Editing IPCC:AR6/WGII/Chapter-10 (section)

==== 10.5.4.2 Findings ====

<div id="h3-41-siblings" class="h3-siblings"></div>

Climate change can cause significant impacts and as a result can impose considerable adaptation costs on countries and people. Despite the importance, the research on adaptation costs is limited in Asia, especially on the economy-wide costs, while fragmented literature is available on sector-level adaptation costs. Most of the available literature on adaptation costs at the regional level originate from the work carried out by development finance institutions such as ADB.

Estimates suggest that climate-change impacts could result in a loss of 2% of the GDP of South Asian countries by 2050 and 9% by 2100 ( [[#Ahmed--2014|Ahmed and Suphachalasai, 2014]] ). These impacts will be felt in major vulnerable sectors, including agriculture, water, coastal, marine, health and energy, and will have significant impact on the economic growth and poverty reduction in the region. Countries could differ widely in terms of the economic costs they face. In South Asia, the economic costs were projected to be 12.6% of the GDP for the Maldives, which is the highest among the South Asian countries, and 6.6% for Sri Lanka, the least among the South Asian countries. The resultant adaptation costs for countries were projected to range from 0.36% (Copenhagen Cancun Scenario for 2050) to 1.32% (business-as-usual scenario) of the GDP in various scenarios during 2010–2050 ( ''Medium agreement'' , ''limited evidence'' ) ( [[#Ahmed--2014|Ahmed and Suphachalasai, 2014]] ).

[[#Arto--2019|Arto et al. (2019)]] have reported the adaptation costs of the Mahanadi Delta in India for agriculture, fisheries and infrastructure sectors ( [[#Arto--2019|Arto et al., 2019]] ). The cumulative adaptation costs for 2015–2016 were reported to be 276 million USD for agriculture and 0.163 million USD for fisheries. In comparison, the modelled cumulative agricultural GDP loss due to climate-change impacts was reported to be 5% up to 2050, and 8% for infrastructure. Adaptation interventions, such as embankments, were found to provide an avoided losses (adaptation benefits) to the tune of 2.2% of the delta’s GDP by 2050. Similarly, input subsidies in seeds, fertilisers and biofertilisers were found to buffer the shocks in agriculture by 10%, and buffer the GDP per capita by 3% ( [[#Arto--2019|Arto et al., 2019]] ).

[[#Markandya--2019|Markandya and González-Eguino (2019)]] have estimated the adaptation costs and residual adaptation costs accrued due to insufficient adaptation using integrated assessment models. Using the residual damages as a measure of loss and damage, the authors have estimated adaptation costs and residual costs under scenarios of high damages–low discount rate and low damages–high discount rate. The estimates suggested adaptation costs of 182 and 193 billion USD by 2050, and 737 and 783 billion USD by 2100 for South Asia and East Asia, respectively, under the scenario of high damages–low discount rate. The residual costs for the same scenario were 289 and 76% for 2050 and 238 and 62% for 2100 for South Asia and East Asia, respectively. Estimates for low damages–high discount rate were significantly lower adaptation costs and residual costs for both of these sub-regions of Asia.

The CCA efforts can be characterised as fragmented, incoherent and lacking perspective ( [[#Ahmed--2019a|Ahmed et al., 2019a]] ), and the picture on adaptation financing can be stated as similarly fragmented with very limited literature published in peer-reviewed journals. Adaptation financing is crucial for supporting vulnerable countries and enhances adaptation, as it is evident that the enhanced adaptation finance support has positively affected the pace of adaptation in low-income countries ( [[#Ford--2015|Ford et al., 2015]] ). At the organisational level, adaptation financing has provided multiple functions that include risk assessment functions, valuation functions and risk disclosure functions ( [[#Linnenluecke--2016|Linnenluecke et al., 2016]] ).

Of the total global public adaptation finance of 28 billion USD, East Asia and the Asia–Pacific attracted 46% of the total funding, while South Asian countries attracted only 9% of the total funding ( [[#UNEP--2016|UNEP, 2016]] ). These differences reflect the capacity of countries to attract adaptation finance. Some of the important adaptation-targeted climate funds are Pilot Programmes for Climate Resilience, Green Climate Fund, and Least-Developed Countries Fund, and South Asian countries have significantly benefited from these dedicated climate funds. Due to the disaster implications of climate change, there is a need to allocate adaptation finances for DRR. Estimates suggest that East Asia and the Asia–Pacific in general allocated 27% of the total adaptation funds to DRR, while South Asia allocated 25% ( [[#Caravani--2016|Caravani, 2016]] ). Low-income economies tend to allocate more adaptation funds to DRR (46%), while lower-middle-income economies allocated 22%.

The least developed countries lack the capacity to adapt to climate change and the Least Developed Country Fund (LDCF) has made significant contributions to adaptation in these countries ( ''High agreement, limited evidence'' ). Based on the interview-based field research in four least developed countries, Sovacool et al. (2017) opined that the LDCF projects are contributing to the adaptive capacity of these countries ( [[#Sovacool--2017|Sovacool et al., 2017]] ). They also found that these projects are taking a marginal approach, rather than a radical or transformational one, to adaptation.

[[#Kissinger--2019|Kissinger et al. (2019)]] have estimated the climate financing needs in the land sector under the Paris Agreement. The estimates suggested adaptation needs of 2.5 billion USD for Bangladesh, 40.5 million USD for Lao PDR and 31 million USD for Mongolia, for the forest sector alone ( ''Low agreement, limited evidence'' ).

Financing green growth and low-carbon development can provide resilience benefits ( ''high agreement'' , ''limited evidence'' ). Kameyama et al. (2016) have estimated the cost of low-carbon investments that can provide resilience benefits in Asia and reported that such low-carbon development will cost in the range of 125–149 billion USD annually. A combination of public, private, bilateral and multilateral funding sources, and carbon-market offsets, were suggested to achieve this level of funding. In terms of the total resources available, a combination of public, private and bi- and multi-lateral funding could help the region to raise as much as 222.3–412.5 billion USD annually, with a possibility to reach higher amounts depending on the future economic growth of countries in the region. Soil carbon sequestration in agricultural soils was found to be a win–win solution for both mitigation and adaptation as it can help improve soils while increasing farm yields and incomes of smallholders ( [[#Aryal--2020a|Aryal et al., 2020a]] ).

New adaptation financing sources have been emerging which could provide country-specific adaptation financing suiting local-level adaptation needs in Asia. The newly established Asia Infrastructure Investment Bank (AIDB), and newly emerging developing-country finance institutions, are known to provide an additional adaptation finance ( [[#Neufeldt--2018|Neufeldt et al., 2018]] ); however, despite these emerging financial sources, the region will fall short of the adaptation target in the Paris Agreement ( [[#Neufeldt--2018|Neufeldt et al., 2018]] ).

<div id="10.5.4.3" class="h3-container"></div>

<span id="knowledge-gaps-1"></span>