Climate resilience and economic resilience go hand in hand
Climate change and economic growth present developing countries with the ultimate dual challenge. They must build a rapidly evolving, sustainable economy within an environment increasingly altered by the impacts of climate change.
However, attempts to adapt to climate change have so far ignored the ongoing structural changes associated with economic development. They have failed to take account for evolving sector composition, the emergence of new comparative advantages and skills, and shifts in consumer demand as a result of rising incomes – all of which has implications for climate change adaptation.
Rapid economic change provides an opportunity for adaptation
Current approaches to climate change adaptation all too often try to preserve existing economic activities. For instance, adaptation plans tend to put too much emphasis on declining sectors, such as agriculture, and fail to invest in smaller sectors, such as the service sector, which are growing much more rapidly. This neither acknowledges nor takes advantage of the fact that the economy is evolving.
The desire to protect existing economic activities can be particularly strong following natural disasters, when an economy is at its most vulnerable. However, extreme weather events actually provide an opportunity for countries to adapt and become increasingly resilient to future climate risks.
Countries can best adapt when they acknowledge how rapidly their economies are evolving, particularly in rural areas. Effective adaptation policy must do more than simply shore up the status quo or protect economic activity that may soon be a relic of the past.
Rapid economic change offers an opportunity to alter for the long term the risk profile of developing economies with respect of climate change. There is the possibility to build climate resilience into decisions from the outset. The importance of this cannot be underestimated since the economic structures and the physical infrastructure put in place now will determine risk profiles for decades to come.
Four key lessons for policymakers
In a new paper on ‘Climate change adaptation in dynamic economies’, we find four key lessons to help policymakers achieve both climate resilience and economic resilience:
- Economic development plans must not underestimate climate risks. Particularly when it comes to agriculture, current development plans often promote development models or set development objectives that are impractical or risky in the light of climate change. Development plans have to become more climate-aware.
- Conversely, adaptation plans must not underestimate the dynamism of modern economies. Badly designed adaptation plans may hinder development by focusing too much on the status quo (e.g. in situ measures to maintain agricultural output) instead of embracing more transformative forms of adaptation (e.g. rural diversification).
- Development planners and adaptation planners need to work more closely together. This will force economic planners to consider sectoral growth dynamics in light of climate risks and adaptation planners to factor into their planning the evolving economic system. It will make it easier to identify potential synergies and manage climate-risk – development trade-offs. One area for such trade-offs is productivity, where some improvements may come at the expense of higher climate risk.
- Economic growth offers an opportunity to alter for the long term the risk profile of countries with respect to climate change. There is the possibility to build climate resilience into decisions from the outset. To do this, adaptation plans need to systematically identify the opportunities, or ‘entry points’, where proactive adaptation can be factored into development strategies and long-term investment plans.
The practical challenge is to make these lessons actionable in actual planning processes. The solutions will be situation-specific and depend on the institutional and political economy context. There are likely to be barriers to achieving a closer integration between climate adaptation and development planning, which need to be understood case by case. However, without closer integration, both adaptation planning and development planning could become increasingly ineffective.
The report on ‘Climate change adaptation in dynamic economies’ was produced as part of the Grantham Research Institute’s programme on ‘Growth and the economy’, sponsored by the Global Green Growth Institute.