The article discusses the critical need for the Global North to fund climate adaptation efforts in the Global South, which faces extreme climate risks. It highlights how inadequate adaptation threatens significant foreign investments, supply chains, and overall productivity, creating economic implications for the Global North. Innovative funding solutions are suggested to bridge the existing financing gap.
The Global South faces extreme climate risks, with cities such as New Delhi, Manila, and Jakarta among the most affected. Despite the urgency of these threats, the Global North may not prioritize funding climate adaptation in these regions. However, as natural disasters increasingly impact economies closer to home, it is vital to recognize that inadequate climate adaptation in the Global South also threatens the Global North’s economic interests.
A major concern is the risk foreign direct investments (FDI) face in vulnerable cities of the Global South, as substantial capital from the Global North is concentrated there. According to the UN Conference on Trade and Development, developing countries in these regions received about US$866 billion of the global US$1.3 trillion in FDI. Companies like Apple have significant investments in locations like India, illustrating the interconnectedness of our economies.
Additionally, the Global South plays a crucial role in supplying goods to the Global North, from agricultural products to manufactured items. For example, coffee production, primarily located in the Global South, could face degradation due to climate change, jeopardizing the US$40 billion industry. Consequently, obstacles in the supply chain originating from climate impacts threaten an increase in costs for consumers in the Global North.
The productivity of workers in the Global South is at risk as rising temperatures and extreme weather conditions could lead to a significant decline in work hours. The International Labour Organization estimates that climate change could result in a loss of US$2.4 trillion, directly affecting global GDP. Therefore, the economic health of the Global South is directly connected to the economic stability of the Global North.
It is imperative for the Global North to consider not only equitable reasons but also financial incentives for investing in climate adaptation in the Global South. With climate adaptation financing sorely lacking, raising capital from the private sector is essential for addressing the urgent needs of developing countries. Currently, private capital is reluctant due to perceived challenges in realizing returns on such investments.
By adopting innovative funding models to assess and capture the value created by climate adaptation activities, the Global North can facilitate private investment. There exists a vast opportunity to establish frameworks akin to Property Assessed Clean Energy financing that can attract and channel investments into needed climate adaptation.
Climate adaptation financing in the Global South is critical given the rising impacts of climate change on economies both within and outside these regions. The vulnerability of cities in the Global South such as Jakarta and Lagos poses direct economic risks to the Global North due to high levels of foreign investment and essential supply chains. The need for action is further amplified by a history of increasing natural disasters and shifting climate patterns, raising substantial economic concerns that necessitate attention and resources from the Global North.
In conclusion, the economic stability of the Global North is closely intertwined with the climate resilience of the Global South. Investment in climate adaptation is not only a matter of moral responsibility but also an essential strategy to protect foreign investments and sustain supply chains. Addressing the funding gap with innovative financing solutions will bolster climate adaptation efforts and ensure that both regions thrive amid increasing climate challenges.
Original Source: www.orfonline.org
