Climate change will alter the conditions that underlie economies. Slow onset changes such as shifting rainfall patterns, increasing temperatures, and coastal intrusion will affect both global as well as national and subnational markets, while rapid onset events such as high intensity storms and flooding will increase disruption and drive economic loss.
These impacts are changing the conditions under which economies deliver goods and services. The resulting structural shift in the economy has already started to drive investment in new business models, technologies, and infrastructure, as well as the upgrading/climate proofing and relocation of existing infrastructure. These investments are taking place against a background of unprecedented uncertainty accompanying climate change and its immediate physical impacts, as well as the more indirect consequences that might ensue.
This uncertainty and lack of historical precedent, coupled with other market imperfections, inhibit private financial flows for adaptation from reaching the required volumes. Much of the discussion on adaptation finance to date has focused on public spending. However, it is clear that a large share of the required adaptation measures, as well as the corresponding financing needs, will need to be provided by private sector actors.
This report finds that substantial investment in adaptation and resilience is already occurring in the private sector, financed by private capital. This investment is being undertaken within private enterprises of varying scales in response to the shifting market conditions driven by climate change.
Understanding how this investment occurs, what drives it and how it is financed, is a low-cost entrance for governments and policy makers seeking to increase levels of adaptation.
The ultimate aim of this report is to analyse the role of public actors in order to inform the way in which public finance and policy can be used to catalyse private investments in adaptation. The report focuses on the barriers inhibiting private financial flows for adaptation and how these barriers may be removed by public intervention.