Welcome to zero.
I am Akshatrati today funding flooding and floating. Three years after the Paris Agreement was signed, then United Nations chief Banky Moon saw there was progress on commitments to cut emissions, but almost none on adapting to climate impacts. Today, close to four billion people live in environments that are highly vulnerable to climate change, and so Banky Moon, alongside other world leaders, created the Global Commission on Adaptation to promote
solutions and figure out how much it might cost. The answer is around two trillion dollars by twenty thirty. It's hard to move that kind of money without a big plan. So after they had figure Banky Moon and his colleagues created another initiative, the Global Center for Adaptation, to act as a solutions broker and to figure out how to finance adaptation projects. Now I've said the word adaptation a lot, but what does it mean?
If you talk about climate adaptation, people really get very tired, very quickly because it's very abstract. But it's also it's about people. It's about a small hall of farmer using drought tolowant crops. It is about a mother in let's say Bangnades taking a family to a cyclone shelter. It's very concrete, tough.
This is Patrick Ferqueen, the head of the Global Center for Adaptation and my guest today. While climate adaptation might seem vague, it is easy to visualize flood defenses, cooling shelters, heat resilient crops. The problem is the financial system we have today is not funding it all. That might start to change, especially if negotiators at COP twenty eight agree
on a global goal for adaptation. The hope is it would specify the kinds of investments needed to be prioritized, giving a strong signal to the financial industry to finally start to fund them. I spoke with Patrick at COUP twenty eight about how he is trying to close that funding gap, how that money is being used, and the future of climate migration. Patrick, welcome to the show, Thank you so much. When it comes to climate change, there
are many many issues to try and tackle. The biggest and the one that most people talk about is reducing emissions because that will allow warming to stop eventually and maybe if he pulls he or two back from the air, even reverse it. But in the intervening period we're already at one point three degrees celsius of warming, and there's a bunch of warming that we've kind of baked in, which means climate impacts are already worse and they will
continue to get worse. So a second pillar of trying to tackle climate change is to actually adapt to the warming that we've already put into the atmosphere. But we don't talk about adaptation as much on a global stage as we need to.
Why is that that's exactly right because adaptation was positioned in the Pairs Agreement in twenty fifteen as the second pillar as part of the climate agreement. We have to adapt already today, and we are adapting already today, but unfortunately that adaptation in action is not at a scale which is required, is also at the speak which is required. That is why five years ago Bunky Moon, Bill Gates, and Crystallina Yogeva, the head of the IMF, they came together.
They said, well, we have to elevate the political heat on their climate adaptation and they launched a so called Global Commission on Adaptation. They said, well, if the world were to invest in five key areas early warning systems, climate,
small agriculture, resilient infrastructure, mangrove restoration, sustainable water management. If the world were to invest in these five critical areas and would mobilize one point seven trillion dollars between twenty eighteen and twenty thirty, the net economic benefits would be in the order of seven trillion dollars. So what these leaders try to do is basically change the narrative. Because
you asked why is adaptation not front and center? Because it's seen as a sonk cost and not as an investment, and that's wrong. By not investing in adaptation, we are missing economic opportunities at scale.
How are we doing with the one point seven trillion dollar climate adaptation goal by twenty thirty.
We are moving forward, but not fast enough another at the scale required. Basically, what we see compared to twenty eighteen is that the adaptation finance gap is growing. So if I would give it a scorecard, I would say is a failing scorecut. That is the backdrop of this Dubai Climate Summit, and it has to be addressed, and it has to be addressed.
Now, can you talk through specific examples of where projects in places that require adaptation are being deployed and what they look like.
Yeah, So, take early warning systems. We know the facts is that half of the developing world does not have proper functioning early warning systems. We also know if you're living in the global South, the risk of your dying of a climate disaster is fifteen times higher than in the global North. So one of the solutions to that sort of imbalance is to have early warning systems. Which country has been pioneering this, well, actually that's Banglades Take
nineteen seventy. In nineteen seventy, most of your listeners may notice a massive cyclone hits Banglades in India. Five hundred thousand people alone diet in Bangladesh because of this incoming cyclone. What did they do since then, they had mangrove restoration, they had earlier warning systems, they built cyclone shelters. So fast forward twenty nineteen, a similar type of cyclone came into Bangladesh. How many people died in the order of twenty So if a country like Bangladesh can move forward
on adaptation, certainly the rest of the world can. I was recently myself in Bangladesh where I met with Prime Minister Shai Casina as he said, well, we're investing out of our own taxpayers money two billion dollars of financing into climate adaptation, but our investment needs on adaptation is not two billion dollars which we pay ourselves, it's eight billion dollars per year. So there is this massive gap
of financing to flow into adaptation. And one of the reasons why the international community is basically coming here to Dubai is to find a way around who will pay for what.
One thing that helps keep the pressure on reducing emissions very clear and persistent is because we have clear targets. Right the one point five goal has been translated into reaching net zero CO two emissions by twenty to fifty globally. That means every entity can contribute towards reducing those emissions. There is a way to align all the people's work
towards one target now adaptation. As we've just talked through, there are many many different things that need to be done because there's going to be more rain or less rain, there's going to be rising sea levels, or there's going to be too much heat, or there's going to be melting of permafrosts like that, all kinds of climate impacts that happen, all of which we need to try and figure out how to adapt to So is there a way in which you could come up with a goal
for adaptation that would be clarifying, that would allow all these minds to align, just like net zero has done for mitigation.
And that's precisely the homework global leaders are wrestling with here in Dubai during the Climate summit, because what is expected from them is that they agree on a global goal on adaptation. So and what will these global goal on adaptations say? Will it be something simple as it is on mitigation, i e. A ton of CO two reduced. No, it's not because adaptation is inherently local and it's multifaceted.
So different proposals are on the table. One sort of overarging approach is it's not one goal, it's a framework, right, and negotiators from the Global SEUTH came forward with a very concrete proposal. I said, Wow, should we not agree that X billion people in the world would become climate resilient? But that's at the global level. Others would say, well, actually that's too abstract. Should we not break it down sector as sector? We just spoke about the early warning example.
Should we not have a goal that say, by twenty twenty seven, all countries in the world should have a functioning early warning system. It's concrete, it's measurable, and it is very sort of impact oriented. Others would say, well, actually, should we also not have a goal of specific target on finance? Two years ago in Glasgow, the world agree to double adaptation finance from the base level twenty billion
dollars to forty billion dollars by twenty twenty five. But we know, of course that that number forty billion is quite frankly a tokenistic number because the needs, the investment needs on adaptation in the global South alone is close to four hundred billion dollars a year. So there is all things to play for during this summit. This global goal on adaptation will help us to make the world accountable.
Just in your own understanding of where things stand right now, where do you think we will end up with the global goal on adaptation? So global goals on adaptations.
So I would say there will be a global framework on adaptation, So I'm optimistic about that there will be a common understanding of where the world needs to head towards, so that let's say, the annual reporting can and also be sort of accountable against a particular agreed framework.
But I would think even more important than a framework, or in addition to the framework, the world and particularly countries need concrete plans. They need to see these are my priority investments. This is what the fundancing which I will put on the table. This is what I need from the private sector, this is what I need from the International finance Institution. It is very important that we
move forward with concrete initiatives where financing is flowing. Why because at the end of the day, that's the only growth story of the twenty first century, particularly for Africa.
One reason why adaptation does not get talked about as much as well is because the warmer the planet gets, the need for adaptation changes. So what you're doing right now for certain things at one point two one point four degree celsius may be not good enough when you're at one point five or one point seven degrees celsius.
So what do you do to deal with that problem where you've invested a bunch of money in an adaptation solution that seems to be working for now and for the near future, but then we go past a warming threshold.
Yeah, So I think that's a very very important example, indeed, because lots of infrastructure in the world still is yet to be built, so I think it's important to take into consideration which climate reality are we actually building against.
So that's why we as an organization, we're working with the African Development Bank, with the Weld Bank, Asian Development Bank, with the IMF when they sort of operationalize infrastructure investments to make sure that climate risks are mainstreamed into their design. Different models are taken into a place. How high should this highway be in a one point two degree world, What will be the sort of the extra high you need to build in a one point five degree world?
What are the sort of the nature based solutions which you can put into place to address these additional climate risks. That's quite complex modeling obviously, which needs to take into a place. But the fact is many developments today are not taking into account these sort of these variations of climate risk. And that's exactly why climate adaptation is essentially
about doing development differently by mainstreaming climate risk. And that's a very mundane and easy way to say, but in reality, lots of development finance is not taking this into account. That's a missed opportunity.
So in a way, there's just a lot of low hanging fruit giving people don't even think about adaptation that could be used and enable more climate resilient infrastructure being built right now.
And if I may want to add this, the World Bank recently came out of with report it so actually, if we build an infrastructure traditional infrastructure, it cost x, but if we were to build in resilient infrastructure right to use in terms of defending against these climate risk additional costs indeed three percent with three percent more expensive. But what is the economic return on that extra dollar pound or euro invested? Is a racial one to four.
It's smart economics. So what I find quite intriguing is that it's also about narrative. Right, if you talk about climate adaptation, people really get very tired very quickly because it's very abstract. But it's about people. It's about a small hall of farmer using drought tolerant crops. It is about a mother in let's say Banglades taking a family to a cyclone shelter. It's very concrete touff and I think that people's centered focus gets lost also, a point
which I think is important. What you see now particularly in Europe. Is this sort of the swing to the right right. I mean, you see the election results in the Netherlands, resort before in Sweden, and you see it in Italy. What will it do to the climate debate written large in particularly what would it do to the
poor cousin of the climate debate climate adaptation? Would it be expected that a country like the Netherlands, which is built on climate adaptation, suddenly drop its investments, say in Africa, say in South Asia, say in the Caribbean. That will be very unwise because the issues and the challenges in Africa on climate change will not stay. If you want to address migration in Europe, you can invest a lot of walls around Europe, but it's also a very important
investment to address in the drivers of this migration. Obviously not everything is climate induced, but it is one of the factors. So that's my calls to the right wing movements which are basically mushrooming in large parts of the world, and.
So a lot of those solutions that need to be deployed in the global cuth to be able to deal with those problems require money, and let's talk about money. According to your latest climate Finance report, only five percent of global climate finance was invested in adaptation in twenty one to twenty two. That's about sixty three billion dollars. Your latest report says the funding gap is between one hundred and thirty and four hundred billion dollars by twenty thirty per year per year.
What do you see.
As the best way to try and increase the money that goes towards adaptation.
Yeah, So, taking into account the reality in Ukraine, development finance going down, the cost of living crisis in the West going up. In the rest of the world as well, given the exchange rate depreciation, particularly in the global South, given a depth crisis, sixty percent of developing nations are in depth distress. Against that backround, it's not realistic to assume that international public finance will be the solf of bullets.
So where is that money needs to come from? While there was a host of sort of sources, first and foremost, I would think it's also the public expenditure in the home country itself. I just gave the example of bundandess it's investing two billion dollars of their own tech spased money. We need to make sure that that two billion dollars is spent wisely on the top priorities in that particular country. Secondly, what is also vital is where is the private sector
in all of this? But they're largely absent in the adaptation space because the return on investment is not always straightforwards. If you build a dyke, it has clear sort of livelihood benefits, but the financial returns is not always there. On the other hand, there are opportunities in the adaptation space. Writt and Launch say I'm a seat company, and if I were to bring to the market drought tolerant seats,
there is a market to be gained there. Let's go back to Africa, because it is the most vulnerable continent. How much finance is flowing from the global north to Africa to date, it's eleven billion dollars a year. How much is needed on an annual basis if you just look at the national determined contribution, the national adaptationment, if you just add everything up, how much is that fifty one billion dollars? So already for Africa alone, it's a
forty billion dollar gap per year. And we will think, well, actually that is a lot, and it is a lot, But think about the economic benefits which we don't capture by investing in this. Think about the migration impacts which will result from this if we don't invest in this, So that cost of action visa vis the cost of inaction. I think that is why it's so important that we don't leave the climate adaptation debate and agenda to environment
ministers alone. They're good people, nothing wrong with them, but the finance community needs to come around this agenda.
After the break we hear more about local solutions and the people's adaptation plan. So one way in which we've been trying to understand climate finance is if you just split it into three types of money. One where if you invest, you can make profits, and so it is where the private sector should be taking the lead, should be jumping up and down to try and make that money. But then there's the middle bucket, which is where it's not yet clear whether you can make a profit from it.
But from a government perspective, it's absolutely clear that there is an economic benefit like building a dike, like building a flood barrier. For that, governments should be able to borrow money in the form of barns or debt or some instrument and invest now so that they don't have to then end up paying a lot more money to
deal with the impacts in the future. That requires governments to have the ability to borrow money, which, as you talked about, is a problem right now because the world's going through a dead crisis, especially in emerging economies developing countries. Are there specific ways in which that gap can be addressed where developing countries can be allowed to borrow for adaptation finance.
So there are these very interesting sort of innovative mechanisms which are basically coming up right now. Take Senegal, West Africa. President Makisal put forward a deal with IMF right around the so called RSF another acronym resilient sustainability facility. So the IMF said, well, we know that your economy, Senegal, is vulnerable to climate shocks, and that vulnerability of your
economy will eventually translate into financial risk. So what if we IMF support you, Senegal in mainstreaming climate risk into your economic planning. With other words, if you invest your public expenditures on particular sectors, what is transport with the agriculture, take climate risk into account. At the same time, In return,
Senegal said, well, that's good. So they received three hundred million dollars in terms of credit from the IMF to mainstream climate risk into their public expenditure process, which is great. But separately President Marquiselos said, well, we want to do more. We have lots of debt and our debt is increasing. What if we were to find an agreement with say bilateral creditors Germany, France, China, we say, you know what, you cancel our debt and in return of their debt cancelation,
we invest that in climate adaptation efforts. This sort of debt for climate swaps. So that's an arena, let's say, a frontier area where the world should enter into. It's not just about oh, tax payers in the global north need to pay for climate adaptation in the global south. That's a way too simplistic. Way. There are different ways of, let's say, structuring these financial flows. And at the same time, it's not just about money, it's also about sound policies.
You do need to have building codes which take into account the climate shocks not just off today but also off tomorrow, so that you don't build in a sort of a flop prone area and without being protected.
Now, one of the leaders who was crucial in enabling the Global Center on Adaptation to be formed was Crystallina Georgieva at the IMF. Now, IMF has something called the Special Drawing Rights. These are just basically money in a way that global economies have access to. The larger the economy, the more money access they have through the IMF, and there's an idea where they can lend that on, lend that right to a developing country, and so that developing
country then is able to borrow and lend money. Is that being used for adaptation at all? Is the IMF interested in having SDRs drawn into the adaptation debate?
Yes, so the SDR, the Special Drawing Rise is sort of this mechanism indeed to mobilize additional financing the effactor on the international capital markets. And indeed Africa needs much more SDRs and have now. So we have been very focal to get more of the SDRs recycled on lended
by the global north. In a nutshell, so the IMF particularly also, I would dare to say, because of Crystallinagorgava, because of our development background from the World Bank before, from the European Commission, humanitarian work before brought into the IMF work adaptation at the center. And that's why this SDR recycling is so important. It is being used as being now even transferred through institutions such as the African
Development Bank. I mean the African Development Bank is I would say, setting the goal standard because they said, well, out of our overall climate finance portfolio, sixty five percent is going to climate adaptation. So there are sort of ways in where current funding Africa to Asia to the current being can be channels in a different way. It's not just new money, it's also using existing financial flows.
Wisely, one other idea has been to try and put a levee on fossil fuel profits or on financial transactions, a very small levy that would end up with billions of dollars that would be available for climate finance. Is that something being talked about for adaptation specifically.
So it's interesting you say, is let's say carbon pricing, putting a price on pollution is out there for I would say since the early nineties. Obviously it's currently being discussed here in Dubai around well, we need to put indeed a levee on the oil and gas industry because that can then fund loss and damage, right, I mean, but surprisingly enough again here this sort of rechanneling of finance extracted from basically a levy or tax on carbon
pollution to fund adaptation specifically is a missed opportunity. But there is space also in this. I mean, it's just basically, how do you utilize their revenues collected from different sources.
We should talk about the Global Center and Adaptation, and I think the best way to try and understand what you're doing is to recognize that your office in the Netherlands is the world's largest floating office. Very fitting for an organization that's trying to deal with adaptation was that by design.
It was by design. I mean, what's the best way to showcase that adaptation is possible is to have being hosted in an office which indeed goes up twice a day, two meters up and two meters downs. It's the largest floating office. And that's also why we were so delighted that President Ruta of Kenya so actually there was a great office in the Netherlands of the Global Center and Adaptation.
We Kenya will host the Africa Office in Kenya, which will be a fully nature based solution It also speaks to the point that adaptation in different context means different things. So obviously in Kenya is different than in the Netherlands.
Your organization was founded only in twenty eighteen, so that sort of speaks to the point where even though adaptation has been something that we should have talked about from day one, we're only starting to really focus on it in the recent years. What is it that Global Center and Adaptation is now enabling as an organization that's been created in twenty eighteen and is trying to bring together these various strands that need to be dealt with as we try and deploy adaptive sos.
So the Global Centerdate or GCA to use that acronym, what do we do on a Monday morning? The facto three things? One, well, very much focus on the political mobilization, sort of turn up the heat on political leaders, but quite frankly, political leaders speaking without the analytics, without the evidence, without the case studies, without the numbers, it's like sort of an emperor without clothes. So our second pillar is
very much focused on analytics. Every year we issue our state and Trends on adaptation, which is basically a very concrete operational roape map, what other priority areas, where should you invest in, who should invest against? What sort of metrics is success being measured against a particular region or a sector. But the third pillar where we all will be just not just a global center in aupdate, but any organization. What are we doing on the ground at
the end of the day. That's where the robber hits the road. Together with the African Development Bank, in twenty twenty one, we launched the largest adaptation program in the world, the Africa Adaptation Acceleration Program, the Triple AP twenty five billion dollars over five years, and in the last two years we have invested close to seven billion dollars in resiling infrastructure, drought tolerant crops, climate information systems, in youth
and jobs, access to finance. So it's working, is moving, but again it's not at the scale and speed which is required.
There's a lot to do on adaptation, but there is an area that is even less talked about, which is there will be places that become uninhabitable, unlivable, or just disappear because sea levels rise. How do you have those conversations with the countries that will have those regions coming up or are already there.
Well, we don't have to tell people the climate impacts if you live in the global South, because they live being on the frontline of the climate emergency today. They're living at basically in their daily lives there they're moving from, say the Marshall Islands. Are ready to say California because there is a treaty between between the United States and and and the Marshal Islands for all sorts of other reasons.
So this phenomena of sort of the impacts of climates basically tipping over sort of realities to adapt to it. That that is, that is very front and center for those who are living on the front lines today. Take for example, another topic which we haven't addressed yet is the psychological impact. I mean you see, say India, that there is a correlation between the level of suicide and
sort of the ratio of droughts of small hall of farmers. Right, I mean, it's not the only factor, obviously we all understand that, but there is a strong correlation in that regard. So sort of the the implications at the societal level is not us financing. Financing is important. It's not just policies. Policies aren't important. It is also the human the psychological factors which need to be addressed, and so this is so this adaptation field, in my view, is so underdeveloped.
Yet that's why it's so important that it's really being elevated at all levels.
This has been an enlightening conversation and I look forward to keeping up with the topic and trying to find ways in which that gap can be filled. Thank you very much, Thank you for listening to Zero. Apart from this podcast, twice a day, we publish the Bloomberg Green newsletter. Sign up for free at Bloomberg dot com. There's a link in the show notes. You can now listen to Zero without ads. Just log into Apple Podcasts using your
Bloomberg subscription. If you liked this episode, please take a moment to rate or review on Apple Podcasts and spot share this episode with a friend or with someone who might like to work in a floating office. You can get in touch at Zero pod at Bloomberg dot net. Zero's producer is Oscar Boyd and senior producer is Christine Driskell. Our theme music is composed by wonderly i am Akshatrati. Back soon with more from cop twenty eight