CLIMATE ADAPTATION: Bangladesh can save billions by early investment
Bangladesh could avoid billions in climate damages and lost GDP growth this decade by making timely investments to withstand the projected impact of climate change, according to a new study by Standard Chartered.
The study titled "The Adaptation Economy" revealed that without investing a minimum of $1.2 billion in adaptation by 2030, Bangladesh could face projected damages and lost GDP growth of $11.6 billion – nearly 10 times that amount.
It investigated the need for climate adaptation investment in 10 markets, including Bangladesh, India, China, and Pakistan, Standard Chartered Bangladesh said in a press release yesterday.
According to the study, without a minimum investment of $30 billion, the 10 featured markets face projected damages and lost GDP growth of $377 billion.
The projection assumes that the world succeeds in limiting temperature rises to 1.5°C, in line with the Paris Agreement.
In a 3.5°C scenario the estimated minimum investment required more than doubles to $62 billion and potential losses escalate dramatically if the investment is not made.
Examples of climate adaptation projects include the creation of coastal barrier protection solutions for areas vulnerable to flooding, the development of drought-resistant crops and early-warning systems against pending natural disasters, according to the study.
Even if the world's nations manage to achieve the goals of the Paris Agreement, measures to adapt to climate change must be pursued alongside the global decarbonisation agenda, with the banking sector having a critical role to play in unlocking finance.
The $30 billion investment required for adaptation represents only slightly more than 0.1 per cent of combined annual GDP of the 10 markets in the study and much less than the estimated amount.
It surveyed 150 bankers, investors and asset managers and found that, currently, just 0.4 per cent of the capital held by respondents is allocated to adaptation in emerging markets where investment is needed most.
However, 59 per cent of respondents plan to increase their adaptation investments over the next 12 months. And on average, adaptation financing is expected to rise from 0.8 per cent of global assets in 2022 to 1.4 per cent by 2030.
Marisa Drew, chief sustainability officer of Standard Chartered, said, "This report makes it clear that irrespective of efforts to keep global warming as close to 1.5°C as possible we are going to have to incorporate climate-warming effects into our systems and adapt to its reality."
All nations will need to adapt to climate change by building more resilient agriculture, industry and infrastructure, but the need is greatest in emerging and fast-developing economies with a disproportionate risk of exposure to the negative effects of rising temperatures and extreme weather, Drew said.
"We must urgently recognise that adaptation is a shared necessity, and as our Adaptation Economy research so effectively highlights, inaction creates a shared societal burden of exponentially increasing cost," she said.
"The financial sector has a crucial role to play in directing capital towards adaptation and creating the proof points to demonstrate that investing in adaptation can be a commercially viable attractive proposition for the private sector," she added.
Bitopi Das Chowdhury, head of corporate affairs, brand and marketing of Standard Chartered Bangladesh, said for a country like Bangladesh that lies on the forefront in the fight against climate change, failure to invest in adaptation this decade could lead to significant lost opportunities for growth.
"This report is another timely reminder that the time for us to act is now," she said.