Investment in adaptation finance gives 10-fold returns: Study
The WRI study found that for every $1 invested in adaptation and resilience efforts, there is more than $10 in benefits spread out over a decade
International climate finance for funding adaptation measures and climate resilience is not only urgently needed, but is also a smart development instrument, according to a new report by the global think-tank World Resources Institute.
The study analysed 320 adaptation and resilience investments across 12 countries totaling $133 billion. It found that for every $1 invested in adaptation and resilience efforts, there is more than $10 in benefits spread out over a decade. In other words, the $133 billion has the potential to generate returns as much as $1.4 trillion, with average returns of 27%, found the study.
According to the study, adaptation investments mean those which are meant to reduce or manage physical climate risks, like climate-smart agriculture, expanded health services and urban flood protection. But the study found that in a lot of scenarios, the social and developmental benefits due to the adaptation investment was more than the losses avoided from climate change impacts.
Greater returns than expected
The study evaluated the investments on three types of returns: avoided losses from climate disasters, induced economic gains, like job creation and increased crop yields, and broader social and environmental benefits, like improved health systems, enhanced biodiversity etc.
The results showed that the investments scored fairly even across all three types of returns. Interestingly, the study also found that only “8% of investment appraisals estimated the full monetized values of these dividends — suggesting that actual rates of return are substantially underestimated in economic assessments of most adaptation investments.”
In sectors such as health, the returns in adaptation investment was around 78%, as lives were protected from climate impacts such as malaria, dengue fever and heat stress. Another sector where lives were saved was investing in disaster risk management, through early warning systems for extreme weather events like floods. This also yielded much higher returns.
“This research has pried open the lid on what resilience is truly worth — and even that first glimpse is staggering. It’s time for leaders to recognize climate adaptation is not just a safety net but a launch pad for development,” said Sam Mugume Koojo, Co-Chair of the Coalition of Finance Ministers for Climate Action from Uganda.
Development and climate resilience go hand-in-hand
The study found that in a lot of cases, investing in adaptation measures led to these countries meeting their development goals. For example, investing in infrastructure for reducing risk from extreme weather events is beneficial to the people in that region. Similarly, investing in irrigation systems to avoid fallout from climate change-induced irregular rainfall helps farmers to do multiple and diverse cropping.
Also, investing in nature-based solutions, like watersheds, wetland regeneration and coastal protections lead to locals enjoying more ecological and recreational benefits, found the study. In fact, even if climate-related disasters do not occur, more than 50% of benefits can be gleaned from adaptation investments.
“One of our most striking findings is that adaptation projects aren’t just paying off when disasters happen — they generate value every day through more jobs, better health and stronger local economies. That’s a major mind shift: policymakers don’t need a disaster to justify resilience — it’s simply smart development,” said Carter Brandon, Senior Fellow, WRI.
According to the study, over 50% of analysed adaptation investments showed reduced greenhouse gas emissions, meaning that adaptation and mitigation needs also overlap. This could lead to a more robust climate finance from investors who are interested in reducing emissions.
The study found that energy, forestry, transport, cities and agriculture sectors showed the greatest promise for attracting investment to reduce emissions. A lot of projects which got investments were related to carbon capture and sequestration, as well as natural solutions like tree plantations for reducing heat, and stabilising the soil in hills to reduce erosion and runoff.
With COP30 coming up in a few months in Brazil, the study recommended that leaders across the world think of adaptation as an economic engine, and integrate it into national development plans.
“This evidence gives leaders and non-State actors exactly what they need heading into COP30: a clear economic case for scaling adaptation. Belém must become a turning point — mainstreaming resilience into national and local priorities and unlocking the full potential of non-state actors’ leadership,” said Dan Ioschpe, Climate High- Level Champion for COP30.
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