Quality projects that factor in existing and future climate risks are needed to maximize the impact of adaptation finance

Adapting to the impacts of climate change and risks has been overshadowed for years by climate change mitigation, which attempts to directly reduce greenhouse gas emissions. The lion's share of attention and finance is channeled to support mitigation activities.

According to the estimates of the United Nations Environment Programme, global public and private adaptation investment reached $30 billion in 2017-18, accounting for less than 20 percent of total climate finance during that period. The cost of adaptation, however, will reach $140-300 billion per year by 2030, and $280-500 billion annually by 2050.

The lack of appetite for adaptation investments might be explained by multiple factors. Many adaptation projects are not perceived as bankable, due in part to the dearth of tools and methodologies to help properly measure their outcomes, including climate resilience. Adaptation projects are also hard to standardize across geography, as each community, region and country is vulnerable in its unique ways, requiring bespoke solutions to build adaptive capacity.

Moreover, the fact that climate adaptation and general development interventions are inextricably interlinked renders it challenging to mobilize additional resources for adaptation per se.

On the one hand, quality development projects can contribute to climate adaptation. Well-designed roads, for instance, can contain engineering structures that can withstand extreme climatic events. On the other hand, climate adaptation could bring about development dividends. The support for drought resistant crops is a case in point. It is not only climate-smart, but also generates sustainable alternatives for livelihoods. Ultimately, it is the similar set of socioeconomic and environmental factors (for example, education level, natural endowments, technology advancement and institutions) that underlie development progress and the status of resilience.

Efforts have been dedicated to disentangling climate adaptation from development for project financing. In their estimate of adaptation finance, the multilateral development banks, for instance, examine and assess the contribution of individual project components, rather than the project as a whole. Only those elements that are truly incremental by demonstrating their direct relevance to addressing a climate vulnerability in the project area are considered adaptation and eligible for climate finance. Such a disaggregated approach could help prevent adaptation finance from being diluted by costless co-benefit of "business-as-usual" development projects that would have happened in any case.

While such endeavors are conductive to safeguarding the additionality of adaptation finance, they are not meant to serve as the end goals. In fact, the preoccupation with distinguishing adaptation from development may compromise the full integration of adaptation into regular development practices. Regardless of the sources of finance, adaptation investments are, after all, intended to enhance the accessibility of adaptation solutions and strengthen the resilience of development projects.

The assessment of adaptation finance may, therefore, take one step back to look at what really matters. The pursuit of accurate and rigorous tracking is certainly commendable to ensure well-leveraged inputs for adaptation. Yet, the impact of adaptation finance cannot be truly optimized without devising quality projects that factor in existing and future climate risks.

To achieve that entails a more meticulous review of projects' designs in the first place. How this will work out requires asking essential questions as to what actual development challenges, including those imposed by climate risks and variability, are to be addressed through the project, as well as what can be done more effectively to reduce the vulnerability of people, assets or ecosystems that are at stake.

Effective adaptation is not necessarily more costly. Small adjustments or nudges could make a difference. Capacity building activities (such as workshops, training) that help raise climate awareness or crystallize the thoughts on climate risks to inspire informed decision-making are a good case in point. These have been observed in many projects involving rural smallholder households who are so habitual to adapting without consciously knowing. To give another example, traditional infrastructure projects (for example, transport projects) are increasingly incorporating to build intelligent management systems that can provide early warning of climate-related events through consolidated data.

In the run-up to the United Nations Climate Change Conference (COP 27), climate adaptation is gaining increasing momentum, considering the ongoing energy crises, and the realization that mitigation alone cannot fully cope with the immediate catastrophic losses confronting the world today. Admittedly, there is much room for spending on adaptation to further grow, from a wider array of funding sources and instruments.

However, the numbers of adaptation finance do not speak directly to the impacts it could generate. And spending wisely is probably equally important as mobilizing more. In the continuous efforts to refine adaptation finance assessment, the opportunities to mainstream climate considerations must be grasped in the stage of project preparations to ensure that effective adaptation measures are captured. Simple adaptation actions, such as those mentioned above, could make an impact accumulatively, if repeatedly conducted across projects.

Exploring the ways to define and measure the effectiveness of adaptation finance may be the next big step forward for the global community. The development of common metrics may help. So too, the many intended beneficiaries of adaptation investments, who are entitled to tell their development stories.

The author is a climate specialist at the New Development Bank. The views of this article are entirely those of the author's, and do not represent the New Development Bank. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn.