We need to talk about climate adaptation

Swiss Re is seeking to bring partners and stakeholders together to discuss overcoming the barriers to climate adaptation. Investing in adaptation will increase resilience by supporting economic stability, create job opportunities and protect the environment, but the inability to easily quantify and compare the financial benefits has contributed towards a significant gap in adaptation financing.” Yet, as our analysis shows, the benefits of the right adaptation measures can outweigh costs by a factor of 10 or more in the face of natural disasters.

The universal adoption of Benefit-to-Cost Ratios (BCRs) in the initial assessment of adaptation projects and later at delivery milestones can drive progress in three ways:

1. Catalysing decision-making - Adaptation requires upfront investment, which can be costly; however, the countries most exposed to climate risk are often those with fewer financial and technical resources. This issue is compounded by the fact that adaptation responses are often only explored after a catastrophic event, which is typically when funding is even less available. Greater awareness of BCRs can help inform better adaptation decision-making and guide future preparedness plans.
2. Comparability and prioritisation - Localised needs-based approaches often result in many projects competing for limited central funds, which are unable to meet all financial demands. The adoption of a universal metric, such as BCRs, would help in prioritising and staging different types of interventions.
3. Benefit measurement – Adaptation projects often do not fit into traditional commercial financing models, as the 'benefits' on the upfront investment are often manifested as avoided loss rather than positive, additive cash flows yet their value creation is just as real. This metric brings supply and demand for adaptation funding together, and BCRs can be assembled into an 'Adaptation Index' to help track the impact over time.

It is in our collective interest to create a world capable of withstanding the consequences of climate change - and one that can thrive despite them, inclusively and responsibly. This conversation is only just starting. We're really looking forward to your thoughts and contributions starting at COP28 where we hold a session for blue badge holders.