THE ECONOMICS OF (AND OBSTACLES TO) ALIGNING DEVELOPMENT AND CLIMATE CHANGE ADAPTATION

The paper frames climate change adaptation as a development challenge, arguing that while financial resources are often a constraint, non-financial barriers such as market failures, governance issues, and behavioral biases are equally critical. It highlights that adaptation and development are inextricably linked, and that 'climate-informed' development can significantly reduce economic losses and poverty. The document reviews various global and local cost estimates, noting that these vary widely based on the reference point used. It recommends a broad definition of adaptation and a focus on removing structural obstacles to maximize the benefits of resilience investments.

• Climate change and natural disasters pose a severe threat to global poverty reduction, with disasters currently pushing 26 million people into poverty annually and the potential to push over 100 million people into poverty by 2030.
• The annual global cost of adaptation is estimated to be between US$28 billion and over US$100 billion by 2030, and between US$70 billion and US$500 billion by 2050, though these figures vary based on the assumptions used.
• Implementing 'rapid, inclusive, and climate-informed' development could reduce economic losses from climate change by 0.4 percent of global GDP by 2030 and limit the number of people pushed into poverty to less than 20 million.
• Adaptation can sometimes be achieved at no cost or even negative cost, such as by removing distortive subsidies in the energy, water, or agriculture sectors or by avoiding the construction of infrastructure in high-risk areas.
• Financial constraints are divided into 'funding' issues, where actors cannot afford the action and require grants or subsidized loans, and 'financing' issues, where actors can afford to repay a loan but lack access to borrowing.
• Non-financial obstacles to adaptation include market failures (such as externalities and moral hazard), governance failures (including lack of coordination and the invisibility of avoided losses), and behavioral biases or deep uncertainty.
• Flood management shows high potential for adaptation; for the 136 largest coastal cities, an annual investment of US$50 billion could reduce flood losses from over US$1 trillion to approximately US$60 billion.
• Adaptation spending in ten major cities varies significantly, ranging from US$23 million in Addis Ababa to US$2.5 billion in New York City, with per capita spending in Paris, New York, and London between US$200 and $600 annually.
• Maladaptation occurs when measures intended to reduce vulnerability actually increase it, such as large irrigation infrastructure in arid regions that encourages the use of water-intensive crops more vulnerable to drought.

APA

Hallegatte, S., Brandon, C., Damania, R., Lang, Y., Roome, J., Rozenberg, J., & Tall, A. (2018). THE ECONOMICS OF (AND OBSTACLES TO) ALIGNING DEVELOPMENT AND CLIMATE CHANGE ADAPTATION. World Resources Institute. https://files.wri.org/s3fs-public/uploads/Global_Commission_on_Adaptation_Discussion_Paper_Economics_final.pdf

Chicago

Hallegatte, Stephane, Carter Brandon, Richard Damania, Yunziyi Lang, John Roome, Julie Rozenberg, and Arame Tall. THE ECONOMICS OF (AND OBSTACLES TO) ALIGNING DEVELOPMENT AND CLIMATE CHANGE ADAPTATION. World Resources Institute, 2018. https://files.wri.org/s3fs-public/uploads/Global_Commission_on_Adaptation_Discussion_Paper_Economics_final.pdf.

Wikipedia

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BibTeX

@techreport{hallegatte2018economics, author = {Hallegatte, Stephane and Brandon, Carter and Damania, Richard and Lang, Yunziyi and Roome, John and Rozenberg, Julie and Tall, Arame}, title = {{THE ECONOMICS OF (AND OBSTACLES TO) ALIGNING DEVELOPMENT AND CLIMATE CHANGE ADAPTATION}}, institution = {World Resources Institute}, year = {2018}, url = {https://files.wri.org/s3fs-public/uploads/Global_Commission_on_Adaptation_Discussion_Paper_Economics_final.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }