What gets measured gets managed – taking the initiative on climate adaptation

Naples, where I grew up, is a centre of seismic activity and has an active volcanic caldera nearby called Campi Flegrei. Recently, this area saw an increase in activity and in response, the Italian government announced €52 million in preparedness for risk assessment, prevention and ex-ante disaster risk reduction.

Earthquakes can cause devastation in just a few seconds that requires months and years of costly recovery. From Turkey to Japan, recent months and years are replete with examples of this. If only the world was prepared for other such natural disasters caused by the warming climate.

Climate change is making floods, droughts and severe storms more extreme, frequent and less predictable. We are already seeing some of this impact — and we must not waste the time we have at our disposal to prepare and adapt. It's better to build resilience now than pay the human and economic price later for our lack of preparation.

Climatic natural disasters caused global economic losses of $275 billion in 2022 – and this trend is expected to continue as economic growth and property development increase the exposed economic value. On top of this, the global protection gap — the difference between economic and insured losses — has been rising steadily over the last five years. The Swiss Re Institute’s Resilience Index shows that it reached a new high of $1.8 trillion in 2022. Over 40% of global risks remain uninsured.

We are seeing progress on climate mitigation. Take, for example, the World Economic Forum Alliance of CEO Climate Leaders, where member organizations have in aggregate achieved a 10% emissions reduction between 2019 and 2021.

But whether it’s floods in Australia and South Africa, winter storms in Europe or heatwaves in China and the Americas, the effects of climate change are already being felt worldwide. That means we need to start putting more focus on climate adaptation, alongside our mitigation efforts.

We are seeing climate change adaptation examples in action in projects across the world. For example, the 2011 Brisbane Floods in Australia damaged over 420,000 buildings. Subsequently, the landscape around the river has now been transformed by “floating ferry stops”, raised living spaces and improved stormwater management systems, increasing the city’s resilience.

It is well known that besides addressing risks, investing in climate adaptation can create a competitive advantage, support economic stability, create job opportunities and protect the natural environment. However, although there are measurable targets for mitigation and work on standardization continues, the same cannot be said for climate adaptation. This impedes the investment and finance necessary to get climate adaptation projects off the ground.

The cost of adaptation will not be cheap. The UN Environment Programme estimates the annual cost of climate adaptation for developing countries at $315-565 billion by 2050. One way to catalyze greater progress is to justify that funding through measurable outcomes.

This is where we can make an impact: By creating the structural conditions necessary for private capital to flow into climate adaptation projects, as well as grow and optimize the use of public funds that will remain central to this battle.

One building block could be a more systematized, universal approach to measuring the impact of disparate climate adaptation interventions. Swiss Re Institute's latest report found that, on average, the benefits of climate change adaptation interventions outweigh costs by a ratio of 10:1. This model can be developed into a wider benefit-to-cost ratio (BCR), which is a universally valid, easy-to-derive and trackable metric.

Consistent use of a BCR metric can drive transparency and comparability for adaptation projects, justifying their financial viability. It will also spark the necessary expertise and local engagement to kickstart them.

Swiss Re’s initial studies into flood and heat-related adaptation show that BCRs are practical metrics, but they also revealed a lack of data and consensus. For example, a standardized period for the financial benefits that would come from climate adaptation interventions is key.

That is why measurement and multi-stakeholder collaboration are not only key to unlocking financing for climate adaptation action, but also for data and examples of effective adaptation initiatives.

Climate adaptation creates stability. It supports economic development. It helps in building a more sustainable world, while supporting new businesses and job opportunities. Getting serious about it now will pay dividends for years to come — but to do so effectively, a way of measuring and understanding which interventions give the best bang for their buck is essential.