage wealthy nations to provide more adaptation and resilience funding at COP30, and that vulnerable nations will use the report to make stronger justifications for the projects they’re eager to launch.

“I am personally unsatisfied with the level of dialogue going on because it doesn’t actually even ask: What should countries do, what should they prioritize, what should they even want? It turns out a lot of countries don’t know,” Brandon said. “If the amount of finance magically doubled — which won’t happen — would countries even know what to do with it? I would say the answer is no.”

That’s why WRI wanted to drill down to assess what is really working on the ground, where billions are already being invested in climate resilience. This is the first time such a detailed analysis has been undertaken, he noted. The goal of the “triple dividend” method was to understand both quantitative and qualitative impacts over a 10-year time frame.

“What we now can see is that this investment is not only good for resilience,” Brandon said, “but it’s also a really strong investment in development and public health.”

The Guandu water treatment plant in Nova Iguaçu, Brazil. The facility supplies water to more than 9 million people in Rio de Janeiro. Under the Cities4Forests initiative, WRI conducted a study on the benefits of natural infrastructure for water in five metropolitan regions, including Rio de Janeiro. By restoring forests and protecting watersheds upstream, the Rio de Janeiro project also helps reduce pollution, lower water treatment costs and secure long-term water quality. Image courtesy of Marizilda Cruppe/WRI Brasil.

Actual, but uncounted, benefits

Among the examples the WRI report highlights to illustrate “triple dividend” impacts, Brandon described a $507 million river management project in Durban, South Africa, aimed primarily at reducing flood risk. The initiative is funded by the C40 Cities Finance Facility, which arranges global climate-mitigation funding.

“This water project basically cleans up a river, cleans up and restores wetlands, and stabilizes the water supply,” Brandon said, explaining the project’s flood prevention expectations. “It also improves water quality through nature so that water availability and quality during times of drought were improved.

But then comes the litany of uncounted benefits: “It also improves the ecology of the river. It improves people’s health all along the river because it reduces waste, pollution and diarrheal diseases. And by using nature and protecting wetlands, it’s also sequestering more carbon. These are real benefits to which we can attach a monetary value that hasn’t been considered previously.”

A WRI blog post co-written by the new report’s researchers describes numerous other projects, including the Ethiopia Resilient Landscapes and Livelihoods Project, funded with $119 million from the World Bank. The project “restored degraded landscapes in selected watersheds through measures such as hillside terraces and tree planting” — results that were anticipated.

But compounding the World Bank’s return on investment is this: The project “trained communities in sustainable farming and grazing practices. Together, these measures could improve soil health, reduce erosion and enhance watersheds, making the area more resilient to floods and droughts while also improving crop and livestock production,” the WRI blog post noted.

Through its novel, in-depth analysis, WRI is recommending that governments begin to view adaptation and resilience strategies more broadly to include economic, social, and a range of public health and environmental benefits when pursuing millions in financial support.

“This evidence gives leaders and non-state actors exactly what they need heading into COP30: A clear economic case for scaling adaptation,” said Dan Ioschpe, appointed by COP leaders in Brazil to advocate for greater climate finance. “Belém must become a turning point — mainstreaming resilience into national and local priorities and unlocking the full potential of non-state actors’ leadership.”

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This article was originally published on Mongabay under the Creative Commons BY NC ND licence. Read the original article.