Climate resilience spending can generate a new wave of startups

We must catalyse an adaptation ecosystem through public outlays, blended finance, procurement incentives and R&D efforts

- SOUMYA SARKAR

Climate adaptation is often viewed as a defensive cost, necessary to protect societies from the effects of a warming world. That framing is incomplete. As governments increasingly allocate resources to address environmental risks and invest in adaptation and resilience projects, they open up new streams of commercial activity. They create markets for goods, services and technologies built to withstand climate change. The flow of capital, mostly from public sources, is directed towards the private sector as public institutions identify adaptation and resilience requirements, allot budgetary funds and engage private contractors to deliver solutions.

Globally, adaptation finance reached $63 billion in 2021-22, less than 5% of total climate finance, according to Climate Policy Initiative (CPI), a think-tank. Climate finance today is directed almost entirely at mitigation measures (like energy transition). The adaptation gap is massive. Developing countries alone would require about $212 billion a year in adaptation finance by 2030, says the Global Commission on Adaptation. The business-ready adaptation and resilience market in India could be worth $24 billion by 2030, a likely conservative estimate by Boston Consulting Group. The annual investment needs for climate-resilient infrastructure, agriculture, water systems and health services could exceed $100 billion, according to CPI, which has identified specific requirements for water resource management, coastal protection and disaster risk reduction, all of which represent tangible business opportunities.