Seizing the Challenge – WEF on Adaptation

Welcome to our new feature – Digested Reads, in which we break down and review those reports you don’t have time for. Also known as “telling you what to think about reports that tell you what to think”. First up – The World Economic Forum: Climate Adaptation – Seizing the Challenge…

Climate adaptation has made it big this month (yup, we were doing it juuuussst before it got cool), with President Obama unveiling a $1bn plan to support agricultural resilience, and the UK has found itself the continued subject of a stream of aquatic abuse from the weather gods. The UN’s Green Climate Fund (GCF) meets this week, and everyone is talking about how in God’s name we’re going to pay for this climate business anyway. The public sector is putting up some of it (through country donations to international climate funds), but the UN wants the private sector to come in on the rest. Trouble is, no one knows exactly how, or why they might do this, as it’s not easy to make adaptation profitable (building a sea wall doesn’t tend to bring in much income long term).

In this context, the World Economic Forum’s (WEF) report, “Climate Adaptation” – Seizing The Challenge”, offers a view to what the world’s business elite (and leaders of the private sector) think about it.

One sentence summary: The inequality theme of WEF’s Davos meeting this year was reportedly lost somewhere between the champagne and canapes, and the same rings true for their report on climate change.

The report starts by considering datasets that measure vulnerability to climate change, highlighting the differences that lead them to produce variable results. Predictably, the only thing they all agree on is that rich countries are going to be alright (more or less), and poor countries, well …… aren’t. They recognise that good data is hard to come by, recommending that metrics for gauging vulnerability be more localised (amalgamating the whole of China into 1 statistic isn’t particularly useful), but then only to a level at which allows for comparability between countries. Calling for better data is all very nice, but the most vulnerable countries in the world are also the ones who are least able to collect reliable and accurate data due to the dearth of resources to do so.

We then get on to the economics of climate change, and unsurprisingly the grail of economic growth remains the priority. The proposed Economics of Climate Change (ECA) methodology has worked out that between 40-65% of projected increases in losses from climate change can be averted cost effectively. The approach involves quantifying losses and costs of adaptation based on scientifically researched risk planning, and assumptions about future economic and population growth. Adaptation measures are then assessed based on cost-benefit analysis, as decision makers choose to add in other factors (like “cultural preferences”, “the value placed on ecosystems” etc). 

Just follow these simple steps and erm ... try not to worry about the rest

Just follow these simple steps and erm … try not to worry about the rest

Methodologically speaking, these are massive assumptions about how much cash each particular adaptation measure saves in terms of loss – assumptions which just can’t be taken seriously once you incorporate the need to integrate those measures into communities which may not be happy or easily able to accept changes. It’s an approach which is extremely top-down and technocratic.

I, Robot. ($10 per unit).

I, Robot. ($10 per unit).

More importantly, this analysis might be useful if we were all robots with a calculable cash value. What’s missing from all this is any element of actual real humanity. Let’s start with cost effectiveness  … the number of 40-65% of cost effectively averted losses hides any concept of human cost (lost livelihoods,  communities, cultural heritage, inherited land etc). The losses are all calculated in terms of physical assets, which don’t reach the heart of the problem. The case study claims that 50% of the losses in Maharashtra, India, can be averted. Maharashtra produces over 15% of India’s GDP and contains 112 million people, 20 million in Mumbai. Accepting 50% of losses as “not cost effective” sweeps the livelihoods of millions of people under the carpet. Cost-effectiveness is simply the wrong way to approach the adaptation challenge. If the most vulnerable are the poorest, then climate change threatens not just their comfort but their entire livelihoods. If you have a shred of concern for the preservation of human life, cost effectiveness as a judicial metric just doesn’t cut it. This is true from an economic perspective too, as the disruption caused by those accepted losses (migration, malnutrition, loss of productivity) are unpredictable and likely to be hugely damaging. Unfortunately, the methodology separates out economic concerns and assumes normal economic growth for fear of it being too complicated.

The next chapter, “financing adaptation”, looks at ways to get the public sector to incentivise private sector involvement.  A set of essential criteria are laid out for adaptation financing, including “political attainability” and being developed in a “certain environment”, next to “desirable” (and therefore unnecessary) criteria including being “carried out in developing and least developed countries”. They recommend adaptation tax credits, an adaptation market (similar to carbon markets), loan guarantees to financial institutions, and ways to service debt by using future savings on insurance.

There is certainly some hypocrisy to be found in recognising at the outset that the world’s poorest are the most vulnerable, but then deciding that it’s only “desirable” that adaptation be in the least developed countries, and even then, only if it can be made profitable and in an environment that enables the private sector to invest with confidence. The LDC’s are poor partly because there is no reason for the private sector to have this confidence, which the WEF must already know. While the UN calls for the private sector to get involved, this report is a marker from Davos that says, “We’re not really interested in changing the status quo”.

The rest of the report focuses somewhat randomly on  the “Water-Food-Energy” Nexus – three sectors which are closely related (crops need a lot of water, as do power plants for cooling – less water means problems for all three areas), and which the report accuses experts and officials of “silo thinking”. A healthy dose of cynicism may suggest that water, food and energy are all areas where a tidy profit can be made, even in developing countries, but that’s just me.

So truthfully, not many surprises from the WEF. A reduction of the issues to economic analysis was predictable, if unhelpful. For all the fanfare about equality, from a climate perspective, fanfare was all that it was.