Editing IPCC:AR6/WGII/Chapter-18 (section)

== 18.4 Agency and Empowerment for Climate Resilient Development ==

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As reflected in the discussion of societal transitions ( [[#18.3|Section 18.3]] ), people and their values and choices play an instrumental role in CRD. The agency of people to act on CRD is grounded in their worldviews, beliefs, values and consciousness ( [[#Woiwode--2020|Woiwode, 2020]] ), and is shaped through social and political processes including how policies and decision making recognise the voices, knowledges and rights of particular actors over others ( ''very high confidence'' ) ( [[#Harris--2017|Harris and Clarke, 2017]] ; [[#Nightingale--2017|Nightingale, 2017]] ; [[#Bond--2020|Bond and Barth, 2020]] ; [[#Muok--2021|Muok et al., 2021]] ). Since the AR5, evidence on diverse forms of engagement by and among social, political and economic actors to support CRD and sustainability outcomes, has increased. New forms of decision making and engagement are emerging within the formal policymaking and planning sphere, including co-production of knowledge, interventions grounded in the arts and humanities, civil participation and partnerships with business ( [[#Ziervogel--2016a|Ziervogel et al., 2016a]] ; [[#Roberts--2020|Roberts et al., 2020]] ). In addition, the set of actors that drive climate and development actions are recognised to extend beyond government and formal policy actors to include civil society, education, industry, media, science and art ( [[#Ojwang--2017|Ojwang et al., 2017]] ; [[#Solecki--2018|Solecki et al., 2018]] ; [[#Heinrichs--2020|Heinrichs, 2020]] ; [[#Omukuti--2020|Omukuti, 2020]] ). This makes the power dynamics among actors and institutions critical for understanding the role of actors in CRD ( [[#Buggy--2016|Buggy and McNamara, 2016]] ; [[#Camargo--2017|Camargo and Ojeda, 2017]] ; [[#Silva%20Rodríguez%20de%20San%20Miguel--2018|Silva Rodríguez de San Miguel, 2018]] ).

The formal space for national, sub-national and international adaptation governance emerged at COP 16 ( [[#UNFCCC--2010|UNFCCC, 2010]] ) when adaptation was recognised as a similar level of priority as GHG mitigation. The Paris Agreement ( [[#UNFCCC--2015|UNFCCC, 2015]] ) built on this and the 2030 Sustainable Development Agenda ( [[#United%20Nations--2015|United Nations, 2015]] ) to link adaptation to development and climate justice. It also highlighted the importance of multi-level adaptation governance, including new non-state voices and climate actors that widen the scope of adaptation governance beyond formal government institutions. For example, individuals can act as agents of changes in their own behaviour, such as via change in their consumption patterns, but also generate change within organisations, fields of practice and the political landscape of governance. Accordingly, these interactions among actors across different scales implies the need for wider modes of, and arena for, engagement around adaptation to accommodate a diversity of perspectives ( ''high agreement'' , ''medium evidence'' ) (Chung [[#Tiam%20Fook--2017|Tiam Fook, 2017]] ; [[#Lesnikowski--2017|Lesnikowski et al., 2017]] ; [[#IPCC--2018a|IPCC, 2018a]] ).

In most regions, such new institutional and informal arrangements are at an early stage of development ( ''high agreement'' , ''limited evidence'' ). Further clarification and strengthening are needed to enable the fair sharing of resources, responsibilities and authorities to enable climate action to enable CRD ( [[#Wood--2017|Wood et al., 2017]] ; [[#IPCC--2018a|IPCC, 2018a]] ; [[#Reckien--2018|Reckien et al., 2018]] ). These are strongly linked to contested and complementary worldviews of climate change and the actors that use these worldviews to justify, direct, accelerate and deepen transformational adaptation and climate action.

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=== 18.4.1 Political Economy of Climate Resilient Development ===

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Political economy studies (i.e., the origins, nature and distribution of wealth, and the ideologies, interests and institutions that shape it) explicitly addressing CRD are quite limited. Yet there is an extensive post-AR5 literature on political economy associated with various elements relevant to CRD including climate change and development ( [[#Naess--2015|Naess et al., 2015]] ); vulnerability, adaptation, and climate risk ( [[#Sovacool--2015|Sovacool et al., 2015]] ; [[#Sovacool--2017|Sovacool et al., 2017]] ; [[#Barnett--2020|Barnett, 2020]] ); energy, decarbonisation and negative emissions technologies ( [[#Kuzemko--2019|Kuzemko et al., 2019]] ; [[#Newell--2019|Newell, 2019]] ); degrowth and low-carbon economies ( [[#Perkins--2019|Perkins, 2019]] ; [[#Newell--2020|Newell and Lane, 2020]] ); solar radiation management ( [[#Ott--2018|Ott, 2018]] ); planetary health and sustainability transitions and transformation ( [[#Kohler--2019|Kohler et al., 2019]] ) ( [[#Gill--2020|Gill and Benatar, 2020]] ). Review and assessment of this literature reveals our key insights about the relationship between the political economy and CRD.

First, the political economy drives coupled development–climate change trajectories and determines vulnerability, thereby potentially subjecting those least responsible for climate change to the greatest risk ( [[#Sovacool--2015|Sovacool et al., 2015]] ; [[#Barnett--2020|Barnett, 2020]] ). The legitimacy, viability and sustainability of the prevailing political economy is being called into question because of its role in driving vulnerability in a changing climate ( [[#Barnett--2020|Barnett, 2020]] ), thus undermining the prospects for CRD.As underpinning political economy ideologies, interests and institutions change, the cause of the vulnerable is being appropriated, the drivers of vulnerability and the adaptation agenda are depoliticised, and market-based solutions advocated in ways that sustain the prevailing political economy at the expense of those most at risk. Political economy interests and institutions that drive vulnerability are thus themselves at risk because worsening climate change raises questions about their legitimacy and political and economic viability ( [[#Barnett--2020|Barnett, 2020]] ).

Second, assessment of this literature suggests four attributes of the political economy of adaptation influence development trajectories in diverse settings, from Australia to Honduras and the Maldives ( [[#Sovacool--2015|Sovacool et al., 2015]] ), as delivered through the Global Environment Facility’s Least Developed Countries Fund ( [[#Sovacool--2017|Sovacool et al., 2017]] ). These include enclosure (public resources or authority captured by private interests); exclusion (stakeholders are marginalised from decision making); encroachment (natural systems and ecosystem services compromised); and entrenchment (inequality exacerbated). These attributes hamper adaptation efforts, and reveal the political nature of adaptation ( [[#Dolšak--2018|Dolšak and Prakash, 2018]] ) and, by extension, CRD. Paradoxically, development initiatives labelled as ‘risk’ reduction or resilience building or ‘equitable and environmentally sustainable’, such as coastal restoration efforts in Louisiana, USA, can compound inequity and climate risk, and perpetuate unsustainable development ( [[#Gotham--2016|Gotham, 2016]] ; [[#Eriksen--2021b|Eriksen et al., 2021b]] ).

Third, a long-held view is that the effects of mitigation are global, while those of adaptation are local. A political economy perspective, however, underscores cross-scale linkages, and shows that local adaptation efforts, vulnerability and climate resilience are manifest in development trajectories that are shaped by both local and trans-local drivers, and defined by unequal power relations that cross scales and levels ( [[#Sovacool--2015|Sovacool et al., 2015]] ; [[#Barnett--2020|Barnett, 2020]] ; [[#Newell--2020|Newell, 2020]] ), including in key sectors such as energy ( [[#Baker--2014|Baker et al., 2014]] ) and agriculture ( [[#Houser--2019|Houser et al., 2019]] ), as well as emergent blocs such as Brazil, Russia, India, China and South Africa (BRICS) ( [[#Power--2016|Power et al., 2016]] ; [[#Schmitz--2017|Schmitz, 2017]] ); and sub-national constellations such as cities ( [[#Fragkias--2016|Fragkias and Boone, 2016]] ; [[#Béné--2018|Béné et al., 2018]] ).

Fourth, transitions towards CRD may be technically and economically feasible but are ‘saturated’ with power and politics ( [[#Tanner--2011|Tanner and Allouche, 2011]] ) ( [[#18.3|Section 18.3]] ), necessitating focused attention to political barriers and enablers of CRD ( [[#Newell--2019|Newell, 2019]] ). With a narrow window of time to contain dangerous levels of global warming, political economy research calls for CRD trajectories that counter the tendency of the prevailing political economy to compound climate change impacts and risk ( [[#Newell--2020|Newell and Lane, 2020]] ), especially given the opportunity to realise co-benefits through pandemic recovery efforts that take into account vulnerability and the intersection of economic power and public health, environmental quality, climate change, and human and indigenous rights ( [[#Bernauer--2020|Bernauer and Slowey, 2020]] ; [[#Schipper--2020b|Schipper et al., 2020b]] ).

Given these insights, CRD can be understood as the sum of complex multi-dimensional processes consisting of large numbers of actions and societal choices made by multiple actors from government, the private sector and civil society, with important influences by science and the media ( ''very high confidence'' ). These actions and social choices are determined by the available solution space and options, along with a range of enabling conditions ( [[#18.4.2|Section 18.4.2]] ) that are largely bounded by individual and collective worldviews, and related ethics and values. This view is consistent with sustainable development being a process constituted by multiple inter-related societal choices and actions that are often contested as the needs and interests of current and future generations are addressed. Development choices have path dependencies and context-sensitive synergies and trade-offs with natural and embedded human systems '','' and they are bounded by multiple and contested knowledges and worldviews ( [[#Goldman--2018|Goldman et al., 2018]] ; [[#Heinrichs--2020|Heinrichs, 2020]] ; [[#Nightingale--2020|Nightingale et al., 2020]] ; [[#Schipper--2020b|Schipper et al., 2020b]] ). Consequently, societal choices about the political economy underpin prospects for moving towards or away from CRD.

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=== 18.4.2 Enabling Conditions for Near-Term System Transitions ===

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Given actors, institutions and their engagement is fundamental to supporting system transitions needed for CRD ( [[#18.3|Section 18.3]] ), this section assesses recent literature with respect to how the values, choices and behaviours of those actors enable or constrain specific enabling conditions. Such enabling conditions represent opportunities for policymakers to pursue actions that contribute to CRD beyond direct risk management options such as climate adaptation and GHG mitigation (Sections 18.2.5.1, 18.2.5.2).

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==== 18.4.2.1 Governance and Policy ====

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An overarching enabling condition for achieving system transitions and transformations is the presence of enabling governance systems ( ''very high confidence'' ) ''.'' Recent literature on the translation of governance into system transitions in practice suggests four key actions are important. The first is the critical reflection on so-called ‘development solutions’, alternatively framed by some as ‘empty promises’, that worsen climate risk, inequity, injustice and ultimately lead to unsustainable development ( [[#Mikulewicz--2018|Mikulewicz, 2018]] ; [[#Mikulewicz--2020|Mikulewicz and Taylor, 2020]] ). Examples include development aid ( [[#Scoville-Simonds--2020|Scoville-Simonds et al., 2020]] ), large-scale development projects such as biofuel production in Ethiopia ( [[#Tufa--2018|Tufa et al., 2018]] ) and urban growth management in Vietnam ( [[#DiGregorio--2015|DiGregorio, 2015]] ). The second is the recognition that while the power of different actors and institutions is often tied to access to resources and the ability to constrain the actions of others, other dimensions of power such as its ability to produce knowledge as well as its contingency on circumstances and relationships are also important in enabling energy transitions ( [[#Avelino--2016|Avelino et al., 2016]] ; [[#Avelino--2016|Avelino and Wittmayer, 2016]] ; [[#Lockwood--2016|Lockwood et al., 2016]] ; [[#Ahlborg--2017|Ahlborg, 2017]] ; [[#Avelino--2017|Avelino and Grin, 2017]] ; [[#Partzsch--2017|Partzsch, 2017]] ; [[#Smith--2018|Smith and Stirling, 2018]] ). Third, governance systems can help to develop productive interactions between formal government institutions, the private sector and civil society including the provision ‘safe arenas’ for social actors to deliberate and pursue transitional and transformational change ( [[#Haukkala--2018|Haukkala, 2018]] ; [[#Törnberg--2018|Törnberg, 2018]] ; Strazds; [[#Ferragina--2020|Ferragina et al., 2020]] ; [[#Koch--2020|Koch, 2020]] ) ( [[#18.3.1|Section 18.3.1]] , Box 18.1). Fourth, governance can address challenges such as climate change from a systems perspective and pursue interventions that address the interactions among development, climate change, equity and justice, and planetary health ( [[#Harvey--2019|Harvey et al., 2019]] ; [[#Hölscher--2019|Hölscher et al., 2019]] ). This is evidenced by recent experience with the COVID-19 pandemic response as well as ongoing escalation of disaster risk associated with extreme weather events ( [[#Walch--2019|Walch, 2019]] ; [[#Cohen--2020|Cohen, 2020]] ; [[#Schipper--2020b|Schipper et al., 2020b]] ; [[#Wells--2020|Wells et al., 2020]] ).

One output from systems of governance is formal policy frameworks and policies that influence processes and outcomes of system transitions that support CRD ( [[#18.1.3|Section 18.1.3]] ). The Paris Agreement, for example, provides a framework for CRD by defining a mitigation-centric goal of ‘limiting warming to well below 2°C and enabling a transition to 1.5°C’ ( [[#UNFCCC--2015|UNFCCC, 2015]] ). It also provides for a broadly defined global adaptation goal ( [[#UNFCCC--2015|UNFCCC, 2015]] : Art. 7.1). The NDCs are the core mechanism for achieving and enhancing climate ambitions under the Paris Agreement. However, the pursuit of a given NDC within a specific country will likely necessitate a range of other policy interventions that have more immediate impact on technologies and behaviour, implicating transitions in energy, industry, land and infrastructure ( ''very high confidence'' ) ( [[#18.3.1|Section 18.3.1]] ). SDG-relevant activities are increasingly incorporated into climate commitments in the NDCs (at last count 94 NDCs also addressed SDGs), contributing to several (154 out of the 169) SDG targets (Brandi and Dzebo; [[#Pauw--2018|Pauw et al., 2018]] ). This reflects the potential of the NDCs as near-term policy instruments and signposts for progress towards CRD ( ''medium agreement'' , ''limited evidence'' ) ( [[#McCollum--2018b|McCollum et al., 2018b]] ).

As reflected by the SDGs (and SDG 13 specifically), the mainstreaming of climate change concerns into development policies is one mechanism for pursuing sustainable development and CRD ( ''very high confidence'' ). However, such mainstreaming has also been critiqued for perpetuating ‘development as usual’, reinforcing established development logics, structures and worldviews that are themselves contributing to climate change and vulnerability ( [[#O’Brien--2015|O’Brien et al., 2015]] ) and for obscuring and depoliticising adaptation choices into technocratic choices ( [[#Murtinho--2016|Murtinho, 2016]] ; [[#Webber--2017|Webber and Donner, 2017]] ; [[#Benjaminsen--2018|Benjaminsen and Kaarhus, 2018]] ; [[#Khatri--2018|Khatri, 2018]] ; [[#Scoville-Simonds--2020|Scoville-Simonds et al., 2020]] ). The coordinated implementation of sustainable development policy and climate action is nonetheless crucial for ensuring that the attainment of one does not come at the expense of others (Stafford-Smith et al., 2017). For example, aggressive pursuit of climate policies that facilitate transitions in energy systems can undermine efforts to secure sustainability transitions in other systems (Sections 18.3.1.1, 18.2.5.3, Table 18.7).

Several non-climate international policy agreements provide context for CRD such as the 1948 UN Universal Declaration of Human Rights, the UN Declaration on the Rights of Indigenous Peoples ( [[#Hjerpe--2015|Hjerpe et al., 2015]] ) and the Convention on Biological Diversity (CBD; [[#UNFCCC--1992|UNFCCC, 1992]] ), the UN Convention to Combat Desertification (UN, 1994), as well as the more recent Sendai Framework for Disaster Risk Reduction ( [[#UNDRR--2015|UNDRR, 2015]] ) and the ‘new humanitarianisms’ which seeks to reduce the gap between emergency assistance and longer term development ( [[#Marin--2017|Marin and Naess, 2017]] ). Collectively they provide a global policy framework that protects people’s rights that are potentially threatened by climate change ( [[#Olsson--2014|Olsson et al., 2014]] ). These policies are relevant to transitions across multiple systems, particularly in societal systems towards more equitable and just development.

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==== 18.4.2.2 Economics and Sustainable Finance ====

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===== 18.4.2.2.1 Economics =====

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System transitions towards CRD is contingent on reducing the costs of current climate variability on society while making investments that prepare for the future effects of climate change. Climate change and responses to climate change will affect many different economic sectors both directly and indirectly ( [[#Stern--2007|Stern, 2007]] ; [[#IPCC--2014a|IPCC, 2014a]] ; [[#Hilmi--2017|Hilmi et al., 2017]] ). As a consequence, the characteristics of economic systems will play an important role in determining their resilience ( ''very high confidence'' ). These effects will occur within the context of other developments, such as a growing world population, which increases environmental pressures and pollution. This impact is higher for developing countries than for high-income countries ( [[#Liobikienė--2018|Liobikienė and Butkus, 2018]] ). While looking for sustainable climate-resilient policies, many complex and interconnected systems, including economic development, must be considered in the face of global-scale changes ( [[#Hilmi--2010|Hilmi and Safa, 2010]] ).

[[#Miller--2017|Miller (2017)]] discusses some of the planning for, and application of, adaptation measures that improve sustainability, noting the importance of considering a range of factors including complexities of interconnected systems, the inherent uncertainties associated with projections of climate change impacts and the effects of global-scale changes such as technological and economic development for decision makers. For example, addressing climate impacts in isolation is unlikely to achieve equitable, efficient or effective adaptation outcomes ( ''very high confidence'' ). Instead, integrating climate resilience into growth and development planning allows decision makers to identify what sustainable development policies can support climate-resilient growth and poverty reduction and understand better how patterns and trends of economic development affect vulnerability and exposure to climate impacts across sectors and populations, including distributional effects ( [[#Doczi--2015|Doczi, 2015]] ). [[#Markkanen--2019|Markkanen and Anger-Kraavi (2019)]] highlighted that climate change mitigation policy can influence inequality both positively and negatively. Although higher levels of poverty, corruption, and economic and social inequalities can increase the risk of negative outcomes, these potential negative effects would be mitigated if inequality impacts were taken into consideration in all stages of policy making ( ''very high confidence'' ).

The primary objective of economic and financial incentives around carbon emissions is to redirect investment from high to low carbon technologies ( [[#Komendantova--2016|Komendantova et al., 2016]] ). Recent years have seen policy interventions to incentivise transitions in energy, land and industrial systems to address climate change and sustainability focus on price-based, as opposed to quantity based, interventions. Price-based interventions aim at leveraging market mechanisms to achieve greater efficiency in the allocation of resources and costs of mitigating climate change. For example, carbon pricing initiatives around the world today cover approximately 8 gigatons of carbon dioxide emissions, equivalent to about 20% of global fossil energy fuel emissions and 15% of total carbon dioxide GHG emissions ( [[#Boyce--2018|Boyce, 2018]] ). Meanwhile, environmental taxes and green public procurement push producers to eliminate the negative environmental effects of production (Danilina and Trionfetti, 2019). There are several advantages for environmental taxation including environmental effectiveness, economic efficiency, the ability to raise public revenue, and transparency ( ''very high confidence'' ). These gains can provide more resource-efficient production technologies and positively affect economic competitiveness ( [[#Costantini--2018|Costantini et al., 2018]] ).

Policies encouraging eco-innovation, defined as ‘ ''new ideas, behaviour, products, and processes that contribute to a decreased environmental burden'' ’ ( [[#Yurdakul--2020|Yurdakul and Kazan, 2020]] ), can positively affect economic competitiveness. By implementing policies to encourage eco-innovation, countries enhance their energy efficiency. These gains can provide more resource-efficient production technologies and positively affect economic competitiveness ( ''very high confidence'' ) ( [[#Costantini--2018|Costantini et al., 2018]] ; [[#Liobikienė--2018|Liobikienė and Butkus, 2018]] ). Other than eco-innovation, it is important to also consider exnovation, meaning the phasing out of old technologies, as otherwise the expansion of supply could lead to a rebound owing to cheaper prices for carbon-based products (Arne [[#Heyen--2017|Heyen et al., 2017]] ; [[#David--2017|David, 2017]] ). Hence, decarbonisation strategies that set limits to carbon-based trajectories can be beneficial. Quantity-based interventions—or so-called ‘command-and-control’ policies—involve constraints on the quantity of energy consumption or GHG emissions through laws, regulations, standards and enforcement, with a focus on effectiveness rather than efficiency.

For a transition from dirty (more advanced) technologies to clean (less advanced) ones, market-based instruments such as carbon taxes should be considered alongside subsidies and other incentives that stimulate innovation ( [[#Acemoglu--2016|Acemoglu et al., 2016]] ). Research and development in energy technologies, for example, can help reduce costs of deployment and therefore the costs of operating in a carbon-constrained world. [[#Hémous--2016|Hémous (2016)]] indicates that a unilateral environmental policy which includes both clean research subsidies and trade tax can ensure sustainable growth, but unilateral carbon taxes alone might increase innovation in polluting sectors and would not generally lead to sustainable growth.

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===== 18.4.2.2.2 Climate Finance =====

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Achieving progress on system transitions will be contingent on the ability of actors and institutions to access the financing they need to invest in innovation, adaptation and mitigation, and broader system change ( ''very high confidence'' ). By greening their investment portfolios, investors can support reduction in vulnerability to the consequences of climate change and the reduction of GHG emissions. Finance can contribute to the reduction of GHG emissions, for example, by efficiently pricing the social cost of carbon, by reflecting the transition risks in the valuation of financial assets, and by channelling investments in low-carbon technologies ( [[#OECD--2017|OECD, 2017]] ). At the same time, there is a growing need to spur greater public and private capital into climate adaptation and resilience including climate-resilient infrastructure and nature-based solutions to climate change. For instance, the Green Climate Fund, established within the framework of the UNFCCC, is assisting developing countries in adaptation and mitigation initiatives to counter climate change.

Recent evidence sheds light on the magnitude and pervasiveness of climate risk exposure for global banks and financial institutions. According to [[#Dietz--2016|Dietz et al. (2016)]] , up to about 17% of global financial assets are directly exposed to climate risks, particularly the impacts of extreme weather events on assets and their outputs. However, when indirect exposures via financial counterparts are considered, the share of assets subject to climate risks is much larger (40–54%) ( [[#Battiston--2017|Battiston et al., 2017]] ). Hence, the magnitude of climate change-related risks is substantial, and similar to those that started the 2008 financial crisis ( ''high agreement'' , ''limited evidence'' ).

Financial actors increasingly recognise that the generation of long-term, sustainable financial returns is dependent on stable, well-functioning and well-governed social, environmental and economic systems ''(very high confidence'' ) ( [[#Shiller--2012|Shiller, 2012]] ; Schoenmaker and Schramade, 2020). Institutional approaches to a variety of environmental domains (Krueger et al., 2019) which seek to integrate the pursuit of green strategies with financial returns include targeted investments in green assets (e.g., green bonds, clean energy public equity) and specialised funds/vehicles for renewable energy infrastructure ( [[#Tolliver--2019|Tolliver et al., 2019]] ; [[#Gibon--2020|Gibon et al., 2020]] ); cleantech venture capital and alternative finance ( [[#Gianfrate--2019|Gianfrate and Peri, 2019]] ); investment screening to steer capital to green industries ( [[#Nielsen--2019|Nielsen and Skov, 2019]] ; [[#Ambrosio--2020|Ambrosio et al., 2020]] ); and active ownership to influence organisational behaviour ( [[#Silvola--2021|Silvola and Landau, 2021]] ).

Despite the expansion of green mandates across the investment chain, definitions of some of the asset classes associated with green investing are ambiguous and poorly defined. The EU taxonomy for sustainable activities is a promising step in the right direction. For example, a ‘green’ label for bonds is often stretched to encompass financing facilities of issuers that misrepresent the actual environmental footprint of their operations (the so-called risk of ‘greenwashing’). Even in cases where the bonds’ proceeds are actually used to finance green projects, investors often remain exposed to both the green and ‘brown’ assets of the issuers ( [[#Gianfrate--2019|Gianfrate and Peri, 2019]] ; [[#Flammer--2020|Flammer, 2020]] ). The heterogeneity of metrics and rating methodologies (along with inherent conflict of interests between issuers, investors and score/rating providers) results in inconsistent and unreliable quantification of the actual environmental footprint of corporate and sovereign issuers ( [[#Battiston--2017|Battiston et al., 2017]] ; [[#Busch--|Busch et al.]] ).

In order to promote financial climate-related disclosures for companies and financial intermediaries, the financial system could play a key role in pricing carbon and in allocating capital towards low-carbon emission companies ( [[#Aldy--2019|Aldy and Gianfrate, 2019]] ; [[#Bento--2020|Bento and Gianfrate, 2020]] ; [[#Aldy--2021|Aldy et al., 2021]] ). Stable and predictable carbon-pricing regimes would significantly contribute to fostering financial innovation that can help further accelerate the decarbonisation of the global economy, even in jurisdictions which are more lenient in implementing climate mitigation actions ( ''very high confidence'' ) ( [[#Baranzini--2017|Baranzini et al., 2017]] ). A growing number of financial regulators are intensifying efforts to enhance climate-related disclosure of financial actors. In particular, the Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial information. Several countries are considering implementing mandatory climate risk disclosure in line with TCFD’s recommendations. Central Banks are also considering mandatory disclosure and climate stress testing for banks. For instance, in November 2020 the European Central Bank (ECB) published a guide on climate-related and environmental risks explaining how the ECB expects banks to prudently manage and transparently disclose such risks under current prudential rules. The ECB also announced that banks in the Euro-zone will be stress tested on their ability to withstand climate change-related risks. In addition to disclosure requirements and stress testing, some Central Banks are considering the possibility of steering or tilting the allocation of their assets to favour the less polluting issuers ( [[#Schoenmaker--2019|Schoenmaker, 2019]] ). This, in turn, would translate into lower cost of capital for cleaner sectors, significantly accelerating the greening of the real economy.

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==== 18.4.2.3 Institutional Capacity ====

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Institutional capacity for system transitions refers to the capacity of structures and processes, rules, norms and cultures to shape development expectations and actions aimed at durable improvements in human well-being. The AR5 highlighted the need for strong institutions to create enabling environments for adaptation and GHG mitigation action ( [[#Denton--2014|Denton et al., 2014]] ). Institutions stand within the social and political practices and broader systems of governance that ultimately drive adaptation and development processes and outcomes. They are thus produced by them and can become tools by which some actors constrain the actions of others ( [[#Gebreyes--2018|Gebreyes, 2018]] ). As a consequence, they and can become a significant barrier to change, whether incremental or more transformational ( ''very high confidence'' ). The post-AR5 focus on transformational adaptation and resilience present in the literature suggests that institutions that enable system transitions towards CRD are secure enough to facilitate a wide range of voices, and legitimate enough to change goals or processes over time, without reducing confidence in their efficacy.

The limited literature on institutions and pathways relevant to system transitions and CRD suggests that institutions are most effective when taking a development-first approach to adaptation. This is consistent with the principles of CRD which emphasise not simply reducing climate risk, but rather making development processes resilient to the changing climate. There is agreement in this literature that such an approach allows for the effective integration of climate challenges into existing policy and planning processes ( ''very high confidence'' ) ( [[#Pervin--2013|Pervin et al., 2013]] ; [[#Kim--2017b|Kim et al., 2017b]] ; [[#Mogelgaard--2018|Mogelgaard et al., 2018]] ). However, this approach generally rests on an incremental framing of institutional change ( [[#Mahoney--2009|Mahoney and Thelen, 2009]] ) based on two critical assumptions. The first is that existing processes and institutions are capable of bringing about system transitions that generate desired development outcomes and thus can be considered appropriate vehicles for the achievement of CRD. A large critical literature questions the efficacy of formal state and multilateral institutions. The evidence for the ability of local, informal institutions to achieve development goals remains uneven, with robust evidence of positive impacts on public service delivery, but more ambiguous evidence on behaviour changes associated with strengthened institutions ( [[#Berkhout--2018|Berkhout et al., 2018]] ). The second is that the mainstreaming of adaptation will bring about changes to currently unsustainable development practices and pathways, instead of merely strengthening development as usual by subsuming adaptation to existing development pathways and allowing them to endure in the face of growing stresses ( [[#Eriksen--2015|Eriksen et al., 2015]] ; Godfrey-Wood and Otto Naess, 2016; [[#Scoville-Simonds--2020|Scoville-Simonds et al., 2020]] ). There is evidence that countries with poor governance have limited adaptation planning or action at the national level, even when other determinants of adaptive capacity are present ( [[#Berrang-Ford--2014|Berrang-Ford et al., 2014]] ). This suggests that, in these contexts, adaptation efforts are likely to be subsumed to existing government goals and actions, rather than having transformational impact.

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==== 18.4.2.4 Science, Technology and Innovation ====

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Ongoing innovations in technology, finance and policy have enabled more ambitious climate action over the past decade, including significant growth in renewable energy, electrical vehicles and energy efficiency. However, access to, and the benefits of, that innovation have not been evenly distributed among global regions and communities, and continued innovation is needed to facilitate climate action and sustainable development ( ''very high confidence'' ). Policymakers need useful science and information ( [[#Cornell--2013|Cornell et al., 2013]] ; [[#Kirchhoff--2013|Kirchhoff et al., 2013]] ; [[#Calkins--2015|Calkins, 2015]] ; IPCC, 2019 f; [[#Guido--2020|Guido et al., 2020]] ) to make informed decisions about possible risks, and the benefits, costs and trade-offs of available adaptation, mitigation and sustainable development solutions (i.e., Article 4.1 of the Paris Agreement; [[#UNFCCC--2015|UNFCCC, 2015]] ). Moreover, recent literature has emphasised the need for deep technological, as well social, changes to avert the risks of conventional development trajectories ( [[#Gerst--2013|Gerst et al., 2013]] ; [[#IPCC--2014a|IPCC, 2014a]] ).

An effective and innovative technological regime is one that is integrated with local social entities across different modes of life, local governance processes ( [[#Pereira--2018|Pereira, 2018]] ; [[#Nightingale--2020|Nightingale et al., 2020]] ) and local knowledge(s), which increasingly support adaptation to socio-environmental drivers of vulnerability ( [[#Schipper--2014|Schipper et al., 2014]] ; [[#Nalau--2018|Nalau et al., 2018]] ; IPCC, 2019 f). These actors and their knowledge are often ignored in favour of knowledge held by experts and policymakers, exacerbating uneven power relations ( [[#Naess--2013|Naess, 2013]] ; [[#Nightingale--2020|Nightingale et al., 2020]] ). For example, achieving sustainability and shifting towards a low carbon energy system (e.g., hydropower dams, wind farms) remains a contested space with divergent interests, values and future prospects ( [[#Bradley--2014|Bradley and Hedrén, 2014]] ; [[#Avila--2018|Avila, 2018]] ; [[#Mikulewicz--2019|Mikulewicz, 2019]] ), and potential impacts on human rights as embodied by the Paris Agreement ( [[#UNFCCC--2015|UNFCCC, 2015]] ). A number of studies have emphasised the limits of relying upon technology innovation and deployment (e.g., expansion of renewable energy systems and/or carbon capture) as a solution to challenges of climate change and sustainable development ( [[#18.3.1.2|Section 18.3.1.2]] ). This is because such solutions may fail to consider the local historical contexts and barriers to participation of vulnerable communities, restricting their access to land, food, energy and resources for their livelihoods.

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<span id="monitoring-and-evaluation-frameworks"></span>
==== 18.4.2.5 Monitoring and Evaluation Frameworks ====

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Enabling system transitions towards CRD is dependent in part on the ability to monitor and evaluate system transitions and broader development pathways to identify effective interventions and barriers to their implementation ( ''very high confidence'' ). However, the monitoring and evaluation of individual system transitions, much less CRD, remains highly challenging for multiple reasons ( [[#Persson--2019|Persson, 2019]] ). The highly contextual nature of resilience, adaptation and sustainable development means that, unlike climate mitigation, it is difficult to define universal metrics or targets for adaptation and resilience ( [[#Pringle--2018|Pringle and Leiter, 2018]] ); ( [[#Brooks--2014|Brooks et al., 2014]] ). This is demonstrated by the Paris Agreement’s global goal for adaptation, The mismatch between timescales associated with resilience and adaptation interventions and those over which the results of such interventions are expected to become apparent tends to result in a focus on the measurement of spending, outputs and short-term outcomes, rather than longer-term impacts ( [[#Brooks--2014|Brooks et al., 2014]] ; [[#Pringle--2018|Pringle and Leiter, 2018]] ). The need to assess resilience and adaptation against a background of evolving climate hazards, and to link resilience and adaptation with development outcomes, present further methodological challenges ( ''very high confidence'' ) ( [[#Brooks--2014|Brooks et al., 2014]] ).

Currently, the ability to monitor different components of CRD are in various stages of maturity ( ''very high confidence'' ). Monitoring of the SDGs, for example, is a routine established practice at global and regional levels, and UNDP publishes annual updates on progress towards the SDGs ( [[#United%20Nations--2021|]] [[#United%20Nations--2021|United Nations, 2021]] ). For resilience, [[#Brooks--2014|Brooks et al. (2014)]] identify three broad approaches to its measurement, each of which could offer potential mechanisms for monitoring progress towards CRD. One is a ‘hazards’ approach, in which resilience is described in terms of the magnitude of a particular hazard that can be accommodated by a system, useful in contexts where thresholds in climate and related parameters can be identified and linked with adverse impacts on human populations, infrastructure and other systems ( [[#Naylor--2020|Naylor et al., 2020]] ). An ‘impacts’ approach is one in which resilience is measured in terms of actual or avoided impacts and is suited for tracking adaptation success in delivering CRD over longer timescales, for example at the national level ( [[#Brooks--2014|Brooks et al., 2014]] ). Finally, a ‘systems’ approach is one where resilience is described in terms of the characteristics of a system using quantitative or qualitative indicators which are often associated with different ‘dimensions’ of resilience ( [[#Serfilippi--2018|Serfilippi and Ramnath, 2018]] ; [[#Saja--2019|Saja et al., 2019]] ). This allows measurement of key indicators that are proxies for resilience at regular intervals, even in the absence of significant climate hazards and associated disruptions ( ''very high confidence'' ) ( [[#Brooks--2014|Brooks et al., 2014]] ) (see also Cross-Chapter Box ADAPT in Chapter 1). Similar criteria could be applied to evaluating adaptation options and their implementation as well as various interventions in pursuit of SDGs.

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'''Box 18.6 | ‘Green’ Strategies of Institutional Investors'''
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'''''Negative and Positive Screening''''' '''.''' Investors assess the carbon footprint of issuers and identify the best and worst performers ( [[#Boermans--2019|Boermans and Galema, 2019]] ). The issuers with excessive carbon footprint are divested and fall into the ‘exclusion lists’ (negative screening). Alternatively, the investors commit to pick only the best in class (positive screening). As a bare minimum, screening approaches force more transparent environmental reporting from issuers. In the most optimistic scenario, to avoid exclusion lists issuers may progressively divest their non-green operations. In the long term, the combination of positive and negative screening will reward sustainable issuers relative to non-green sectors, thus reducing the cost of capital for less polluting entities.

'''''Active Ownership.''''' Equity investors can exercise the voting rights at shareholders’ meetings in relation to governance and business strategy, including the environmental performance. In addition, institutional investors engage with the management and the boards of directors of investee companies. Active ownership is therefore defined as the full exercise of the rights that accrue to the ‘owners’ of the securities issued by companies ( [[#Dimson--2015|Dimson et al., 2015]] ; [[#Dimson--2020|Dimson et al., 2020]] ). Active owners are entitled to question and challenge the robustness of financial analyses and the risk assessment behind strategic decisions including the environmental footprint ones. For instance, since fossil fuel businesses face the prospect of dramatic business decline ( [[#Ansar--2013|Ansar et al., 2013]] ) and must revisit their business model to survive, active ownership by institutional investors may foster the transition to cleaner production and supply chain. Companies more exposed to carbon risks particularly need the active support of long-term shareholders. In turn, investors adopting an active ownership approach can manage their holdings’ exposure to climate change risks, thus protecting the value of their investments on a long-term horizon (Krueger et al., 2019).

'''''Specialized Financial Instruments and Investors''''' ''.'' New asset classes have been created to address the climate change challenge. Also, specialised investment funds and vehicles came to life with the primary objective of addressing climate issues. While these financial instruments and funds prioritise the achievement of climate objectives, they do not sacrifice financial returns and are able to attract private capital. To mention a few examples:

* ''Green bonds'' are typically issued by companies, banks, municipalities and governments with the commitment to use the proceeds exclusively to finance or refinance green projects, assets or business activities. These bonds are equivalent to any other bond issued by the same entity except for the label of ‘greenness’ that ideally is verified ''ex ante'' at the launch and ''ex post'' when the proceeds are actually used by the issuer. Early evidence show that green bonds do not penalise financially issuers ( [[#Gianfrate--2019|Gianfrate and Peri, 2019]] ; [[#Flammer--2020|Flammer, 2020]] ).
* ''Carbon funds'' are designed to help countries achieve long-term sustainability typically financing forest conservation. They are intended to reduce climate change impacts from forest loss and degradation.
* ''Project finance.'' New renewable energy initiatives are likely to recur more and more to project finance. Project finance relies on the creation of a special purpose vehicle (SPV), which is legally and commercially self-contained and serves only to run the renewable energy project. The SPV is financed without (or very limited) guarantees from the sponsors (typically energy companies: investors are therefore paid back on the basis only of SPV’s future cash flows only and cannot recourse on the sponsors’ assets) ( [[#Steffen--2018|Steffen, 2018]] ).
* ''Cleantech venture capital'' . These funds invest exclusively in early-stage companies working on innovative, but not yet fully tested, clean technologies. The risk profile of such investments is usually very high. The extent to which this segment of the financial industry can successfully support ‘deep’ energy innovations is still debated ( [[#Gaddy--2017|Gaddy et al., 2017]] ). When cleantech start-ups develop hardware requiring a high upfront investment, support from the public sector seems necessary to attract further investments from large corporations and patient institutional investors.
* ''Crowdfunding and alternative finance'' are emerging as a channel to both finance small-scale clean energy projects as well as fund early-stage innovative clean technologies ( [[#Cumming--2017|Cumming et al., 2017]] ; [[#Bento--2019|Bento et al., 2019]] ).

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<span id="arenas-of-engagement"></span>
=== 18.4.3 Arenas of Engagement ===

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Much of the enabling conditions for system transitions discussed in [[#18.4.2|Section 18.4.2]] are inherently linked to actors and their agency in pursuing system change. Yet a significant literature has developed since the AR5, exploring not only the role of different actors in pursuing adaptation, mitigation and sustainable development options, but also how those actors interact with one another to drive outcomes. CRDPs are determined by the interactions between societal actors and networks, including government, civil society and the private sector, as well as science and the media. The resultant social choices and cumulative private and public actions (and inactions) are institutionalised through both formal and informal institutions that evolve over time and seek to provide societal stability in the face of change. The degree to which the emergent pathways foster just and CRD depends on how contending societal interests, values and worldviews are reconciled through these interactions. These interactions occur in many different arenas of engagement, that is, the settings, places and spaces in which societal actors interact to influence the nature and course of development, including political, economic, socio-cultural, ecological, knowledge–technology and community arenas (Figures 18.1, 18.2).

For example, political arenas range from formalised election and voting procedures to more informal and less transparent practices, such as special interest lobbying. Town squares and streets can become sites of political struggle and dissent, including protests against climate inaction. As a more specific case in point, the formal space for national, sub-national and international adaptation governance emerged at COP 16 ( [[#UNFCCC--2010|UNFCCC, 2010]] ) when adaptation was recognised as having a similar level of priority as mitigation. The Paris Agreement ( [[#UNFCCC--2015|UNFCCC, 2015]] ) built on this and the 2030 Sustainable Development Agenda ( [[#United%20Nations--2015|United Nations, 2015]] ) to link adaptation to development and climate justice, widening the scope of adaptation governance beyond formal government institutions. It also highlighted the importance of multi-level adaptation governance, including non-state voices from civil society and the private sector. This implied the need for wider arenas and modes of engagement around adaptation (Chung [[#Tiam%20Fook--2017|Tiam Fook, 2017]] ; [[#Lesnikowski--2017|Lesnikowski et al., 2017]] ; [[#IPCC--2018a|IPCC, 2018a]] ) that facilitate coordination and convergence among these diverse actors including individual citizens to collectively solve problems and unlock the synergies between adaptation and mitigation and sustainable development ( [[#IPCC--2018a|IPCC, 2018a]] ; [[#Romero-Lankao--2018|Romero-Lankao et al., 2018]] ).

There are many other visible and less visible arenas of engagement in the other interconnected spheres of societal interaction spanning scales from the local to international level. The metaphor of arenas derives from diverse social and political theory, with applications in studies of, among other things, governance transformation and transitions ( [[#Healey--2006|Healey, 2006]] ; [[#Jørgensen--2012|Jørgensen, 2012]] ; [[#Jørgensen--2017|Jørgensen et al., 2017]] ). It underscores that these arenas can be enduring or temporary in nature, are historically situated and often spatially bounded, and signifies the many different mechanisms by which societal actors interact in dynamic and emergent ways. Power and politics impact access and influence in these arenas of engagement—with varying levels of inclusion and exclusion shaping the nature and trajectory of development. In practice, some arenas of engagement are ‘struggle arenas’ as different societal actors strive to influence the trajectory of development, with inevitable winners and losers.

Institutional arrangements to foster CRD are at an early stage of development in most regions ( ''medium agreement'' , ''limited evidence'' ). They need to be further clarified and strengthened to enable a sharing of resources and responsibilities that facilitate climate actions embracing climate resilience, equity, justice, poverty alleviation and sustainable development ( [[#Wood--2017|Wood et al., 2017]] ; [[#IPCC--2018a|IPCC, 2018a]] ; [[#Reckien--2018|Reckien et al., 2018]] ). These endeavours are strongly influenced by how contested and complementary worldviews about climate change and development are mobilised by societal actors to justify, direct, accelerate and deepen transformational climate action or entrench maladaptive business as usual practices ( [[#18.4.3.1|Section 18.4.3.1]] ).

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<span id="worldviews"></span>
==== 18.4.3.1 Worldviews ====

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Worldviews are overarching systems of meaning and meaning-making that inform how people interpret, enact and co-create reality ( [[#De%20Witt--2016|De Witt et al., 2016]] ). Worldviews shape the vision, beliefs, attitudes, values, emotions, actions and even political and institutional arrangements. As such, they can promote holistic, egalitarian approaches to enable, accelerate and deepen climate action and environmental care ( [[#Ramkissoon--2014|Ramkissoon and Smith, 2014]] ; [[#De%20Witt--2016|De Witt et al., 2016]] ; [[#Lacroix--2017|Lacroix and Gifford, 2017]] ; [[#Sanganyado--2018|Sanganyado et al., 2018]] ; [[#Brink--2019|Brink and]] [[#Wamsler--2019|Wamsler, 2019]] ). Alternatively, they can also serve as significant barriers to system transitions and transformation, based on anthropocentric, mechanistic and materialistic worldviews and the utilitarian, individualist or skeptical values and attitudes they often promote ( ''very high confidence'' ) ( [[#Beddoe--2009|Beddoe et al., 2009]] ; [[#van%20Egmond--2011|van Egmond and de Vries, 2011]] ; [[#Stevenson--2014|Stevenson et al., 2014]] ; [[#Zummo--2020|Zummo et al., 2020]] ).

Traditional, modern and post-modern worldviews have different, and in many ways, complementary potentials for enabling diverse approaches to climate action and sustainable development. They can also shift societal values and societal concern for climate change ( [[#Shi--2015|Shi et al., 2015]] ), resulting in changes in behaviour and acceptance of climate change policies ( [[#van%20Egmond--2011|van Egmond and de Vries, 2011]] ; [[#Van%20Opstal--2013|Van Opstal and Hugé, 2013]] ; [[#De%20Witt--2016|De Witt et al., 2016]] ; [[#Shaw--2016|Shaw, 2016]] ) which are predictors of concern. Among the challenges of strongly different climate-related worldviews, is that they rarely co-exist. Some worldviews become incompatible or hostile to other worldviews, openly seeking to dominate, eliminate or segregate competing perspectives ( ''medium agreement'' , ''medium evidence'' ) ( [[#de%20Witt--2015|de Witt, 2015]] ; [[#Jackson--2016|Jackson, 2016]] ; [[#Nightingale--2016|Nightingale, 2016]] ; [[#Xue--2016|Xue et al., 2016]] ; [[#Goldman--2018|Goldman et al., 2018]] ).

To address these difficult contests, worldviews regarding climate and global environmental change are often expressed in scientific language and themes ( [[#Parsons--2016|Parsons et al., 2016]] ; [[#Goldman--2018|Goldman et al., 2018]] ). This can exclude other worldviews grounded in other forms of knowledge or ways of knowing which ultimately narrows understanding of climate change and the solution space. Hence, the post-AR5 literature on worldviews focuses on the numerous meanings, associations, narratives and frames of climate change and how these shape perceptions, attitudes and values ( [[#Morton--2013|Morton, 2013]] ; [[#Boulton--2016|Boulton, 2016]] ; [[#Hulme--2018|Hulme, 2018]] ; Nightingale Böhler, 2019). The recognition of the diversity of interpretations and meanings has led to multidisciplinary and transdisciplinary research that incorporates the humanities and the arts ( [[#Murphy--2011|Murphy, 2011]] ; [[#Elliott--2017|Elliott and Cullis, 2017]] ; [[#Steelman--2019|Steelman et al., 2019]] ; [[#Tauginienė--2020|Tauginienė et al., 2020]] ), feminist studies ( [[#MacGregor--2003|MacGregor, 2003]] ; [[#Demeritt--2011|Demeritt et al., 2011]] ; [[#Bell--2013|Bell, 2013]] ; [[#Brink--2019|Brink and]] [[#Wamsler--2019|Wamsler, 2019]] ; [[#Plesa--2019|Plesa, 2019]] ) and religious studies ( [[#Sachdeva--2016|Sachdeva, 2016]] ; [[#McPhetres--2018|McPhetres and Zuckerman, 2018]] ) to examine diverse understandings of reality and knowledge possibilities around climate change. In addition, literature on cultural cognition, epistemological plurality and relational ontologies draws on non-Western worldviews and forms of knowledge ( [[#Goldman--2018|Goldman et al., 2018]] ).

On the other hand, the tendency for certain worldviews to dominate the policy discourse has the potential to exacerbate social, economic and political inequities as well as ontological, epistemic and procedural injustices ( ''very high confidence'' ). Research aimed at exploring the existing political ontology and knowledge politics of exclusion that marginalise certain communities and actors originated in academic or scientific perspectives. This includes institutions such as the IPCC and is subsequently replicated in social representations, including the media, public policy and the development agenda, narrowing possibilities for social transformation ( [[#Jackson--2014|Jackson, 2014]] ; [[#Luton--2015|Luton, 2015]] ; [[#Escobar--2016|Escobar, 2016]] ; [[#Burman--2017|Burman, 2017]] ; [[#Newman--2018|Newman et al., 2018]] ; [[#Sanganyado--2018|Sanganyado et al., 2018]] ; [[#Wilson--2018|Wilson and Inkster, 2018]] ).

<div id="18.4.3.2" class="h3-container"></div>

<span id="political-and-government-arenas"></span>
==== 18.4.3.2 Political and Government Arenas ====

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CRD is embedded in social systems, in the political economy and its underlying ideologies, interests and institutions ( [[#18.4.1|Section 18.4.1]] ). The pursuit of CRD, and shifting development pathways away from prevailing trends, unfolds in an array of political arenas, from the offices of bureaucrats to parliament buildings, sidewalks and streets, to discursive arenas in which governance actors interact—from the village level to global forums ( [[#Jørgensen--2017|Jørgensen et al., 2017]] ; [[#Montoute--2019|Montoute et al., 2019]] ; [[#Sørensen--2019|Sørensen and Torfing, 2019]] ; [[#Pasquini--2020|Pasquini, 2020]] ). Paradoxically, the post-AR5 literature suggests that political arenas are often used to shut down efforts to explore the solution space for climate change and sustainable development ( ''medium agreement, robust evidence'' ) (e.g., [[#Kenis--2012|Kenis and Mathijs, 2012]] ; [[#Kenis--2014|Kenis and Mathijs, 2014]] ; [[#Beveridge--2016|Beveridge and Koch, 2016]] ; [[#Kenis--2016|Kenis and Lievens, 2016]] ; [[#Driver--2018|Driver et al., 2018]] ; [[#Meriluoto--2018|Meriluoto, 2018]] ; [[#Swyngedouw--2018|Swyngedouw, 2018]] ; [[#Mocca--2019|Mocca and Osborne, 2019]] ). Power relationships among different actors create opportunities for people to be included or excluded in collective action ( [[#Siméant-Germanos--2019|Siméant-Germanos, 2019]] ) (Sections 18.3.1.6, 18.4.3.5). Therefore, as evidenced by examples from the UK ( [[#MacGregor--2019|MacGregor, 2019]] ) and China ( [[#Huang--2020|Huang and Sun, 2020]] ), small-scale collective environmental action has transformative potential in part owing to its ability to increase levels of cooperation among different actors ( ''medium agreement'' , ''limited evidence'' ) ( [[#Green--2020|Green et al., 2020]] ; [[#Blühdorn--2021|Blühdorn and Deflorian, 2021]] ).

In addition to the ‘arm’s length’ acts of voting, social mobilisation, protest and dissent can be critical catalysts for transformative change ( [[#Porta--2020|Porta, 2020]] ). These are competitions for recognition, power and authority ( [[#Nightingale--2017|Nightingale, 2017]] ) that take place in settings. This is evidenced by experiences from the energy sector in Bangladesh which became a contested national policy domain and where social movements eventually transformed the nation’s energy politics ( [[#Faruque--2017|Faruque, 2017]] ). Similarly, in Germany, the nation’s energy transition led to marked changes in agency and legal frameworks, and energy markets drove the proliferation of so-called municipalisations of energy systems—a reversal of years of system privatisation ( [[#Becker--2016|Becker et al., 2016]] ). Meanwhile, experience in Bolivia demonstrate that the transformative potential of political conflict depends on transcending narrow issues to form broad coalitions with a collective identity that challenge prevailing development objectives and trajectories ( [[#Andreucci--2019|Andreucci, 2019]] ). Such examples illustrate the power of the communities as a vanguard against environmentally destructive practices ( [[#Villamayor-Tomas--2018|Villamayor-Tomas and García-López, 2018]] ). Social movements have been successful at countering fossil fuel extraction ( [[#Piggot--2018|Piggot, 2018]] ) and open up political opportunities in the face of increasing efforts to capture natural resources ( [[#Tramel--2018|Tramel, 2018]] ) and are bolstered by resistance from within some corporations and/or their shareholders ( [[#Fougère--2016|Fougère and Bond, 2016]] ; [[#Swaffield--2017|Swaffield, 2017]] ; [[#Walton--2018|]] [[#Walton--2018|Walton, 2018]] a; [[#Walton--2018|]] [[#Walton--2018|Walton, 2018]] b).

Coincident with these social movements targeting climate change and sustainability has been a rise of political conservatism and populism as well as growth in misinformation ( ''high agreement'' , ''medium evidence'' ) ( [[#Mahony--2016|Mahony and Hulme, 2016]] ; [[#Swyngedouw--2019|Swyngedouw, 2019]] ). This reflects efforts to maintain the status quo by actors in positions of power in the face of rising social inertia for climate action ( [[#Brulle--2019|Brulle and Norgaard, 2019]] ). Political arenas of the future could include a new body politic that integrates non-humans and a new geo-spatial politics ( [[#Latour--2018|Latour et al., 2018]] ).

As introduced in the discussion of governance as an enabling condition ( [[#18.4.2.1|Section 18.4.2.1]] ), a wide range of actors are involved in successful adaptation, mitigation, and sustainability policy and practice including national, regional and local governments, communities and international agencies ( [[#Lwasa--2015|Lwasa, 2015]] ). As of 2018, 197 countries had between them over 1500 laws and policies addressing climate change as compared with 60 countries with such legislation in 1997 when the Kyoto Protocol was agreed upon ( [[#Nachmany--2017|Nachmany et al., 2017]] ; [[#Nachmany--2018|Nachmany and Setzer, 2018]] ). In judicial branches, climate change litigation is increasingly becoming an important influence on policy and corporate behaviour among investors, activists and local and state governments ( [[#Setzer--2019|Setzer and Byrnes, 2019]] ). There is enhanced action on climate change at both national and sub-national levels, even in cases where national policies are inimical, as in the USA ( [[#Carmin--2012|Carmin et al., 2012]] ; [[#Hansen--2013|Hansen et al., 2013]] ).

The strong role of governments in climate action has implications for the nature of democracy, the relationship between the local and the national state, and between citizens and the state ( [[#Dodman--2015|Dodman and Mitlin, 2015]] ). More integration of government policy and interventions across scales, accompanied by capacity building to accelerate adaptation is needed ( ''very high confidence'' ). Key needs include enhanced funding, clear roles and responsibilities, increased institutional capability, strategic approaches, community engagement and judicial integrity ( [[#Lawrence--2015|Lawrence et al., 2015]] ). More resources, and more active involvement of the private sector and civil society can help maintain adaptation on the policy agenda. Multi-level adaptation approaches are also relevant in low-income countries where local governments have limited financial resources and human capabilities, often leading to dependency on national governments and donor organisations (Donner et al., 2016; [[#Adenle--2017|Adenle et al., 2017]] ).

Unlike mitigation, adaptation has traditionally been viewed as a local process, involving local authorities, communities and stakeholders ( [[#Preston--2015|Preston et al., 2015]] ). The literature on the governance of adaptation continues to emphasise that local governments have demonstrated leadership in implementation by collaborating with the private sector and academia. Local governments can also play a key role ( [[#Melica--2018|Melica et al., 2018]] ; [[#Romero-Lankao--2018|Romero-Lankao et al., 2018]] ) in converging mitigation and adaptation strategies, coordinating and developing effective local responses, enabling community engagement and more effective policies around exposure and vulnerability reduction ( [[#Fudge--2016|Fudge et al., 2016]] ). Local authorities are well-positioned to involve the wider community in designing and implementing climate policies and adaptation implementation ( [[#Slee--2015|Slee, 2015]] ; [[#Fudge--2016|Fudge et al., 2016]] ). Local governments also help deliver basic services and protect their integrity from climate impacts ( [[#Austin--2015|Austin et al., 2015]] ; [[#Cloutier--2015|Cloutier et al., 2015]] ; [[#Nalau--2015|Nalau et al., 2015]] ; [[#Araos--2017|Araos et al., 2017]] ). However, the resource limitations of local governments as well as their small geographic sphere of influence suggests the need for more funding for this from higher levels of government, particularly national governments, to address adaptation gaps ( ''very high confidence'' ) ( [[#Dekker--2020|Dekker, 2020]] ). Local adaptation implementation gaps can be linked to limited political commitment at higher levels of government and weak cooperation between key stakeholders ( [[#Runhaar--2018|Runhaar, 2018]] ). Incongruities and conflicts can exist between adaptation agendas pursued by national governments and the spontaneous adaptation practices of communities. There may be grounds for re-evaluating current consultative processes integral to policy development, if narrow technical approaches emerge as the norm for adaptation ( [[#Smucker--2015|Smucker et al., 2015]] ).

Therefore, the traditional view of adaptation as a local process has now widened to recognise it as a multi-actor process that transcends scales from the local and sub-national to national and even international ( ''very high confidence'' ) ( [[#Mimura--2014|Mimura et al., 2014]] ). Many of the impacts of climate change are both local and transboundary, so that local, bilateral and multilateral cooperation is needed ( [[#Nalau--2015|Nalau et al., 2015]] ; Donner et al., 2016; [[#Magnan--2016|Magnan and Ribera, 2016]] ; [[#Tilleard--2016|Tilleard and Ford, 2016]] ; [[#Lesnikowski--2017|Lesnikowski et al., 2017]] ). National policies and transnational governance should be seen as complementary, especially where they favour transnational engagement with sub- and non-state actors ( [[#Andonova--2017|Andonova et al., 2017]] ). National governments typically act as a pivot for adaptation coordination, planning, determining policy priorities, and distributing financial, institutional and sometimes knowledge resources. National governments are also accountable to the international community through international agreements. National governments have helped enhance adaptive capacity through building awareness of climate impacts, encouraging economic growth, providing incentives, establishing legislative frameworks conducive to adaptation and communicating climate change information ( [[#Berrang-Ford--2014|Berrang-Ford et al., 2014]] ; [[#Massey--2014|Massey et al., 2014]] ; [[#Austin--2015|Austin et al., 2015]] ; [[#Huitema--2016|Huitema et al., 2016]] ).

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<span id="economic-and-financial-arenas"></span>
==== 18.4.3.3 Economic and Financial Arenas ====

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The performance of local, national and global economies is a priority consideration shaping perceptions of climate risk and the costs and benefits of different policy responses to climate change. The most commonly used indicator of performance is GDP ( [[#Hoekstra--2017|Hoekstra et al., 2017]] ). Traditionally, national development efforts have sought to maximise the growth of GDP under the assumption that GDP growth equates not only to economic prosperity (including poverty reduction) but also to increased efficiency and reduced environmental externalities ( [[#Ota--2017|Ota, 2017]] ). Such assumptions often employ models such as the environmental Kuznets curve (EKC) that postulates that economic development initially increases environmental impacts, but these trends eventually reverse with continued economic growth. Wealthy nations of the Global North, including for example the USA, Great Britain, Iceland and Japan, have had success over the past decade in reducing their GHG emissions while growing their economies ( ''very high confidence'' ). However, attempts to empirically test EKC in different national contexts has yielded mixed results. Case studies in Myanmar, China and Singapore, for example, suggest that the impacts of GDP on environmental quality are contingent on the development context and the environmental impact under consideration ( [[#Aung--2017|Aung et al., 2017]] ; [[#Lee--2017|Lee and Thiel, 2017]] ; [[#Xu--2018|Xu, 2018]] ; [[#Chen--2020|Chen and Taylor, 2020]] ). In addition, an extensive literature now argues that current patterns of development, and the economic systems underpinning that development, are unsustainable (Washington and Twomey, 2016), and thus economic growth may not necessarily continue indefinitely in the absence of more concerted effort to pursue sustainable development, including reducing the impacts of climate change.

Given such criticisms of the link between development and economic growth, a growing number of researchers argue for the need for alternatives to GDP to guide development and evaluate the costs and benefits of different policy interventions ( [[#Hilmi--2015|Hilmi et al., 2015]] ). For example, while GDP growth can drive growth in income, it can also drive growth in inequality which can undermine poverty reduction efforts ( ''very high confidence'' ) (Fosu, 2017). Hence, recent years have seen significant interest in the concept of well-being as a more robust measure for linking policy and the economy with sustainable development for a healthy Anthropocene era ( [[#Fioramonti--2019|Fioramonti et al., 2019]] ).

Another mechanism for evaluating environmental performance is to include environmental data in the System of National Accounts (SNA) through the System of Environmental-Economic Accounting (SEEA) introduced by the UN. As the international statistical standard for environmental–economic accounting ( [[#Pirmana--2019|Pirmana et al., 2019]] ), SEEA includes natural capital resources in national accounting. A number of recent studies conclude that failure to account for natural capital in macroeconomic impact assessments results in overly optimistic outcomes ( [[#Pirmana--2019|Pirmana et al., 2019]] ; [[#Jendrzejewski--2020|Jendrzejewski, 2020]] ; [[#Naspolini--2020|Naspolini et al., 2020]] ); ( [[#Banerjee--2019|Banerjee et al., 2019]] ; [[#Kabir--2019|Kabir and Salim, 2019]] ; [[#Keith--2019|Keith et al., 2019]] ). For example, [[#Jendrzejewski--2020|Jendrzejewski (2020)]] inserted natural capital into a computable general equilibrium model of the 2017 European windstorm on state-owned forests in Poland. This resulted in more negative assessment of impacts, suggesting excluding natural capital could lead to erroneous investments, strategies or policies. Similarly, other studies rely on Quality of life (QOL) measurements as alternatives for GDP. [[#Estoque--2018|Estoque et al. (2018)]] suggested a ‘QOL-Climate’ assessment framework, designed to capture the social-ecological impacts of climate change and variability.

Another alternative to GDP is Green GDP which seeks to incorporate the environmental consequences of economic growth ( [[#Boyd--2007|Boyd, 2007]] ; Stjepanović et al., 2017; [[#Stjepanović--2019|Stjepanović et al., 2019]] ). Green GDP is difficult to measure, because it is difficult to evaluate the environmental depletion and ecological damages of growth ( [[#Stjepanović--2019|Stjepanović et al., 2019]] ). Although there is no consensus in measuring Green GDP, attempts have been made for select countries including the USA ( [[#Garcia--2017|Garcia and You, 2017]] ), Europe ( [[#Stjepanović--2019|Stjepanović et al., 2019]] ), China ( [[#Chi--2010|Chi and Rauch, 2010]] ; [[#Yu--2019|Yu et al., 2019]] ; [[#Wang--2020|Wang et al., 2020]] ), Ukraine and Thailand ( [[#Harnphatananusorn--2019|Harnphatananusorn et al., 2019]] ), and Malaysia ( [[#Vaghefi--2015|Vaghefi et al., 2015]] ). Le (2016) illustrated the potential negative impacts of climate change vulnerability on green growth. Some studies have suggested that focusing on green growth as the only strategy to address climate change would be risky. [[#Hickel--2020|Hickel and Kallis (2020)]] argue that green growth is likely to be a misguided goal due to the difficulties of separating economic growth from resource use and, therefore, carbon emissions (see also ( [[#Antal--2014|Antal and van den Bergh, 2014]] ). Therefore, alternative strategies are required ( [[#Hickel--2020|Hickel and Kallis, 2020]] ). In addition, green growth should also be able to justly respond to social movements involving contestation, internal debates and tensions ( [[#Mathai--2018|Mathai et al., 2018]] ).

The emphasis on Green GDP is mirrored by another concept, Blue Growth, that focuses on pursuing sustainable development through the ecosystem services derived from ocean conservation ( [[#Mustafa--2019|Mustafa et al., 2019]] ). Synthesis studies suggest that more intensive use of ocean resources, such as scaling up seaweed aquaculture, can be used to enhance CO 2 -eq sequestration, thereby contributing to GHG mitigation, while also achieving other economic goals ( [[#Lillebø--2017|Lillebø et al., 2017]] ; [[#Froehlich--2019|Froehlich et al., 2019]] ). Similarly, [[#Sarker--2018|Sarker et al. (2018)]] present a framework for linking Blue Growth and CRD in Bangladesh, with Blue Growth representing an opportunity for adapting to climate change. Bethel et al. (2021) also links Blue Growth to resilience, noting that a Blue economy can help facilitate recovery from the COVID-19 pandemic. Nevertheless, consistent with earlier assessment of enabling conditions for system transitions ( [[#18.4.2.1|Section 18.4.2.1]] ), implementation of Blue Growth initiatives is contingent upon the successful achievement of social innovation as well as creating an inclusive and cooperative governance structure ( ''very high confidence'' ) ( [[#Larik--2017|Larik et al., 2017]] ; [[#Soma--2018|Soma et al., 2018]] ).

A potential critique of the various alternative metrics and models for economic development is that they are all framed in the context of growth. Over the past decade, ecological economists and political scientists have proposed degrowth (e.g., [[#Kallis--2011|Kallis, 2011]] ; [[#Demaria--2013|Demaria et al., 2013]] ) and managing without growth (e.g., [[#Jackson--2009|Jackson, 2009]] ) as a solution for achieving environmental sustainability and socioeconomic progress. Such concepts are a deliberate response to concerns about ecological limits to growth and the compatibility between growth-oriented development and sustainability ( [[#Kallis--2009|Kallis et al., 2009]] ). Sustainable degrowth is not the same as negative GDP growth, which is typically referred to as a recession ( [[#Kallis--2011|Kallis, 2011]] ). Degrowth goes beyond criticising economic growth; it explores the intersection among environmental sustainability, social justice and well-being ( [[#Demaria--2013|Demaria et al., 2013]] ). Under current economic and fiscal policies (see Box 18.7), degrowth has been argued as an unstable development paradigm because declining consumer demand leads to rising unemployment, declining competitiveness and a spiral of recession ( [[#Jackson--2009|Jackson, 2009]] : 46). More comprehensive modelling of socioeconomic performance understands the segments of sufficient social transformation to guarantee maintenance and rises in well-being coupled with reduced ‘footprints’ ( [[#Raworth--2017|Raworth, 2017]] ; [[#Hickel--2019|Hickel, 2019]] ; [[#D’Alessandro--2020|D’Alessandro et al., 2020]] ).

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<span id="knowledgetechnology-and-ecological-arenas"></span>
==== 18.4.3.4 Knowledge–Technology and Ecological Arenas ====

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Knowledge–technology arenas comprise the interaction in knowledge spaces connected to technology transitions. The institutional and political architecture through which knowledge and technology interact is described in sustainability transitions literature ( [[#Fazey--2018b|Fazey et al., 2018b]] ; [[#Sengers--2019|Sengers et al., 2019]] l Kanger, 2020 #3709). A common theme explored in that literature is the ability of actors to access and apply various forms of knowledge as a means of effecting change. Different forms of innovation are recognised as a core enabling condition for achieving system transitions for CRD ( [[#18.3|Section 18.3.3]] ; Cross-Chapter Box INDIG). However, while scientific and technology knowledge may be useful, in some cases, they remain subordinate to political agendas, or are controlled by actors in positions of power and thus not equitably distributed ( ''very high confidence'' ) ( [[#Mormina--2019|Mormina, 2019]] ). Participatory decision making, for example, assumes that multiple actors, with differing motivations, agency and influence, engage with climate decision making and co-produce actions. Yet some actors may not participate in the process if the proposed actions do not align with their motivations or if they do not have adequate agency ( [[#Roelich--2019|Roelich and Giesekam, 2019]] ). Hence, effectively using knowledge to inform policy is challenging for both scientists, policymakers and civil society alike.

Science, technology and innovation (STI) policies are expected to shape expectations of the potential for a better world based on access to information, clean technologies, higher labour productivity, economic growth and a healthier environment ( [[#Brasseur--2016|Brasseur and Gallardo, 2016]] ; [[#Schot--2018|Schot and Steinmueller, 2018]] ; [[#Singh--2018|Singh et al., 2018]] ; [[#Mormina--2019|Mormina, 2019]] ; [[#Bamzai-Dodson--2021|Bamzai-Dodson et al., 2021]] ). STI policies are considered as ‘social goods for development’. Hence, STI policies are often proposed or implemented as means of addressing environmental challenges such as climate change along with SDGs such as the reduction of inequality, poverty and environmental pollution ( [[#Mormina--2019|Mormina, 2019]] ). Realising the benefits of STI, however, may be contingent on building broader STI capacity and bolstering nations’ systems of innovation ( ''very high confidence'' ) ( [[#Mormina--2019|Mormina, 2019]] ). This could include building global research partnerships to address priority STI needs as well as long-standing gaps between the Global North and South. Such an approach shifts the framing of STI as one focused on individual investigators to one comprised of building knowledge networks. It also creates opportunities for integration of disparate forms of knowledge and innovation, including local and Indigenous knowledge, into global knowledge systems (Cross-Chapter Box INDIG).

Furthermore, an extensive literature increasingly incorporates natural and ecological systems as knowledge domains relevant to understanding opportunities for sustainability and CRD. For example, the literature on socio-ecological systems (SES) ( [[#Sterk--2017|Sterk et al., 2017]] ; [[#Holzer--2018|Holzer et al., 2018]] ; [[#Avriel-Avni--2019|Avriel-Avni and Dick, 2019]] ; [[#Martínez-Fernández--2021|Martínez-Fernández et al., 2021]] ) as well as social, ecological and technological systems (SETS) ( [[#McPhearson--2017|McPhearson and Wijsman, 2017]] ; [[#Webb--2018|Webb et al., 2018]] ; [[#Ahlborg--2019|Ahlborg et al., 2019]] ), explicitly integrate ecological knowledge into sustainability, including concepts such as planetary boundaries ( [[#18.1.1|Section 18.1.1]] ), adaptation and nature-based solutions, natural resources management, rights and access to nature, and understanding of how humans govern society–nature interactions in the face of climate change ( [[#Benjaminsen--2018|Benjaminsen and Kaarhus, 2018]] ; [[#Mikulewicz--2019|Mikulewicz, 2019]] ; [[#Nightingale--2020|Nightingale et al., 2020]] ). Some of these interactions are explained in Cross-Chapter Box INDIG, including conflict over which knowledges are recognised as valuable in understanding and responding to climate change and therefore shape the nature of climate actions. Actor engagement in stewardship, solidarity and inclusion of multiple knowledges and nature–society connectedness can highlight the intertwined nature of ecological change and knowledge relations, thereby supporting shifts to sustainability ( [[#Pelling--2010|Pelling, 2010]] ; [[#Hulme--2018|Hulme, 2018]] ; [[#Ives--2019|Ives et al., 2019]] ; [[#Nightingale--2020|Nightingale et al., 2020]] ) (see also Box 18.6).

The expanding definition of what constitutes credible, relevant and legitimate knowledge is leading to the democratisation of knowledge and efforts to address historical inequities in access to knowledge ( [[#Ott--2016|Ott and Kiteme, 2016]] ; [[#Rowell--2019|Rowell and Feldman, 2019]] ). This is reflected in the communication of science, which is increasingly focused on reducing the distance between internal scientific and public communication and more engagement in public science governance and knowledge production ( [[#Waldherr--2012|Waldherr, 2012]] ; [[#Peters--2013|Peters, 2013]] ). One innovative approach in co-production of knowledge is mobilising communities through citizen science ( [[#Heigl--2019|Heigl et al., 2019]] ). This also presents additional opportunities to incorporate local knowledge with scientific research, and better match scientific capability to societal needs.

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<span id="community-arenas"></span>
==== 18.4.3.5 Community Arenas ====

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Societal choices and development trajectories emerge from decisions made in different arenas which intersect and interact across levels and scales, in diverse institutional settings—some formal with their associated instruments and interventions, while others are informal. Since AR5, both formal and informal setting are increasingly arenas of debate and contestation regarding development choices and pathways ( ''very high confidence'' ) ( [[#18.4.4|Section 18.4.4]] , Chapters 1, 6, 8, 10 and 17). Community arenas exist from the local to the global scale and constitute the many interactions between governance actors, often transcending any one scale to reflect the emergent outcomes of interactions in political, economic, socio-cultural, knowledge-technology and ecological arenas of engagement. Actions within and between these five arenas hence come together in the community arena of engagement. While community engagement is often described at the level of villages and cities ( [[#Ziervogel--2021|Ziervogel et al., 2021]] ) (Chapter 8), communities in terms of people interacting with each other sharing worldviews, values and behaviours, also exist at the regional and global levels. For example, civil society engagement in climate action reached a peak in 2019, notably through the global youth movement which led to large global mobilisation and street demonstrations on all continents and in many large cities ( [[#Bandura--2020|Bandura and Cherry, 2020]] ; [[#Han--2020|Han and Ahn, 2020]] ; [[#Martiskainen--2020|Martiskainen et al., 2020]] ). Calling for enhanced climate action by governments and other societal actors, the youth movement was supported by many other societal groups and networks, including arenas of community interaction.

While the SR1.5 ( [[#de%20Coninck--2018|de Coninck et al., 2018]] ) for the first time comprehensively assessed behavioural dimensions of climate change adaptation, most literature still has a greater focus on what triggers mitigation behaviour ( [[#Lorenzoni--2014|Lorenzoni and Whitmarsh, 2014]] ; [[#Clayton--2015|Clayton et al., 2015]] ). Meanwhile, with CRD still a relatively young concept, there is little literature focused on what motivates action in pursuit of CRD rather than its sub-components of climate action and sustainable development. Nevertheless, a common motivation that is emerging in the literature is clinically significant levels of climate distress among individuals ( [[#Bodnar--2008|Bodnar, 2008]] ), which is experienced as a continuing distress over a changed landscape which no longer offers solace, also known as solastalgia ( ''high agreement'' , ''medium evidence'' ) ( [[#Albrecht--2007|Albrecht et al., 2007]] ). This is accompanied by a shift from blaming natural forces for disasters to attributing it to human negligence, which is known to lead to more acute perceptions of risk as well as more prolonged post-traumatic stress disorder (PTSD) than trauma arising from non-human causes. Improving social connections, acknowledging anxiety, reconnecting to nature and finding creative ways to re-engage are identified as ways of managing this growing anxiety ( [[#Lertzman--2010|Lertzman, 2010]] ; [[#Clayton--2017|Clayton et al., 2017]] ). Climate action in communities at various scales could fulfil many of these needs.

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'''Cross-Chapter Box INDIG | The Role of Indigenous Knowledge and Local Knowledge in Understanding and Adapting to Climate Change'''
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Authors: Tero Mustonen (Finland), Sherilee Harper (Canada), Gretta Pecl (Australia), Vanesa Castán Broto (Spain), Nina Lansbury (Australia), Andrew Okem (Nigeria/South Africa), Ayansina Ayanlade (Nigeria), Jackie Dawson (Canada), Pauline Harris (Aotearoa-New Zealand), Pauliina Feodoroff (Finland), Deborah McGregor (Canada)

Indigenous knowledge refers to the understandings, skills and philosophies developed by societies with long histories of interaction with their natural surroundings ( [[#UNESCO--2018|UNESCO, 2018]] ; [[#IPCC--2019a|IPCC, 2019a]] ). Local knowledge refers to the understandings and skills developed by individuals and populations, specific to the places where they live ( [[#UNESCO--2018|UNESCO, 2018]] ; [[#IPCC--2019a|IPCC, 2019a]] ). Indigenous knowledge and local knowledge are inherently valuable but have only recently begun to be appreciated and in western scientific assessment processes in their own right ( [[#Ford--2016|Ford et al., 2016]] ). In the past these often endangered ways of knowing have been suppressed or attacked ( [[#Mustonen--2014|Mustonen, 2014]] ). Yet these knowledge systems represent a range of cultural practices, wisdom, traditions and ways of knowing the world that provide accurate and useful climate change information, observations and solutions ( ''very high confidence'' ) (Table Cross-Chapter Box INDIG.1). Rooted in their own contextual and relative embedded locations, some of these knowledges represent unbroken engagement with the earth, nature and weather for many tens of thousands of years, with an understanding of the ecosystem and climatic changes over longer-term timescales that is held both as knowledge by Indigenous Peoples and local peoples, as well as in the archaeological record ( [[#Barnhardt--2005|Barnhardt and Angayuqaq, 2005]] ; [[#UNESCO--2018|UNESCO, 2018]] ).

Indigenous Peoples around the world often hold unique worldviews that link today’s generations with past generations. In particular, many Indigenous Peoples consider concepts of responsibility through intergenerational equity, thereby honouring both past and future generations ( [[#Matsui--2015|Matsui, 2015]] ; [[#McGregor--2020|McGregor et al., 2020]] ). This can often be in sharp contrast to environmental valuing and decision making that occurs in Western societies ( [[#Barnhardt--2005|Barnhardt and Angayuqaq, 2005]] ). Therefore, consideration of Indigenous knowledge and local knowledge needs to be a priority in the assessment of adaptation futures ( [[#Nakashima--2012|Nakashima et al., 2012]] ); [[#Ford--2016|Ford et al., 2016]] ) (Chapter 1), although adequate indigenous cultural and intellectual property rights require legal and non-legal measures for recognition and protection ( [[#Janke--2018|Janke, 2018]] ).

Indigenous knowledge and local knowledge are crucial to address environmental impacts, such as climate change, where the uncertainty of outcome is high and a range of responses are required ( [[#Mackey--2015|Mackey and Claudie, 2015]] ). However, working with this knowledge in an appropriate and ethically acceptable way can be challenging. For instance, questions of data ‘validity’ and the requirement to communicate such knowledge in the dominant language can lead to inaccurate portrayals of Indigenous knowledge as inferior to science. This may overlook the uniqueness of Indigenous knowledge and then lead to the overall devaluation of indigenous political economies, cultural ecologies, languages, educational systems and spiritual practices ( [[#Smith--2013|Smith, 2013]] ; [[#Sillitoe--2016|Sillitoe, 2016]] ; [[#Naude--2019|Naude, 2019]] ; [[#Barker--2020|Barker and Pickerill, 2020]] ). Furthermore, Indigenous knowledge is too often only sought superficially—focusing only on the ‘what’, rather than the ‘how’ of climate change adaptation and/or seen through the lenses of ‘romantic glorification’ leaving little room for the knowledge to be expressed as authored by the communities and knowledge holders themselves ( [[#Yunkaporta--2019|Yunkaporta, 2019]] ).

'''Multiple knowledge systems and frameworks'''
Indigenous knowledge systems include not only the specific narratives and practices to make sense of the world, but also profound sources of ethics and wisdom. They are networks of actors and institutions that organise the production, transfer and use of knowledge ( [[#Löfmarck--2017|Löfmarck and Lidskog, 2017]] ). There is a pluralism of forms of knowledge that emerge from oral traditions, local engagement with multiple spaces, and Indigenous cultures ( [[#Peterson--2018|Peterson et al., 2018]] ). Recognising such multiplicity of forms of knowledge has long been an important concern within sustainability science ( [[#Folke--2016|Folke et al., 2016]] ). Less dominant forms of knowledge should not be put aside because they are not comparable or complementary with scientific knowledge ( [[#Brattland--2018|Brattland and]] [[#Mustonen--2018|Mustonen, 2018]] ; [[#Mustonen--2018|Mustonen, 2018]] ; [[#Ford--2020|Ford et al., 2020]] ; [[#Ogar--2020|Ogar et al., 2020]] ). Instead, Indigenous knowledge and local knowledge can shape how climate change risk is understood and experienced, the possibility of developing climate change solutions grounded in place-based experiences, and the development of governance systems that match the expectations of different Indigenous knowledge and local knowledge holders ( ''very high confidence'' ).

Different frameworks that enable the inclusion of Indigenous knowledge have emerged from efforts to utilise more than one knowledge system ( ''robust evidence'' , ''high agreement'' ). For example, the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) has developed a ‘nature’s contribution to peoples’ framework that provides a common conceptual vocabulary and structural analysis ( [[#Díaz--2015|Díaz et al., 2015]] ; [[#Tengö--2017|Tengö et al., 2017]] ; [[#Díaz--2018|Díaz et al., 2018]] ; [[#Peterson--2018|Peterson et al., 2018]] ). The IPBES approach complements other efforts to study areas of intersection between scientific and indigenous worldviews ( [[#Barnhardt--2005|Barnhardt and Angayuqaq, 2005]] ; [[#Huaman--2015|Huaman and Sriraman, 2015]] ) or ‘boundaries’ that illustrate ‘blind spots’ in scientific knowledge ( [[#Cash--2003|Cash et al., 2003]] ; [[#Clark--2016|Clark et al., 2016]] ; [[#Brattland--2018|Brattland and]] [[#Mustonen--2018|Mustonen, 2018]] ). These frameworks highlight areas of collaboration but provide less guidance in areas where sources of evidence conflict across different knowledge systems ( [[#Löfmarck--2017|Löfmarck and Lidskog, 2017]] ). These experiences suggest that the inclusion of Indigenous knowledge and local knowledge in international assessments may transform the process of assessment of scientific, technical and socioeconomic evidence ( ''medium evidence'' , ''high agreement'' ). These knowledge systems also point to novel discoveries that may be still unknown to the scientific world but have been known by communities for millennia (Mustonen and [[#Feodoroff--2020|Feodoroff, 2020]] ).

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Cross-Chapter Box INDIG

'''The importance of free and prior-informed consent'''
Obtaining free and prior-informed consent is a necessary but not sufficient condition to engage in knowledge production with Indigenous Peoples ( [[#Sillitoe--2016|Sillitoe, 2016]] ). Self-determination in climate change assessment, response and governance is critical ( [[#Chakraborty--2021|Chakraborty and Sherpa, 2021]] ), and Indigenous Peoples are actively contributing to respond to climate change ( [[#Etchart--2017|Etchart, 2017]] ). Climate change assessment and adaptation should be self-determined and led by Indigenous Peoples, acknowledge the importance of developing genuine partnerships, respect Indigenous knowledge and ways of knowing, and acknowledge Indigenous Peoples as stewards of their environment ( [[#Country--2016|Country et al., 2016]] ; [[#Country--2018|Country et al., 2018]] ; [[#ITK--2019|ITK, 2019]] ; [[#Barker--2020|Barker and Pickerill, 2020]] ; [[#Chakraborty--2021|Chakraborty and Sherpa, 2021]] ). Supporting Indigenous Peoples’ leadership and rights in climate adaptation options at the local, regional, national and international levels is an effective way to ensure that such options are adapted to their living conditions and do not pose additional detrimental impacts to their lives ( ''very high confidence'' ). [https://www.ipcc.ch/report/ar6/wg2/chapter/chapter-18 Chapter 18] shows that the transformations required to deliver climate-resilient futures will create societal disruptions, with impacts that are most often unevenly experienced by groups with high exposure and sensitivity to climate change, including Indigenous Peoples and local communities ( [[#Schipper--2020a|Schipper et al., 2020a]] ). Climate-resilient futures depend on finding strategies to address the causes and drivers of deep inequities (Chapter 18). For example, climate-resilient futures will depend on recognising the socioeconomic, political and health inequities that often affect Indigenous Peoples (Mapfumo et al., 2016; [[#Ludwig--2018|Ludwig and Poliseli, 2018]] ) ( ''very high confidence'' ).

'''International conventions to support and utilise Indigenous knowledge and local knowledge'''
Several tools within international conventions may support instruments to develop equitable processes that facilitate the inclusion of Indigenous knowledge and leadership in climate change adaptation initiatives. The International Labour Convention 69 recognised Indigenous People’s right to self-determination in 1989 ( [[#ILO--1989|ILO, 1989]] ). The United Nations’ Declaration on the Rights of Indigenous Peoples ( [[#United%20Nations--2007|United Nations, 2007]] ) includes articles on the right to development (Article 23), the right to maintain and strengthen their distinctive spiritual relationship and to uphold responsibilities to future generations (Article 25), and the right to the conservation and protection of the environment and the productive capacity of their territories (Article 29). Article 26 upholds the right to the lands, territories and resources, the right to own, use, develop and control the lands, and legal recognition and protection of these lands, territories and resources. Indigenous Peoples are also recognised within the Sustainable Development Goals as a priority group ( [[#Carino--2019|Carino and Tamayo, 2019]] ). International events such as the ‘Resilience in a time of uncertainty: Indigenous Peoples and Climate Change’ conference brought together Indigenous Peoples’ representatives and government leaders from around the world to discuss the role of Indigenous Peoples in climate adaptation (UNESCO, 2015).

'''The value of Indigenous knowledge and local knowledge in climate adaptation planning'''
There have been increasing efforts to enable Indigenous knowledge holders to participate directly in IPCC assessment reports ( [[#Ford--2012|Ford et al., 2012]] ; [[#Nakashima--2012|Nakashima et al., 2012]] ; [[#Ford--2016|Ford et al., 2016]] ). Adaptation efforts have benefited from the inclusion of Indigenous knowledge and local knowledge ( [[#IPCC--2019e|IPCC, 2019e]] ) ( ''very high confidence'' ). Moreover, it has been recognised that including Indigenous knowledge and local knowledge in IPCC reports can contribute to overcoming the combined challenges of climate change, food security, biodiversity conservation, and combating desertification and land degradation ( [[#IPCC--2019c|IPCC, 2019c]] ) ( ''high confidence'' ). Limiting warming to 1.5°C necessitates building the capability of formal assessment processes to respect, include and utilise Indigenous knowledge and local knowledge ( [[#IPCC--2018a|IPCC, 2018a]] ) ( ''medium evidence'' , ''high agreement'' ).

However, these efforts have been accompanied by a recognition that ‘integration’ of Indigenous knowledge and local knowledge cannot mean that those knowledge systems are subsumed or required to be validated through typical scientific means ( [[#Gratani--2011|Gratani et al., 2011]] ; [[#Matsui--2015|Matsui, 2015]] ). Such a critique of ‘validity’ can be inappropriate, unnecessary, can disrespect Indigenous Peoples’ own identities and histories, limits the advancement and sharing of these perspectives in the formal literature, and overlooks the structural drivers of oppression and endangerment that are associated with Western civilisation ( [[#Ford--2016|Ford et al., 2016]] ). Moreover, by underutilising Indigenous knowledge and local knowledge systems, opportunities that could otherwise facilitate effective and feasible adaptation action can be overlooked. We should also reserve space for the understanding that each cultural knowledge system, building on linguistic-cultural endemicity, is unique and inherently valuable.

Indigenous Peoples have often constructed their ways of knowing using oral histories as one of the vehicles of mind and memory, observance, governance and maintenance of customary law (Table Cross-Chapter Box INDIG.2). These ways of knowing can also incorporate the relationships between multiple factors simultaneously which adds particular value towards understanding complex systems that is in contrast to the dominant reductionist, Western approach, noting that non-reductionist approaches also exist ( [[#Ludwig--2014|Ludwig et al., 2014]] ; [[#Hoagland--2017|Hoagland, 2017]] ).

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Cross-Chapter Box INDIG

For climate research, the role of oral histories as a part of Indigenous knowledge and local knowledge is extremely relevant. For example, ocean adaptation initiatives can be guided by oral historians and keepers of knowledge who can convey new knowledge and baselines of ecosystem change over long-time frames ( [[#Nunn--2016|Nunn and Reid, 2016]] ). Oral histories can also convey cultural indicators and linguistic devices of species identification as a part of a local dialect matrix, and changes in ecosystems and species using interlinkages not available to science ( [[#Mustonen--2013|Mustonen, 2013]] ; [[#Frainer--2020|Frainer et al., 2020]] ). Oral histories attached to maritime place names, especially underwater areas ( [[#Brattland--2011|Brattland and Nilsen, 2011]] ), can position observations relevant for understanding climate change over long ecological timeframes ( [[#Nunn--2016|Nunn and Reid, 2016]] ). Species abundances, well-being and locations are some of the examples present in the ever-evolving oral histories as living ways of knowing. Indigenous knowledge and oral histories may also have the potential to convey governance, moral and ethical frameworks of sustainable livelihoods and cultures ( [[#Mustonen--2020|Mustonen and Shadrin, 2020]] ) rooted in the particular Indigenous or local contexts that are not otherwise available in written or published forms.

Climate change research involving Indigenous Peoples and local communities has shown that the generation, innovation, transmission and preservation of Indigenous knowledge is threatened by climate change ( [[#Kermoal--2016|Kermoal and Altamirano-Jiménez, 2016]] ; [[#Simonee--2021|Simonee et al., 2021]] ). This is because Indigenous knowledge is taught, local knowledge is gained through experience, and relationships with the land are sustained through social engagement within and among families, communities and other societies (Tobias J.K, 2014; [[#Kermoal--2016|Kermoal and Altamirano-Jiménez, 2016]] ). The knowledge that has traditionally been passed on in support of identity, language and purpose has been disrupted at an intergenerational level ( [[#Lemke--2017|Lemke and Delormier, 2017]] ). Many of these dynamics have affected local knowledge transfers equally ( [[#Mustonen--2013|Mustonen, 2013]] ). This scenario represents a tension for Indigenous Peoples, where Indigenous knowledge in the form of land-based life ways, languages, food security, intergenerational transmission and application are threatened by climate change, yet in parallel, these same practices can enable adaptation and resilience ( [[#McGregor--2020|McGregor et al., 2020]] ).

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Cross-Chapter Box INDIG

'''Table Cross-Chapter Box INDIG.1 |''' Examples of Indigenous knowledge and local knowledge about climate change used in this Assessment Report

{| class="wikitable"
|-
! '''Issue'''

! '''Examples of Indigenous Peoples’ and local communities’ action'''

! '''Context, peoples and location'''

! '''Source'''

|-
| rowspan="4"| Climate forecasting/early warning

| Phenological cues to forecast and respond to climate change

| Smallholder farmers, Delta State, Nigeria

| rowspan="2"| Chapter 9

|-
| Forecasting of weather and climate variation through observation of the natural environment (e.g., changes in insects and wildlife).

| Afar pastoralists, north-eastern Ethiopia

|-
| Observation of wind patterns to plan response to coastal erosion/flooding

| Inupiat, Alaska, USA

| Chapter 14

|-
| Sky and moon observation to determine the onset of rainy season

| Maya, Guatemala

| Chapter 12

|-
| Fire hazards

| Prescribed burning

| Indigenous nations in Venezuela, Brazil, Guyana, Canada and USA

| Chapter 12

Chapter 14

|-
| rowspan="3"| Crop yield/food security

| Water management, native seeds conservation and exchange, crop rotation, polyculture and agroforestry

| Mapuche, Chile

| Chapter 12

|-
| Crop association (milpa) agroforestry, land preparation and tillage practices, native seed selection and exchange, adjusting planting calendars

| Maya, Guatemala

| Chapter 12

|-
| Harvesting rainwater and the use of maize landraces by Indigenous farmers to adapt to climate impacts and promote food security in Mexico

| Yucatán Peninsula, Mexico

| Chapter 14

|-
| Livelihood and well-being

| Cultural values ingrained in knowledge system: reciprocity, collectiveness, equilibrium and solidarity

| Quechua, Cusco, Peru

| Chapter 12

|-
| rowspan="3"| Ecosystem degradation

| Ecosystem restoration including rewilding

| Sámi, Nenets, and Komi, Scandinavia and Siberia

| Chapter 13

|-
| Collaboration with researchers, foresters and landowners to manage native black ash deciduous trees against emerald ash borer

| Indigenous Nations in Canada and USA

| Chapter 14

|-
| Selection and planting of native plants that reduce erosion

Whole-of-island approaches that embed Indigenous knowledge and local knowledge in environmental governance

| Small Islands States (as defined by Chapter 15)

| Chapter 15

|-
| Fisheries

| Traditional climate-resilient fishing approaches

| Indigenous nations across North America and the Arctic

| Chapter 14

CCP6

|-
| Management of urban resources

| Restoration of traditional network of water tanks

| Traditional communities and activists in South Indian cities such as Bengaluru

| Chapter 6

|}

'''Table Cross-Chapter Box INDIG.2 |''' Case study summary

{| class="wikitable"
|-
! '''Region'''

! '''Summary'''

|-
| '''Africa'''

| Many rural smallholder farmers in Africa use their ingrained Indigenous knowledge systems to navigate climatic changes as many do not have access to Western systems of weather forecasting. Instead, these farmers have been reported to use observations of clouds and thunderstorms, and migration of local birds to determine the start of the wet season, as well as create temporary walls by rivers to store water during droughts. Indigenous knowledge systems should be incorporated into strategic plans for climate change adaptation policies to help smallholder farmers cope with climate change (Mapfumo et al., 2016).

|-
| '''Arctic'''

| For local Inuit hunters and others who travel across Arctic land, ice and sea, there is evidence that the most accurate approach to reduce risk and enable informed decision making for safe travel is to combine Indigenous knowledge and local observations of weather with official online weather and marine services information that is available nationally ( [[#Simonee--2021|Simonee et al., 2021]] ). Combining Inuit and local knowledge of weather, water, ice and climate information with official forecasts has provided local hunters with more accurate, locally relevant information, and has on several occasions helped to avoid major weather-related accidents.

|-
| '''Latin America'''

| In Venezuela, Brazil and Guyana, Indigenous knowledge systems have led to a lower incidence of wildfires, reducing the risk of rising temperatures and droughts ( [[#Mistry--2016|Mistry et al., 2016]] ). The Mapuche Indigenous Peoples in Chile use various traditional and sustainable agricultural practices, including native seed conservation and exchange ( ''trafkintu'' ), crop rotation, polyculture and tree-crop association. They also give thanks to Mother Earth through rituals to nurture socio-ecological sustainability ( [[#Parraguez-Vergara--2018|Parraguez-Vergara et al., 2018]] ). In the rural Cusco Region of Peru, ‘cultures values known in Quechua as ''ayni'' (reciprocity), ''ayllu'' (collectiveness), ''yanantin'' (equilibrium) and ''chanincha'' (solidarity)’ have led to successful adaptation to climate change ( [[#Walshe--2016|Walshe and Argumedo, 2016]] ).

|-
| '''Māori'''

'''(Aotearoa New Zealand)'''

| The traditional calendar system ( ''maramataka'' ) used by the Māori in Aotearoa, New Zealand, incorporates ecological, environmental and celestial Indigenous knowledge. Māori practitioners are collaborating with scientists through the Effect of Climate Change on Traditional Māori Calendars project (Harris et al., 2017) to examine if climatic changes are impacting the use of the ''maramataka'' , which can be used as a framework to identify and explain environmental changes. Observations are being documented across Aotearoa, New Zealand to improve understandings of environmental changes and explore the use of Indigenous Māori knowledge in climate change assessment and adaptation.

|-
| '''Skolt Sámi (Finland)'''

| In 2011, the Skolt Sámi in Finland began the first co-governance initiative where collaborative management and Indigenous knowledge were utilised to effectively manage a river and Atlantic Salmon ( ''Salmo salar'' ). This species is culturally and spiritually significant to the Skolt Sámi and has been adversely impacted by rising water temperatures and habitat loss ( [[#Brattland--2018|Brattland and]] [[#Mustonen--2018|Mustonen, 2018]] ; [[#Feodoroff--2020|Feodoroff, 2020]] ; [[#Ogar--2020|Ogar et al., 2020]] ) (see also CCP Polar). Using Indigenous knowledge, they mapped changes in catchment areas and used cultural indicators to determine the severity of changes. Through collaborative management efforts that utilised both Indigenous knowledge and science, spawning and juvenile habitat areas for trout and grayling were restored, demonstrating the autonomous community capacity ( [[#Huntington--2017|Huntington et al., 2017]] ) of the Indigenous Skolt Sámi and the capacity of Indigenous knowledge to address climate change impacts and detection of very first microplastics pollution together with science ( [[#Pecl--2017|Pecl et al., 2017]] ; [[#Brattland--2018|Brattland and]] [[#Mustonen--2018|Mustonen, 2018]] ; Mustonen and [[#Feodoroff--2020|Feodoroff, 2020]] ).

|}

Cross-Chapter Box INDIG

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'''Box 18.7 | Macroeconomic Policies in Support of Climate Resilient Development'''
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Climate change risk may differ from other economic and financial risks in a number of ways: climate change is global; it involves long-term impacts and a great deal of uncertainty; and it has the possibility of irreversible change ( [[#Hansen--2021|Hansen, 2021]] ). The macroeconomic implications will differ across countries, with less developed countries likely to suffer more relative to more advanced ones ( [[#Batten--2018|Batten, 2018]] ). Hence, policymakers need to understand the impact of climate change on macroeconomic issues such as potential output growth, capital formation, productivity and long-run levels of interest rates, in order to better design policy interventions, be it monetary or fiscal ( [[#Economides--2018|Economides and Xepapadeas, 2018]] ; [[#Bank%20of%20England--2019|Bank of England, 2019]] ; [[#Rudebusch--2019|Rudebusch, 2019]] ). As discussed, below are a range of fiscal tools that can be leveraged to mitigate the effects of climate change ( [[#Krogstrup--2019|Krogstrup and Oman, 2019]] ).

'''Monetary Policy'''
Changes in climate and subsequent policy responses could increase volatility of food and energy prices, resulting in higher headline inflation rates. Thus, Central Banks (CBs) have to pay careful attention to underlying inflationary factors to maintain their inflationary targets. In response, CBs can take a number of actions. For example, they could require that collateral comprises assets that support the move to low-carbon economy, or their refinancing operations and crisis facilities could incentivise borrowers’ move to low-carbon activities, particularly in countries where CBs’ mandate has been expanded to account for climate impact ( [[#Papoutsi--2021|Papoutsi et al., 2021]] ). Other actions that CBs could take include adoption of sustainable and responsible investment principles ( [[#Rudebusch--2019|Rudebusch, 2019]] ) and requiring financial firms to disclose their climate-related risks ( [[#ECB--2020|ECB, 2020]] ; [[#Lee--2020|Lee, 2020]] ). Despite these opportunities, there is ongoing debate regarding whether CBs should actively use monetary policy to address climate change and its risks ( [[#Honohan--2019|Honohan, 2019]] ).

'''Fiscal Policy'''
The application of green fiscal policies to address climate change could lead to environmental benefits, including environmental revenues that may be used for broader fiscal reforms ( [[#OECD--2021|OECD, 2021]] ). As the USA aims at becoming carbon neutral by 2050, fiscal policies at the national, sectoral and international level can help to achieve this goal, along with investment, regulatory and technology policies ( [[#Parry--2021|Parry, 2021]] ). The effectiveness of green fiscal policies are through their fiscal potential, opportunities for efficiency gains, distributional and macroeconomic impacts, and their political economy implications ( [[#Metcalf--2016|Metcalf, 2016]] ). The International Monetary Fund argues public support for green policies may rise in response to the COVID-19 crisis ( [[#IMF--2017|IMF, 2017]] ). For example, [[#Leibenluft--2020|Leibenluft (2020)]] argues that investments to combat climate change should be an important component of the efforts to rebuild the economy in the wake of COVID-19. Such action is justified not only on ecological and social welfare grounds, but from a long-term fiscal perspective. For example, climate change impacts and/or efforts to adapt to those impacts drive increased spending in areas such as public health and disaster mitigation or response. Preventive and corrective actions would strengthen resilience to shocks and alleviate the financial constraints they create, particularly for small countries ( [[#Catalano--2020|Catalano et al., 2020]] ). For example, Mallucci (2020) found that natural disasters exacerbate fiscal vulnerabilities and trigger sovereign defaults in seven Caribbean countries. [[#Ryota--2019|Ryota (2019)]] illustrates how to include natural disaster and climate change in a fiscal policy framework to developing countries.

'''Carbon Pricing'''
Pricing of GHGs, including carbon, is a crucial tool in any cost-effective climate change mitigation strategy, as it provides a mechanism for linking climate action to economic development (IMF/ [[#OECD--2021|OECD, 2021]] ). By 2019, 57 nations around the world had implemented or scheduled implementation of carbon pricing. These initiatives cover 11 gigatons of carbon dioxide or about 20% of GHG emissions. Carbon prices in existing initiatives range between USD 1 and USD 127 per ton of carbon dioxide, while 51% of the emissions that are covered are priced more than USD 10 per ton of carbon dioxide. Moreover, in 2018, Governments raised about USD 44 billion in carbon pricing revenues (World Bank, 2019). However, the carbon prices are lower than the levels required for attaining the ambitious goal of climate change mitigation, and therefore, prices would need to increase if pricing alone is going to be used to drive compliance with the Paris Agreement. Higher carbon prices would also be warranted if prices are based on the social cost of carbon, which represents the present value of the marginal damage to economic output caused by carbon emissions ( [[#Cai--2018|Cai and Lontzek, 2018]] ). This cost needs to be considered with the social benefits of reducing carbon emissions through cost-benefit analyses to make the intended regulation acceptable.

'''Taxes'''
Carbon taxes represent another financial mechanism for addressing climate change ( [[#Metcalf--2019|Metcalf, 2019]] ), 2019b). For example, the implementation of a carbon tax and a value-added tax on transport fuel in Sweden resulted in a reduction of CO 2 emissions from transport of about 11%, of which the carbon tax had the largest share ( [[#Andersson--2019|Andersson, 2019]] ). In the USA, for example, a carbon tax could increase fiscal flexibility by collecting new revenues that can be redeployed to finance reforms and help stimulate economic growth. However, US tax-inclusive energy prices would have to be 273% higher than laissez-faire levels in 2055 in order to meet international agreements ( [[#Casey--2019|Casey, 2019]] ). Similarly, limiting global warming to 2°C or less would likely require a carbon tax rate in the Asia/Pacific region to be significantly higher than USD 25 per ton ( [[#IMF--2021|IMF, 2021]] ). Therefore, using tax revenues to issue payments back to taxpayers that are disproportionately impacted, or to redistribute capital among regions, may be one of the most important features of carbon tax policies. Although the average effect of carbon tax on welfare would be positive, some regions (56%) will gain and some regions (44%) lose ( [[#Scobie--2013|Scobie, 2013]] ). Therefore, large transfer payments are needed to compensate those losing from carbon tax ( [[#Krusell--2018|Krusell and Smith, 2018]] ).The International Monetary Fund ( [[#IMF--2019|IMF (2019)]] argues that, of the various mitigation strategies to reduce fossil fuel CO 2 emissions, carbon taxes are the most powerful and efficient, because they allow firms and households to find the lowest-cost ways of reducing energy use and shifting towards cleaner alternatives.

'''Subsidies'''
The World Bank has been encouraging both developed and developing states, especially those with petroleum reserves, to use the removal of subsidies as a mechanism for promoting energy transitions away from fossil fuels. The transition has led to social unrest in some cases, especially where there is a culture of entitlement to low-cost energy because it is an indigenous resource. Such reforms have been more effective when governments have been able to clearly show how savings are applied to social and health programs that benefit human well-being. Nevertheless, policymakers should not underestimate the complexity of issues involved in the removal of subsidies that will increase the cost of carbon and hasten the transition to cleaner fuels ( [[#Scobie--2017|Scobie, 2017]] ; [[#Scobie--2018|Scobie et al., 2018]] ; [[#Chen--2020a|Chen et al., 2020a]] ). A crucial issue to take into account is the harmful effects some subsidies have on biodiversity. Although governments agreed in 2010 to make progress on reducing subsidies in 2010, by 2020 few governments had identified specific incentives to remove or taken action towards their removal. Further investigation of the positive and negative effects of subsidy redirection or elimination on people and the environment ( [[#Dempsey--2020|Dempsey et al., 2020]] ).

<div id="18.4.4" class="h2-container"></div>

<span id="frontiers-of-climate-action"></span>
=== 18.4.4 Frontiers of Climate Action ===

<div id="h2-16-siblings" class="h2-siblings"></div>

After decades of limited government action and social inertia to reduce the risk of climate change, there is also increasing social dissent towards the current political, economic and environmental policies to address climate ( [[#Brulle--2019|Brulle and Norgaard, 2019]] ; [[#Carpenter--2019|Carpenter et al., 2019]] ). Social movements are demanding radical action as the only option to achieve the mobilisation necessary for deep societal transformation ( ''very high confidence'' ) ( [[#Hallam--2019|Hallam, 2019]] ; Berglund and Schmidt, 2020).

Prompted by SR1.5, new youth movements seek to use science-based policy to break with incremental reforms and demand radical climate action beyond emissions reductions ( [[#Hallam--2019|Hallam, 2019]] ; [[#Klein--2020|Klein, 2020]] ; [[#Thackeray--2020|Thackeray et al., 2020]] ; [[#Thew--2020|Thew et al., 2020]] ). Recent social movements and climate protests embrace new modalities of action related to political responsibility for climate injustice through disruptive collective political action ( [[#Young--2003|Young, 2003]] ; [[#Langlois--2014|Langlois, 2014]] ). This is complemented by a regenerative culture and ethics of care ( [[#Westwell--2020|Westwell and Bunting, 2020]] ). These new social movements are based on non-violent methods of resistance, including actions classified as dutiful, disruptive and dangerous dissent ( [[#O’Brien--2018|O’Brien, 2018]] ).

The new climate movement mixes messages of fear and hope to propel urgency and the need to respond to a climate emergency ( [[#Gills--2020|Gills and Morgan, 2020]] ). While some consider the mix between fear and hope as beneficial to success, depending on psychological factors ( [[#Salamon--2019|Salamon, 2019]] ) or political geography ( [[#Kleres--2017|Kleres and Wettergren, 2017]] ), others warn of the risks of a rhetoric of emergency and its political outcomes (Hulme and Apollo-University Of Cambridge Repository, 2019; [[#Slaven--2020|Slaven and Heydon, 2020]] ).

Research shows that new climate movements have increased public awareness, and also stimulated unprecedented public engagement with climate change ( ''very high confidence'' ) ( [[#Lee--2020|Lee et al., 2020]] ; [[#Thackeray--2020|Thackeray et al., 2020]] ) and has helped rethink the role of science with society ( [[#Isgren--2019|Isgren et al., 2019]] ). Such movements may represent new approaches to accelerate social transformation and have resulted in notable political successes, such as declarations of climate emergency at the national and local level, as well as in universities. Their methods have also proven effective to end fossil fuel sponsorship ( [[#Piggot--2018|Piggot, 2018]] ). Social demands for radical action are likely to continue to grow, as there is growing discontent with political inertia and a rejection of reformist positions ( [[#Stuart--2020|Stuart et al., 2020]] ).

<div id="box-18.8:-the-role-of-the-private-sector-in-climate-resilient-development-via-climate-finance,-investments-and-innovation" class="h2-container box-container"></div>

'''Box 18.8: The Role of the Private Sector in Climate Resilient Development via Climate Finance, Investments and Innovation'''
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Climate finance broadly refers to resources that catalyse low-carbon and climate resilient development. It covers the costs and risks of climate action, supports an enabling environment and capacity for adaptation and mitigation, and encourages research and development (R&amp;D) and deployment of new technologies. Climate finance can be mobilised through a range of instruments from a variety of sources, international and domestic, public and private ( [[#18.4.2.2|Section 18.4.2.2]] ).

The private sector has particular competencies which can make significant contributions to adaptation, through innovative technology, design of resilient infrastructure, development and implementation of improved information systems, and the management of major projects. The private sector can be seen as a ‘supplier of innovative goods and services’ to meet the adaptation priorities of developing countries with expertise in technology and service delivery ( [[#Biagini--2013|Biagini and Miller, 2013]] ).

Future investment opportunities in climate resilient development (CRD) are in water resources, agriculture and environmental services. Provision of clean water is another opportunity, requiring investment in water purification and treatment technologies such as desalination and wastewater treatment. Weather and climate services are a possible area for private investment. ( [[#Hov--2017|Hov et al., 2017]] ; [[#Hewitt--2020|Hewitt et al., 2020]] ).

<div id="18.5" class="h1-container"></div>

<span id="sectoral-and-regional-synthesis-of-climate-resilient-development"></span>