Poor and Vulnerable Countries Need Help to Adapt to Climate Change – IMF Blog

By Kristalina Georgieva, Vitor Gaspar and Ceyla Pazarbasioglu

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The poorest countries face the greatest risks from climate change and need international support to finance adaptation.

All countries, rich and poor, must adapt to climate change. A recent report by the United Nations Intergovernmental Panel on Climate Change described the dramatic consequences of failure to curb global temperature rise and adaptation to a warmer planet. Adaptation should address the risks associated with climate change and extreme weather, for example by protecting agriculture, managing the impact of rising seas and making infrastructure more resilient.

The benefits of adaptation are sometimes difficult to estimate because they depend on specific factors such as how well a country is adapting to its current climate. Nevertheless, well-designed policies can yield significant returns, as we show in three articles published today covering climate adaptation and fiscal policy, macro-fiscal implications and mainstreaming climate adaptation into the mainstream of budget planning.

The long-term savings from investments in resilience and coping mechanisms, such as better irrigation, improved seed varieties, strengthened health systems, and better access to finance and telecommunications, can be very significant. . This is especially true for sub-Saharan Africa, which experiences a third of the world’s droughts and is particularly vulnerable to rising temperatures and extreme weather due to its reliance on rain-fed agriculture. Our research shows that a single drought can reduce an African country’s medium-term economic growth potential by 1 percentage point.

In Ethiopia, however, some farmers’ yields have increased by 40% thanks to the development of wheat varieties resistant to rust, a fungal disease. In Ghana, meanwhile, cocoa farmers have made their crops more drought-resistant by improving seeds and irrigation and planting trees to protect their crops from the sun.

The benefits of investing in adaptation are not limited to sub-Saharan Africa: countries in all regions of the world can benefit from adapting to a warmer planet. This does not mean, however, that adaptation can replace mitigation. Without strong mitigation, it will be impossible to stabilize global temperature, and adaptation would become incredibly costly.

Colossal costs

Some countries are already facing considerable costs. Research by the IMF and others suggests that the public costs of adaptation will reach around 0.25% of global gross domestic product per year over the next few decades. While such estimates may seem manageable at the global level, they are not representative of the magnitude of the challenge facing many poor and vulnerable countries. We estimate annual requirements to exceed 1% of GDP in about 50 low-income and developing economies for the next 10 years. Costs can be even higher for small island nations exposed to tropical cyclones and rising seas, up to 20% of GDP.

Unfortunately, the countries that most need to adapt most often lack the means to do so. They generally lack the funding and institutional capacity to implement the necessary adaptation programs. In addition, some countries most at risk from heat waves, droughts, storms and sea level rise often face other pressing development needs. This means that it is more important than ever to invest in resilient growth, with adaptation fully integrated with the other Sustainable Development Goals.

The international community can help poor and vulnerable countries to adapt by providing financial support and developing their institutional capacities. These countries will suffer the most devastating effects of climate change, even if they are not responsible for its cause. It is also in the world’s interest to ensure that climate change does not undermine the development and stability of the poorest countries. Investing in climate resilience can also be cost effective for development partners, as an upfront investment in protection can be less costly than humanitarian relief and post-disaster reconstruction.

To be successful, adaptation aid must complement existing aid, with streamlined conditionality commensurate with the country’s institutional capacity. For example, we found that lengthy and complex requirements have hindered direct access by Pacific island countries to international climate funds.

How the IMF Helps

The IMF is helping its members meet the challenges of adaptation, including with the release today of three reports, which complement and support the work of the World Bank, the Intergovernmental Panel on Climate Change, and other international organizations, and builds on the Fund’s existing work.

This work includes analyzing regional and national challenges to climate change adaptation in our annual Article IV consultations (for example, for the Maldives, for the Republic of Congo or Dominica) and in studies transnational (for sub-Saharan Africa, for the western hemisphere and for Asia and the Pacific).

The Fund is also helping by expanding its capacity development support, which now includes macroeconomic climate assessment programs, climate-focused public investment management assessments, and green public finance management.

And finally, we are working with member countries and our partners to develop financing solutions, such as the proposed Resilience and Sustainability Trust, to channel financial resources from countries with a strong external position into affordable long-term financing for communities. vulnerable countries. This will help recipients address structural challenges such as climate change through policy reforms aimed at fostering balance of payments stability.

Climate adaptation alone is not enough. Unless global temperature is stabilized by strong attenuation, adaptation will become incredibly costly. Yet countries can still reap significant benefits from investing in resilient growth and integrating adaptation into development strategies.

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