Timely investments to withstand the projected impact of climate change could save Bangladesh billions in climate damages and lost GDP growth this decade, according to a new study by Standard Chartered.
The Adaptation Economy, which investigates the need for climate adaptation investmentin10 markets– includingBangladesh, India, China,and Pakistan –reveals that, without investing a minimum of USD1.2 billion in adaptation by 2030, Bangladeshcould face projected damages and lost GDP growth of USD11.6 billion – nearly 10 times that amount.
Across the entire study, without a minimum investment of USD30 billion, the 10 featured markets face projected damages and lost GDP growth of USD377 billion.
The projection assumes that the world succeeds in limiting temperature rises to 1.5°C, in line with the Paris Agreement. In a 3.5°C scenario the estimated minimum investment required more than doubles to USD62 billion and potential losses escalate dramatically if the investment is not made.
Examples of climate adaptation projects include the creation of coastal barrier protection solutions for areas vulnerable to flooding, the development of drought-resistant crops and early-warning systems against pending natural disasters.
Even if the world’s nations manage to achieve the goals of the Paris Agreement, measures to adapt to climate changemust be pursued alongside the global decarbonisation agenda, withthe banking sector having a critical role to play in unlocking finance.
The USD30billion investment required for adaptation represents only slightly more than 0.1 per cent of combined annual GDP of the 10 markets in the study and much less than the estimated USD95 trillion emerging markets require to transition to net zero using mitigation measures, as outlined in Standard Chartered’s Just in Time report.
The Adaptation Economy also surveyed 150 bankers, investors and asset managers and found that, currently, just 0.4 percent of the capital held by respondents is allocated to adaptation in emerging markets where investment is needed most.
However, 59 percent of respondents plan to increase their adaptation investments over the next 12 months. And on average,adaptation financing is expected to rise from 0.8 percent of global assets in 2022 to 1.4 percent by 2030.
Marisa Drew, Chief Sustainability Officer, Standard Chartered said,“This report makes it clear that irrespective of efforts to keep global warming as close to 1.5°C as possible we are going to have to incorporate climate-warming effects into our systems and adapt to its reality.”
