Taxpayers cannot foot the bill - urgent need for private investments in climate adaptation

Photo: Jude Allan

Climate change is real. It is already affecting nature and the lives of human beings. Due to melting ice and changing weather patterns, billions of dollars must be invested in climate adaptation infrastructure to protect citizens around the globe.

Even cities considered climate adaptation frontrunners such as Copenhagen, London and Singapore are not well prepared for the rising sea levels, the extreme rain and the heat following climate change. The city planners and politicians do actually realize that there is an unmet need to construct infrastructure such as dikes, local drainage of rainwater and parks for shade. But they do not know how to raise the money.

This is the conclusion made in research performed by CBS researchers Stella Whittaker:

“Right now, the city governments are the only ones being proactive to find solutions, because they know that they cannot afford the necessary infrastructure. The private sector, which is capable of providing the funding, is really not that interested, because they do not see a clear income stream. So, there is an urgent need to develop business models, which will give them a viable risk return,” says Stella Whittaker, PhD student at CBS and an international specialist in the field of climate change.

Also, even at state level, politicians, and policymakers are reluctant to face the challenge, she says.

Enablers for change have to come together

Stella Whittaker gathered this information through ninety interviews carried out in Copenhagen, London, and Singapore.

To capture their thinking, she interviewed city bureaucrats, investors and people working for organizations who could become enablers for a change. According to Whittaker, they will all have to work together to create models on how the public and private sector combine forces. Their common goal should be to protect citizens against flooding, extreme heat, loss of land for farming, famine, and economic decline.

“Fortunately, as things have developed, private investors are contributing heavily to the climate mitigation process. They do this because they gain money from funding low carbon energy resources such as wind turbines. It took twenty years to develop those business models and to get there. Now somebody will have to develop business models for the climate adaptation process, too,” she says.

According to a recent report from UN Intergovernmental Panel on Climate Change (IPCC), the financing of the global adaptation needs to be upscaled from the current level of tens of billions of dollars per year to hundreds of billions of dollars globally per year. Also, a report from Stockholm Environment Institute states that there is a need to increase adaptation financing globally by 12-22 times current levels.

Get rid of the psychological block

“We need to have a conversation about this because it is an enormous problem. And it is urgent. We need a response like the one we had to Covid or like the Marshall Plan, which provided money for investments in Europe after the Second World War,” says Stella Whittaker.

Her research shows that politicians, urban planners, and investors are reluctant to take the debate, because they have difficulties finding solutions. In Stella Whittaker’s’ view, they suffer from some kind of psychological blocking in terms of facing the challenge, which they will have to overcome. Soon.

“We are all challenged psychologically by the huge challenge in front of us. The climate adaptation challenge is so enormous that it creates inertia and delay. We are paralyzed and only doing a bit on the surface, and obviously this needs to change.”

Want to know more: Read Stella Whittaker’s publications:
Are Markets Interested in Adapting to Climate? Insights From Singapore
Stretching and Conforming? Financing Urban Climate Change Adaptation in Copenhagen?

Contact:

Richard Steed, Journalist email: rs.slk@cbs.dk

Stella Whittaker, PhD fellow, email: swh.msc@cbs.dk