Developing nations of the world including Nigeria will require between $280 and $500 billion to finance climate change adaptation investments in their jurisdictions, a new policy brief by the International Monetary Fund (IMF) has disclosed.
The brief – ‘fiscal policies for implementing Paris climate strategies’, was recently released by the IMF. It contained amongst others, key recommendations to countries on how to get along with meeting their commitments to reducing greenhouse gas (GHG) emission as agreed in the Paris pact.
Specifically describing the process of adapting to climate change as being costly, the IMF explained that these countries will in the immediate have to spend between $140-300 billion in 2030 and then $280-500 billion by 2050, to stand against climate change impacts on their lives and economies.
It noted that climate change adaptation requires action across a wide range of areas, adding that the Paris pact focuses on enhancing adaptive capacity, strengthening resilience, and reducing vulnerability to climate change with a view to contributing to sustainable development and ensuring an adequate adaptation response.
According to the IMF, to achieve these requires building systems and processes, enhancing analysis, monitoring and evaluation systems, in addition to policy actions countering climate change impacts.
“These actions will vary in content and priority across countries, but might include: improving the efficiency of energy and water usage; strengthening regulations (e.g., building codes); upgrading flood defenses; climate-proofing public infrastructure; strengthening health and social protection systems; and developing drought-tolerant crops,” said the IMF in the brief.
“Adapting to climate change can be costly, particularly in small islands and low-income countries,” it warned, adding: “Annual financing needs for adaptation investments in developing countries have been put at US$140-300 billion in 2030 and US$280-500 billion by 2050, compared with international adaptation finance in 2014 of around US$23 billion.”
It noted that for small island states, adapting to climate change and natural disasters, for example, in Fiji is estimated to require physical investments of around 100 per cent of its Gross Domestic Product (GDP) over the next 10 years. The IMF stated that this implies almost doubling currently budgeted plans of the country.
“Initial Climate Change Policy Assessments (CCPAs) undertaken by the Fund and World Bank, suggest that annual public investment needs to meet adaptation strategy requirements are around 2-3 per cent of GDP.
“Additional pressures will also arise on social spending (e.g., health care, and social safety nets). This will be challenging in countries with constrained fiscal space but finding space for small cost-effective investments can still enhance resilience,” it added.
On what could be done, the IMF said financing for resilience-building should be fully integrated into fiscal policy frameworks, while the framework should be consistent with fiscal and debt sustainability.
It also stated that allowing room for investment in physical resilience and building fiscal buffers—including through reducing debt and building savings funds to respond to shocks, especially from natural disasters, could be adopted by countries.
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