{
  "title": "Adapting to Climate Change—Three Success Stories",
  "publication": "IMF Blog, March 20, 2018",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories",
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  "summary": "Public investment in adaptation can partially reduce the economic costs of severe weather events.",
  "sections": [
    {
      "heading": "Major findings and model results",
      "content": "- Public investment in adaptation can partially reduce the economic costs of severe weather events.\n- Historical evidence: a 1°C increase in temperature in a country with an average annual temperature of 25°C would reduce per capita output by 1.5 percent — a loss that persists for at least 7 years.\n- Model simulations indicate that if governments subsidize private investment in adaptation, the economic burden of weather shocks could be partially reduced.\n- The reduced losses from weather shocks as a result of investing in adaptation measures could significantly exceed the cost to the public coffers over time.\n- Many adaptation measures generate social benefits that accrue to non-investors (positive externalities), which justifies government intervention."
    },
    {
      "heading": "Role of government and rationale for subsidies",
      "content": "- Households and firms invest in adaptation (for example, planting more heat-resistant crops or investing in green infrastructure), but they do not capture the full social benefits.\n- Examples of non-excludable benefits: an early-warning system for extreme weather will be enjoyed freely by everyone living in the area.\n- Because private actors do not internalize full social benefits, governments need to step in by subsidizing private investment in adaptation to improve resilience and reduce the impact of weather-related shocks."
    },
    {
      "heading": "Success stories (case studies)",
      "content": "- Social safety nets in Ethiopia\n  - Productive Safety Net Program (established in 2006) provides cash and food to families unable to feed themselves due to droughts, delayed rains, and flooding.\n  - Aid is contingent on participation in local productivity-enhancing or environmental programs (for example, land rehabilitation, improvement of water sources, construction of infrastructure such as roads and hospitals).\n  - Program beneficiaries experience a 25 percent smaller drop in consumption after droughts relative to those not in the program.\n  - The program has reduced soil loss by more than 40 percent, improved availability of water, and increased land productivity.\n- Climate-smart infrastructure in Malaysia\n  - Stormwater Management and Road Tunnel (SMART Tunnel) in Kuala Lumpur serves a dual purpose: carries traffic and helps combat flash floods.\n  - Tunnel consists of three levels; normally the top two levels carry road traffic but can be temporarily used as storm drains.\n  - At a cost of about $500 million, the SMART Tunnel is expected to prevent more than $1.5 billion in flood damage and reduce the costs of traffic congestion by more than $1 billion over the next 30 years.\n- Centralized air conditioning in India\n  - District cooling (centrally chilled water distributed through underground pipes) reduces negative effects of decentralized air-conditioning (energy consumption and pollution) and lowers up-front costs for users.\n  - Under construction by the Government of Gujarat in the Gujarat International Finance Tec-City.\n  - Centralized cooling systems consume 35 to 50 percent less energy than individual air cooling units.\n  - These systems unburden the electricity sector and make indoor climate control more accessible by eliminating the up-front cost for users."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Governments should support adaptation to improve resilience and reduce the impact of weather-related shocks.\n- Public subsidies for private adaptation investment can be welfare-improving because private actors underinvest relative to socially optimal levels due to positive externalities.\n- Many successful adaptation strategies exist and can be scaled or adapted to local conditions, but investing in them is expensive and will further stretch the budgets of very poor countries.\n- The international community, particularly advanced economies that have emitted the lion’s share of greenhouse gasses, should help finance adaptation-related projects in poorer countries.\n- Adaptation is necessary but not sufficient: the only long-term solution is to sharply reduce the greenhouse gas emissions responsible for Earth’s warming.\n\nIMF Blog post by Evgenia Pugacheva and Mico Mrkaic, March 20, 2018.\n\n---\n\n\n References\n\n- https://www.imf.org/wp-content/uploads/2018/03/BLOG-1024x600-Hand-holding-Plant-on-Soil-iStock-649090040.jpg\n- Our study in the World Economic Outlook\n- previous blog\n- https://www.imf.org/wp-content/uploads/2018/03/CLIMATE-BLOG.jpg\n\nSource: https://www.imf.org/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories"
    }
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    "[Markdown version](/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories/index.md)",
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    "Authors: Evgenia Pugacheva, Mico Mrkaic",
    "Published: March 20, 2018",
    "Public investment in adaptation can partially reduce the economic costs of severe weather events.",
    "Historical evidence: a 1°C increase in temperature in a country with an average annual temperature of 25°C would reduce per capita output by 1.5 percent — a loss that persists for at least 7 years.",
    "Model simulations indicate that if governments subsidize private investment in adaptation, the economic burden of weather shocks could be partially reduced.",
    "The reduced losses from weather shocks as a result of investing in adaptation measures could significantly exceed the cost to the public coffers over time.",
    "Many adaptation measures generate social benefits that accrue to non-investors (positive externalities), which justifies government intervention.",
    "Households and firms invest in adaptation (for example, planting more heat-resistant crops or investing in green infrastructure), but they do not capture the full social benefits.",
    "Examples of non-excludable benefits: an early-warning system for extreme weather will be enjoyed freely by everyone living in the area.",
    "Because private actors do not internalize full social benefits, governments need to step in by subsidizing private investment in adaptation to improve resilience and reduce the impact of weather-related shocks.",
    "Social safety nets in Ethiopia",
    "Climate-smart infrastructure in Malaysia",
    "Centralized air conditioning in India",
    "Governments should support adaptation to improve resilience and reduce the impact of weather-related shocks.",
    "Public subsidies for private adaptation investment can be welfare-improving because private actors underinvest relative to socially optimal levels due to positive externalities.",
    "Many successful adaptation strategies exist and can be scaled or adapted to local conditions, but investing in them is expensive and will further stretch the budgets of very poor countries.",
    "The international community, particularly advanced economies that have emitted the lion’s share of greenhouse gasses, should help finance adaptation-related projects in poorer countries.",
    "Adaptation is necessary but not sufficient: the only long-term solution is to sharply reduce the greenhouse gas emissions responsible for Earth’s warming.",
    "[https://www.imf.org/wp-content/uploads/2018/03/BLOG-1024x600-Hand-holding-Plant-on-Soil-iStock-649090040.jpg](https://www.imf.org/wp-content/uploads/2018/03/BLOG-1024x600-Hand-holding-Plant-on-Soil-iStock-649090040.jpg)",
    "[Our study in the World Economic Outlook](https://www.imf.org/en/Publications/WEO/Issues/2017/09/19/world-economic-outlook-october-2017)",
    "[previous blog](https://blogs.imf.org/2017/09/27/the-unequal-burden-of-rising-temperatures-how-can-low-income-countries-cope/)",
    "[https://www.imf.org/wp-content/uploads/2018/03/CLIMATE-BLOG.jpg](https://www.imf.org/wp-content/uploads/2018/03/CLIMATE-BLOG.jpg)"
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