Building resilience and infrastructure in a warming world


By Jan Corfee-Morlot, New Climate Economy/ World Resources Institute (WRI), Nancy Kete, Kete Consulting and Delger Erdenesanaa, WRI

This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.

Solar panels and roadInvestment in tackling climate change is still very small compared to the expected adverse impacts on society and nature. The economic costs of climate change are estimated to range from 2-10% of global GDP loss by the end of this century. Flood-related damages alone under high emissions scenarios might account for 3% of global GDP in 2100, translating to losses in the range of USD 14-27 trillion per year. In today’s US dollars, this would be equivalent to losing the combined GDP of China and India in the best-case scenario, and US, Canada and Germany combined, in the worst case.

Currently most climate funding supports work to reduce emissions rather than for adaptation to impacts. While the world must strive for net-zero emissions and the goals of the Paris Agreement, we must at the same time plan for conditions that may be much worse.

Few institutions– whether commercial banks, philanthropies, multinational companies, asset managers or public treasuries – have explicit strategies for climate adaptation and resilience to guide their investments in infrastructure. Among those beginning to adopt such strategies, planned adaptation and resilience investments are still niche and pale in scale relative to the magnitude of possible longer-term costs. Adapting to inevitable changes wrought by climate change is a huge, on-going challenge, easier to ignore than to rise up to meet it.

The COVID-19 crisis demonstrates the consequences of not being prepared for a crisis foretold, despite experts’ warning and advice on how to prepare. Still, COVID-19 also has shown that world leaders are capable of mobilising resources at unprecedented scale. As governments and international finance institutions prepare to spend more than USD 10 trillion on recovery, these funds will determine how resilient our economies and societies will be to climate change.

Adapting to climate change

Even if the globe warms “only” from 1.5 oC to 2oC, climate change is unlikely to be linear or gradual but exponential, triggering much greater rises in key climate impact indicators such as the number and intensity of heat waves, droughts and floods. An Earth warmed 3oC to 4oC raises the risk of large, abrupt and possibly catastrophic or irreversible changes, such as runaway climate change, major loss of habitat or large-scale species die-off. Combined with weak development and infrastructure services,  climate change exacerbates food shortages, water stress, heat stress and poverty, and forces migration across the world’s poorest and most vulnerable regions.

Yet we are also not well equipped to plan and commit to a future that will benefit people we don’t know. Greek mythology’s “Cassandra” reminds us that societies tend to shun those who warn about the future, ignoring suggestions for how to avoid even imminent threats. Compounding this problem is deep uncertainty and complexity. Yet inaction is not an option. In fact, climate change is here and now. A first challenge in adaptation is dealing with the change already expressing itself as “bad weather” – notably more powerful storms, more frequent and higher levels of flooding, persistent droughts and catastrophic fire seasons, and perhaps most deadly of all, heat waves with air temperatures exceeding the range of human tolerance across wide swathes of the globe. These worsening disasters form a dangerous backdrop for the COVID-19 pandemic – a threat multiplier that, like climate change, will exacerbate societal inequities. According to UNU-WIDER, the pandemic’s economic fallout threatens to drive 500 million more people into poverty across the developing world.

Building back better with resilient infrastructure

Development banks, governments and others, who put real money into long-lasting infrastructure, are increasingly using climate-risk screening and stress-testing to deal with climate change and uncertainty. The recommendations of the Task Force on Climate-Related Financial Disclosure are helping to accelerate this but other work also reveals how unprepared economies and companies are to understand the resilience of their investments in a changing world.

Some institutions are exploring adaptive management approaches to design slack for the contingency of a much warmer world. The Structures of Coastal Resilience project in the United States, the International Finance Corporation’s pilots of best practice for private sector risk and adaptation strategies, and private investor-led approaches all aim to build adaptive management capacity.

Many philanthropies are experimenting with initiatives on sustainable and resilient cities (including infrastructure), water and land use or pro-poor development strategies. This includes city networks like the Asian Cities Climate Change Resilience Network, 100 Resilient Cities and C40, as well as competitions like Rebuild by Design, National Disaster Resilience Competition, Water as Leverage and the World Resources Institute Ross Centre Prize for Cities.

Some of these initiatives can help us respond to the immediate threat of COVID-19 now, and also build long-term resilience to climate change. Right now in St. Vincent and the Grenadines, a smart hospital project is retrofitting medical facilities to withstand hurricanes and continue delivering healthcare – an imperative as many places enter hurricane season in the midst of a pandemic.

Another good example is water infrastructure. Some 3 billion people, 40% of the world’s population, still lack access to adequate handwashing facilities. Prioritising access to clean water and sanitation should be obvious. World Resources Institute estimates that every dollar invested in sanitation services yields more than six dollars in benefits.

Nature can help bridge the water infrastructure gap. Natural or “green” infrastructure can lower the cost and complement hard or “grey” infrastructure, providing vital water services to people and other amenities while also building resilience to climate change. Ecosystems like wetlands, mangroves and forests naturally regulate and filter water for nearby communities and buffer storms. The Nature Conservancy found that restoring upstream forests and watersheds could save water utilities in the world’s 534 largest cities an estimated USD 890 million each year. Given that even in cities, 1 billion people receive piped water only intermittently, freeing up resources to invest in greater water access could significantly improve public health and resilience to both pandemics and natural disasters.

Beyond infrastructure is the need to invest in “soft” measures to ensure disaster readiness and to limit people’s exposure when disaster hits. For example, investing US$1 billion into early warning and evacuation systems for natural disasters can generate economic benefits ranging from USD 4-36 billion.

Towards a resilient future

Governments, businesses and philanthropies are at the earliest stages of adaptation efforts, so prioritising experimentation and competitions can support learning through coalitions and networks of diverse stakeholders. One way forward would be to ask social scientists to explore best strategies for motivating effective and timely change. They might evaluate or stress-test current strategies, and provide recommendations for incorporating “adaptive management” strategies in infrastructure investments.

We should also initiate efforts to make sure pro-poor development strategies and investments in nature-based solutions are taking as sophisticated an approach as are companies and development finance partners who are learning by doing with a focus on hard infrastructure. Efforts to ground the recommendations of the Task Force on Climate-related Disclosures in business practice offer early guidance on how to begin climate-proofing investments.

Policy makers, investors and other practitioners can adopt emerging climate adaptation techniques – whether targeting pro-poor, ecological, rural or urban development goals. The urgency of building back better from COVID-19 calls for greater experimentation and for taking advantage of new information and tools that help forecast likely climate impacts. The aim must be to recover and grow economies to benefit the poorest and the most vulnerable, where resilience to pandemic risks and to climate change are central to better growth and sustainable development.