Social capital as a policy catalyst: Enhancing municipal investment in climate risk reduction and adaptation

Asia, a rapidly emerging global economic power, is vulnerable to natural disasters. Its annualized flood-related losses, amounting to 53 billion USD and approximately 16,000 human lives, are expected to increase with further climate change. Several international organizations have recommended increasing investment in disaster risk reduction (DRR) and climate change adaptation (CCA). Developing Asian economies’ investment of 33.6 billion USD (0.21% of their GDP) in flood protection in 2015 is projected to reach 100 billion USD annually by 2030. Official development assistance (ODA) in DRR—5 billion USD/year from 1991 to 2010—increased by 2.6 times to 13.3 billion USD/year from 2011 to 2020. Simultaneously, investment in risk prevention or reduction decreased from 680 to 550 million USD/year (a decrease from 12.7 to 4.1% as the share in DRR assistance). This book collates the existing data, research findings, conceptual works of the scholars and senior officials of disaster management organizations who directly manage or investigate natural disasters in the Asia-Pacific, and practical cases of investment in DRR and CCA. This chapter examines the international initiatives for promoting investment in DRR and CCA and the current and projected funding for DRR and CCA to construct the background for this compendium and outlines its chapters.KeywordsAsia-pacificEmergency responseFloodJapanOfficial development assistance

ABSTRACTToday, many advocate insurance as a tool for coping with natural disasters. Beyond providing prompt financial relief to victims of disasters, insurance can also incentivise individuals to invest in preventive measures if insurers reward such efforts with reduced premiums. However, insurers might be unable to reward investments in precautionary measures with lower premiums if they are ill-informed about individual-level risks. Here, we explore how Ghanaian home insurers respond to investments in flood risk reduction by asking them to quote premiums for four identical buildings; two had investments in flood risk reduction, while the other two had none. We find that insurers did not reward investments in risk reduction, with some charging higher premiums for elevated buildings, suggesting they have interpreted such preventive measures as a sign of high flood risk. This failure to reward investments in precautionary measures may discourage insured homeowners from investing in risk reduction.

Editors’ Letter

Decentralization and the governance of climate adaptation: Situating community-based planning within broader trajectories of political transformation

As population is growing and urbanization is progressing, higher numbers of people are exposed to disaster risks, especially in developing countries. Climate change is further worsening impacts of existing risks and introducing new risks in the form of heat stress, water scarcity, water and vector borne diseases and extreme events. There is no doubt that countries need to investment more in disaster risk reduction (DRR) together with climate change adaptation (CCA) not only to minimize impacts but also build resilience. Sadly, investment in DRR and CCA is far behind compared with investments in expansion of human settlements, infrastructure and services development. This paper examines existing practices of investment and investigates challenges in increasing investments in reduction of water-related disaster risks. It concludes that in the first place, DRR needs to be integrated in national development plans. In addition, formulating sectoral long-term plans proved helpful to secure commitment of investment.

Has the establishment of national key ecological function areas reduced climate risk?

Community level adaptation to climate change: The potential role of participatory community risk assessment

Climate-induced hazards are becoming more frequent and severe, causing escalating economic losses worldwide. Consequently, climate change adaptation is increasingly necessary to protect people, nature and the economy. However, little is known about who is adapting and how much they spend on adaptation measures, especially in the private sector. This article focuses on firms—the backbone of economic development, yet understudied in climate adaptation research. Here we present insights from a unique panel dataset detailing businesses’ adaptation investments across 28 European countries (2018–2022), 5 hazard types, and 19 economic sectors. Our descriptive analysis reveals low but increasing adaptation investments across Europe (0.15–0.92% of national gross domestic product, annually increasing by 30.6–37.4%). Moreover, we highlight considerable differences in adaptation intensity across sectors, including low adaptation intensity in manufacturing and retail trade. Additionally, our econometric analysis indicates that public adaptation spending crowds in private investments in adaptation, highlighting opportunities to facilitate autonomous adaptation.

The study examines private sector initiatives and investment challenges in mainstreaming green economy in Ghana. An exploratory study design of qualitative research method was adopted. Due to the level of information required for the study, a purposive sampling technique was employed and a total of twenty-four respondents selected from 8 private sector organisations and some selected government ministries participated in the study. Data collected through in-depth interviews was transcribed, coded and analyzed thematically in line with the objectives and questions of the study. The study found out that green economy initiatives are not well mainstreamed in the private sector. Most companies’ involvement in climate change and green economy activities was commonly carried out through corporate social responsibility (CSR). The study further revealed that, government incentives for private sector investments in adaptation are not attractive. The study identified access to finance, poor knowledge base, weak collaborative effort, inadequate incentives, absence of clear-cut government policy and unsatisfactory recognition as challenges facing private sector-led investments in climate change adaptation. The paper recommends the need for government incentives to attract private sector investment, identification of green investment opportunities, collaboration among stakeholders, climate change sensitisation and education among the private sector in order to address the immediate to long-term consequences of climate change in Ghana.

Nepal is one of the most hazard-prone and vulnerable countries in the world. In 2016, it ranked seventh among countries most affected by climate risk Nepal is thus one of the top 20 most hazard-prone and vulnerable countries in the world according to German Watch. This makes it difficult to achieve sustainable development goals, manage its disaster risks and promote climate change adaptation. Developing integrated strategies to meet the 2030 sustainable development agenda is especially challenging due to political instability and low government capacities. Following the 2015 Gorkha earthquake, which killed nearly 9,000 people and incurred damages of USD 7 billion, the Government of Nepal, with support by UN Environment, developed a post-crisis integrated strategic environmental assessment (Post-crisis ISEA) to promote more sustainable post-earthquake reconstruction and planning. Post-crisis ISEA is an approach for both fast-tracking reconstruction efforts and for long-term sustainable development planning. It integrates conservation of environment and sustainable development with disaster and climate risk reduction. It gives more rapid guidance on which developments can go forward without lengthy environmental impact assessments (EIA) while ensuring consultations with multiple stakeholders. Post-crisis ISEAs provide the additional advantage of conflict resolution between conservation and development-oriented actors while enabling data collection and sharing. The approach was tested in the post-conflict Northern Sri Lanka shortly after the end of the conflict to promote and fast-track sustainable development planning. It was piloted in 14 post-earthquake-affected districts in Nepal to ensure environmental conservation in the recovery process in collaboration between UN Environment, the Ministry of Forest and Environment (MOFE) and the National Reconstruction Agency (NRA). This chapter covers Nepal’s experience with post-crisis ISEAs as a participatory approach to post-crisis sustainable development planning, with a focus on the road sector. This chapter provides details on the multi-stakeholder process undertaken to map environmental baselines, and areas prone to landslide susceptibility along roads designated for reconstruction by the government “post-disaster reconstruction framework”. The project resulted in synthesis maps, which provided policy makers with a more integrated analysis and clear guidelines for “Building back better” in a post-crisis situation. The post-crisis ISEA approach provided data related to environmental and social issues for determining whether to conduct more in-depth EIAs. Such approaches are thus useful for integrated development planning in achieving sustainable development goals, disaster risk reduction and climate change adaptation.

Despite contributing little to global warming, Africa continues to be adversely impacted by climate change in multifaceted ways including in agriculture and food systems, human health, water and ocean systems, transportation, energy and industrialisation. Global efforts to mitigate the climate crisis are woefully inadequate and Africa-driven initiatives to tackle these challenges are increasingly focussed on regional and national climate adaptation strategies aimed at reducing climate risk, helping society adjust and building resilience to the present and future impact of climate change. These strategies include developing innovation and technology systems especially for climate adaptation in Africa. To be effective, such strategies must be guided by evidence of the innovation capabilities and require appropriate governance systems at the regional and national levels in Africa. Conducted by way of desk research, as part of a broader research project involving two other African countries, this case study focuses on South Africa and examines the climate adaptation innovation of LiquidGold Africa (Pty) Ltd to demonstrate Africa’s capacity to innovate climate adaptation solutions. The research also examines the potential of the innovation governance systems in South Africa, such as intellectual property (IP) regimes, to harness existing climate adaptation innovation for substantial impact. In this regard, the paper briefly sets out some broad background issues relating to IP, technology transfer and access to adaptation innovation from the perspective of international climate change negotiations. It then undertakes a survey of South African climate change challenges, the legal, policy and institutional frameworks on climate adaptation, and the climate adaptation innovation governance landscape before focusing specifically on the work of LiquidGold.

Private finance can contribute to the achievement of systemic climate adaptation. But the research community are yet to provide a framework for private investors and borrowers to assess the commercial viability of investments in adaptation. To date, investment cases have not been constructed with climate adaptation as the underlying investment logic - no framework explains how adaptation creates value and converts to cash flows. Instead cases are made as standard equity, debt or loan investments in climate vulnerable contexts, or as poorly specified climate resilience or adaptation solutions. Such specialisms and experiences are present within the public sector adaptation evaluation community, but they typically have few means to communicate with private investors and private adapting entities. This perspective sets out how private investments in adaptation generates value and cash flows that can be applied in investment cases to guide investors and those seeking to raise capital. First it sets out the conceptual and practical linkages between effective adaptation, value and cash flows. It then shows the importance of cash flows when formulating basic financial asset pricing methods, using examples of intangible assets for equity and fair value for debt-based instruments.

Climate change has been identified as one of the biggest challenges of our time and the impacts of global warming are becoming increasingly notable and damaging. As a result, the Intergovernmental Panel on Climate Change urges for drastic actions to address and mitigate climate risk. This is highly relevant for the tourism industry which has been identified as a sustainable development option and which provides important economic activity to destinations globally, including many small island developing states, such as Vanuatu. Yet, tourism is highly vulnerable to the impacts of climate change, while at the same time contributing to global greenhouse gas emissions. For tourism to deliver on its development promise under a changing climate, climate risk to destinations and how it can be reduced needs to be better understood. To address this need, this thesis aims to understand what role tourism can play to reduce climate risk to the wider destination. The relevance of climate change is not new to the tourism literature, and there is evidence that tourism businesses are already coping with changes in their environment. Yet actions to address climate risk are often reactionary without the consideration of potential flow-on effects that may be created. This can be problematic, particularly in the South Pacific where tourism activity is highly integrated with local communities and the natural environment. For tourism to create benefits and reduce climate risk beyond the tourism businesses, the wider destination needs to be considered. However, our understanding of how different destination characteristics and elements link, interact, and change under increased climate risk and how flow-on effects between destination elements can themselves influence climate change remains limited. To address these gaps, this thesis applies general systems theory to advance our understanding of climate risk to destinations in Vanuatu, and to identify the systemic change that is required to collectively and holistically address climate change through tourism. A qualitative multi-stage research design was developed to first assess how academic, practical and political tourism and climate change knowledge is produced and how it can be enhanced to better inform the sector’s climate response. Following this literature review, the systems approach guides the development of the Vanuatu Tourism Adaptation System which identifies economic, socio-cultural, political, and environmental variables, how they interlink and thereby influencing climate risk to destinations in Vanuatu. Destination trade-offs are discussed and policy recommendations of how they may be reduced presented. Building on this systemic understanding of risk to Vanuatu destinations, the potential of Ecosystem-based Adaptation for tourism is empirically tested. Results highlight the potential this approach provides to reduce climate risk and contribute to destination well-being. A number of barriers to successful implementations were identified, and strategies presented of how to address those. To discuss the results and learnings of the empirical studies of this thesis, the concepts resilience and transformation, system characteristics linked to change, are critically reflected upon to develop seven leverage points for holistic climate risk reduction to Vanuatu destinations. Results of this thesis highlight the opportunity systems thinking provides to reduce climate risk to destinations. It can help enhance awareness, support collaboration to integrate projects and policies across sectors and inform the selection and implementation of climate risk reducing interventions in tourism. This thesis makes several significant theoretical and practical contributions. It contributes to our theoretical understanding of how tourism climate change knowledge is created, and to our systemic knowledge on climate risk to destinations. It thus advances systems approaches in tourism, including our understanding of destinations as social-ecological systems. Linking resilience to leverage points provides a novel way of assessing system change and provides insights into how to manage such change to reduce climate risk. In addition, this thesis provides practical recommendations for Vanuatu destinations relevant to decision makers at local, provincial and national level. It seeks to stimulate a different way of thinking about the means of tourism and how to address complex problems such as climate change more holistically.

A lesson from the COVID-19 pandemic and the growing climate crisis is that development that is not risk-informed is neither inclusive nor sustainable. In light of this increasingly complex risk landscape, The 2021 Financing for Sustainable Development Report calls for a risk-informed approach to sustainable finance, and for investments in prevention, risk reduction and resilience. Because many such investments have a public good character, Governments must take the lead: incorporating risk analysis into their planning processes; overcoming ex post biases in their budgeting; aligning the private sector risk landscape with SDG risks, through carbon pricing and other incentives and regulations; and advancing risk-informed development cooperation in all its forms. Ultimately, all financing must be risk-informed and resilient, and sufficient financing must be available for investments in risk reduction and resilience, at national and global levels.

Flood Insurance, Building Codes, and Public Adaptation: Implications for Airport Investment and Financial Constraints