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Trade and development report 2021: From recovery to resilience: the development dimension

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A. Introduction

July 2021 was the hottest month ever recorded on the planet, following on from the hottest year in 2020 which, itself, came after the hottest decade on record. Intense heatwaves, increasingly powerful tropical cyclones, prolonged droughts, rising sea levels, spreading diseases are just some of the threats accompanying the unrelenting rise in global temperatures, bringing with them ever greater economic damage and human suffering. And worse is to come. Even if we get our mitigation efforts together within this decade and manage to keep the global average temperature rise to 1.5°C above pre-industrial levels by the year 2100, the extreme climate events in 2021 serve as a foretaste of what an additional 0.4°C to the average global temperature has in store for communities and countries across the planet.

On current trends, global heating will trigger tipping points in the Earth’s natural systems, leading to irreversible changes that will reshape life in this century (IPCC, 2021). Even assuming economic collapse can be avoided, the loss of output over coming decades will be significant everywhere, but particularly in the developing world (SwissRe, 2021); hundreds of millions of people will be forced to move within and across borders (Rigaud et al., 2018) with large parts of the tropical world outside the limits of human adaptation (Zhang et al., 2021); food production will change dramatically (Kuma et al., 2021); access to ever scarcer sources of fresh water will trigger increasing geo-political tensions (WEF, 2019). In short, barring intense action to curb greenhouse gas (GHG) emissions, parts of the planet will simply become uninhabitable for future generations (Wallace-Wells, 2018).

To date, the global policy response to the climate crisis has been divided between mitigation and adaptation measures. Climate mitigation focuses on slowing down and reducing emissions of greenhouse gases (GHG), through a mixture of more efficient energy use and the replacement of fossil fuels with renewable sources of energy. Climate adaptation centers on harnessing resilience and protection mechanisms to minimize the negative impact of climate change on lives and livelihoods (Ge et al., 2009). While, in practice, the two sets of measures are often difficult to separate, in much of the agenda-setting discussion on climate, adaption has remained a poor cousin of mitigation efforts. This is proving short-sighted and increasingly costly, particularly for developing countries.

The consequences of continued neglect have become more apparent in the aftermath of the health pandemic as talk has turned to building resilience in the face of a global shock. Up until now, climate adaptation policies have been driven by a mixture of the procedural politics surrounding climate conferences, a technocratic approach to policy design and an undue faith in the efficiency of markets to price the way to a sustainable future. The aim has been to meet internationally agreed targets through a better assessment of climate-related risks and their improved management using insurance and other market-based mechanisms. While this approach has yielded some positive results, it has offered too little, too late and no longer stands up to the scale of environmental shocks and the economic damage they are causing.

The chapter is structured as follows. Section B takes account of the measure of the challenge, focusing on the damage to regions and countries around the world and the scale of investment required to meet it.

Section C discusses some of the limits of the existing institutional architecture to manage the adaptation challenge. Section D considers how framing the adaptation challenge as one of risk management distracts from the need to position adaptation measures in the context of economic transformation.