Early climate adaptation investment could save Bangladesh billions by 2030: Study

Timely investments to withstand the projected impact of climate change could save Bangladesh billions in climate damages and lost GDP growth this decade, according to a new study by Standard Chartered.

The Adaptation Economy, which investigates the need for climate adaptation investment in 10 markets – including Bangladesh, India, China, and Pakistan – reveals 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, reads a press release.

Across the entire 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.

The case for adaptation

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% of combined annual GDP of the 10 markets in the study and much less than the estimated $95 trillion emerging markets require to transition to net zero using mitigation measures, as outlined in Standard Chartered's Just in Time report.

The Adaptation Economy also surveyed 150 bankers, investors and asset managers and found that, currently, just 0.4% of the capital held by respondents is allocated to adaptation in emerging markets where investment is needed most, adds the release.

However, 59% 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% of global assets in 2022 to 1.4% by 2030.

Marisa Drew, chief sustainability officer, 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.  

"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. 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.

 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," said Bitopi Das Chowdhury, head of Corporate Affairs, Brand & Marketing, Standard Chartered Bangladesh.