## Adapting to Climate Change—Three Success Stories

_IMF Blog, March 20, 2018_

## Source details

**Canonical URL:** [Adapting to Climate Change—Three Success Stories](https://www.imf.org/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories)

## Other formats

- [Markdown version](/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories/index.md)
- [Structured JSON version](/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories/index.json)
- [Bundle manifest](/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories/bundle-manifest.json)

## Bibliographic details
- Authors: Evgenia Pugacheva, Mico Mrkaic
- Published: March 20, 2018

---

### Major findings and model results
- 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.

### Role of government and rationale for subsidies
- 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.

### Success stories (case studies)
- Social safety nets in Ethiopia
  - Productive Safety Net Program (established in 2006) provides cash and food to families unable to feed themselves due to droughts, delayed rains, and flooding.
  - 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).
  - Program beneficiaries experience a 25 percent smaller drop in consumption after droughts relative to those not in the program.
  - The program has reduced soil loss by more than 40 percent, improved availability of water, and increased land productivity.
- Climate-smart infrastructure in Malaysia
  - Stormwater Management and Road Tunnel (SMART Tunnel) in Kuala Lumpur serves a dual purpose: carries traffic and helps combat flash floods.
  - Tunnel consists of three levels; normally the top two levels carry road traffic but can be temporarily used as storm drains.
  - 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.
- Centralized air conditioning in India
  - 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.
  - Under construction by the Government of Gujarat in the Gujarat International Finance Tec-City.
  - Centralized cooling systems consume 35 to 50 percent less energy than individual air cooling units.
  - These systems unburden the electricity sector and make indoor climate control more accessible by eliminating the up-front cost for users.

### Policy implications and recommendations
- 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.

*IMF Blog post by Evgenia Pugacheva and Mico Mrkaic, March 20, 2018.*

---


## References

- [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)

_Source: https://www.imf.org/en/blogs/articles/2018/03/20/adapting-to-climate-change-three-success-stories_