Keith Alverson
Keith Alverson
Topic: Climate Change Adaptation
Keith Alverson is the Head of the Climate Change Adaptation and Terrestrial Ecosystems Branch of the Division on Environmental Policy Implementation at the UNEP in Nairobi, Kenya. In this role he coor...
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Posted on 28/08/2014 06:14:41
What are the costs and benefits of adaptation?
Ramogi Omollo-Nam Gogo (from Tanzania (United Republic of))
The UNEP mantra is green economy. Broadly speaking, this means moving beyond GDP, to a more inclusive indicator that includes ecosystem services. In Macroeconomic situations, ecosystem valuation has not proven very useful - there is simply not much one can do with estimates of the recently published value of global coral reefs ($11 trillion) or value of global ecosystems that UNEP, among others, likes to trumpet, because these astronomical numbers are not the basis of any actual decision making. Although it is reassuring that these numbers dwarf global adaptation cost estimates, they are in fact little more than eye candy for nature papers and newspaper headlines.

Valuing ecosystem services does however make very clear microeconomic sense. A single farmer in Tanzania can effectively take decisions, based on clear cost benefit considerations, to seek finance for small scale ecosystem based adaptation actions. It is important to note that such individual calculations do not generally account for synergies among individual actions, multiple benefits (such as for example increased girls education rates arising from easier access to water during dry periods) or the opportunity costs associated with doing nothing. The hope then is that they may not only add up to more than the sum of its individual small scale projects, but also pave the road, by demonstration, to substantial microfinance sector engagement in adaptation actions alongside more traditional funding sources. So there is great replication potential of small actions that can make a big difference in the lives of some of the most vulnerable populations.

I like to think of adaptation to climate change in terms of constraints (gaps) that need to be overcome [as opposed to facilitators]. So rather than thinking about what is needed to adapt, consider what is inhibiting adaptation. That is, try not to think outside the box to some ideal solution - with no road to get there - but rather how to grow the box of possible adaptation space - by removing (critical) constraints. Often a critical constraint is a lack of sufficient financial resources the subject we are here to discuss.

You probably wanted me to provide some numbers, so let me offer a few of those: The global adaptation gap has been estimated, by UNEP and others, at about $100 billion/year. Global multilateral funding for adaptation, by comparison, has been less than 5 billion in total over the past 10 years. UNEPs global adaptation portfolio stands currently at about $150 million this figure represents a staggering 1000% growth from only $10 million five years ago. This growth may sound impressive, but it is less than a single recently announced Fire island, NY (USA) restoration project to restore about 17km of dunes to adapt to sea level rise - with a price tag of $170 million. The length of the US east coast barrier island chain - of which Fire Island is a small part - is over 5000km. At 10 million dollars per kilometer, that would make 50 billion dollars to restore them all. You can begin to see then, why the global adaptation cost estimate is so large.

Let me now introduce an important caveat to the reductionist view of adaptation as a cost. Money is not always the limiting constraint to building resilience. One cannot simply add up costs everywhere, throw money at them, and thereby adapt to climate change. Rather money must be carefully targeted to specific areas where it is the limiting constraint. Often, these areas are in least developed countries. At the same time, too much money, provided too fast, can not only lead to diminishing returns per dollar, but even have negative and unintended consequences, particularly in least developed countries - oil rich African nations prove this point. And sometimes, development, and its tendency to increasing wealth concentration can increase, rather than decrease, vulnerability to local extreme events.

I simply cannot see government transfer pledges ever filling the global adaptation funding gap anyway. I doubt there is a business as usual path to 100billion/year requirement, but some plausible ideas would include a global carbon tax and private sector engagement - companies taking their own actions to protect their businesses, customer bases and supply chains from climate impacts. Clearly all adaptation funding is good, but to achieve the order of magnitude shift that is required, we will need alternative finance mechanisms to take off.