Dh10b adaptation investment to contribute over Dh100b to UAE GDP by 2030

The cost of adaptation in developing countries is expected to reach $300 billion per year by 2030. By contrast, global adaptation finance flows were only $46 billion in 2020 of which only $28.6 billion went to developing countries. This is insufficient, according to the WEF

by

Issac John

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A man wearing traditional Emirati clothes looks out at an array of wind turbines at sunset. Analysts at WEF warned that developing countries would be more seriously impacted by climate change.
A man wearing traditional Emirati clothes looks out at an array of wind turbines at sunset. Analysts at WEF warned that developing countries would be more seriously impacted by climate change.

Published: Mon 16 Jan 2023, 2:23 PM

A climate adaptation investment of Dh10 billion to withstand projected climate damage could contribute more than Dh100 billion to the UAE’s gross domestic product by 2030, Standard Chartered said in a study released on Monday.

“The UAE is at the forefront of fighting climate change with a solid commitment to achieve its Net Zero target by 2050; therefore, setting an example not only on a regional level, but on the international level as well. Adaptation is a shared necessity, and as our research highlights, a lack of action would probably create a shared societal burden of exponentially increasing costs,” said Rola Abu Manneh, chief executive officer, Standard Chartered Bank UAE.


With the global climate adaptation market estimated to hit $2 trillion by 2026, as per the projection by the World Economic Forum, the need for adaptation solutions across countries will grow as climate impacts become more prevalent, climate experts and investment funds predict.

The cost of adaptation in developing countries is expected to reach $300 billion per year by 2030. By contrast, global adaptation finance flows were only $46 billion in 2020 of which only $28.6 billion went to developing countries. This is insufficient, according to the WEF.


Analysts at WEF warned that developing countries would be more seriously impacted by climate change. The world’s 55 most climate-vulnerable economies have already lost 20 per cent of their GDP. “There is a clear need for increased climate adaptation finance, especially in developing countries,” they said.

Rola Abu Manneh, chief executive officer, Standard Chartered Bank UAE, said adaptation is a shared necessity.
Rola Abu Manneh, chief executive officer, Standard Chartered Bank UAE, said adaptation is a shared necessity.

The Standard Chartered research features 10 markets, including the UAE, India, China, and Pakistan, and highlights that the lack of action could cost billions in climate damages and lost GDP growth this decade. Across the entire study, without a minimum investment of Dh110 billion, the markets included in the study face projected damages and lost GDP growth of over Dh1 trillion.

“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 and would reflect positively on the overall economic growth," Manneh said.

The Dh110 billion investment required by the 10 countries for adaptation represents only slightly more than 0.1 per cent of combined annual GDP of the 10 markets in the study and much less than the estimated Dh347 trillion emerging markets require to transition to net zero using mitigation measures, as outlined in Standard Chartered’s Just in Time report.

Among the 10 markets in the study, India is projected to benefit the most from adaptation investment. The market would require an estimated Dh40 billion to prevent climate damages and lost growth of Dh500 billion in a 1.5°C warming scenario – equal to a thirteen-to-one return for the Indian economy of investment in climate adaptation.

Pakistan will require Dh2.2 billion adaptation investment to prevent climate damages and lost growth of Dh27.8 billion.

The bank’s 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 Dh225 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.

According to the study, China could avoid an estimated cost of Dh410 billion by investing just Dh30 billion. And Kenya, which requires the least investment, could avoid costs of an estimated Dh8 billion by investing Dh730 million in adaptation.

The study argued that 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.

— issacjohn@khaleejtimes.com


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