Climate change adaptation in dynamic economies

Headline issue: Adaptation presents developing countries with the ultimate dual challenge – building a rapidly evolving, sustainable economy within an environment increasingly altered by the impacts of climate change. To meet this challenge, adaptation policy must find balance and create synergy between the two, as climate resilience and economic resilience go hand in hand. Economic development is associated with structural change, including an evolving sector composition, the emergence of new comparative advantages and skills, and shifts in consumer demand as a result of rising incomes – all of which has implications for adaptation. Existing attempts to adapt developing economies to climate change have nonetheless ignored these economic dynamics. Current approaches to adaptation often seek to preserve current structures, for example by protecting agricultural output, which neither acknowledges nor takes advantage of the fact that the status quo is evolving. This policy brief explores the implications of dynamic economic development for adaptation to climate change. Policy lessons are derived from two case studies, the country of Colombia and the Indian state of West Bengal. The case studies are illustrative and used to identify broader policy lessons. Key findings: Economic development plans must not underestimate climate risks. Particularly when it comes to agriculture, current development plans often promote development models or set development objectives that are impractical or risky in the light of climate change. Development plans have to become more climate-aware. Conversely, adaptation plans must not underestimate the dynamism of modern economies. Badly designed adaptation plans may hinder development by focusing too much on the status quo (e.g. in situ measures to maintain agricultural output) instead of embracing more transformative forms of adaptation (e.g. rural diversification). Development planners and adaptation planners need to work more closely together. This will force economic planners to consider sectoral growth dynamics in light of climate risks and adaptation planners to factor into their planning the evolving economic system. It will make it easier to identify potential synergies and manage climate-risk – development trade-offs. One area for such trade-offs is productivity, where some improvements may come at the expense of higher climate risk. Economic growth offers an opportunity to alter for the long term the risk profile of countries with respect to climate change. There is the possibility to build climate resilience into decisions from the outset. To do this, adaptation plans need to systematically identify the opportunities, or ‘entry points’, where proactive adaptation can be factored into development strategies and long-term investment plans