Early investment can save Bangladesh $11.6b by 2030

A timely investment of $1.2 billion to withstand the impact of climate change could save Bangladesh $11.6 billion — nearly 10 times the amount — in projected damages and lost GDP growth by 2030, according to a new study by Standard Chartered.

The study was conducted on 10 emerging markets, including Bangladesh, China, Egypt, India, Indonesia, Kenya, Nigeria, Pakistan, the United Arab Emirates and Vietnam, said a press release issued on Sunday.

The Adaptation Economy, which investigates the need for climate adaptation investment in these markets, revealed that without investing a minimum of $30 billion in adaptation by 2030, the 10 markets together could face projected damages and lost GDP growth of $377 billion — over 12 times the amount.

The $30 billion investment required for adaptation represents only slightly more than 0.1 per cent of the combined annual GDP of the 10 markets in the study and much less than the estimated $95 trillion emerging markets require to transition to net zero using mitigation measures, as outlined in Standard Chartered’s Just in Time report.

The projection has been made assuming that the world will be able to limit the global temperature rise to 1.5°C in line with the Paris Agreement.

In a 3.5°C scenario, the estimated minimum investment required more than doubles to $62 billion and potential losses escalate dramatically if the investment is not made.

Examples of climate adaptation projects include the creation of coastal barrier protection solutions for areas vulnerable to flooding, the development of drought-resistant crops and early-warning systems against pending natural disasters, according to the study.

The investment required is calculated by estimating future climate damages, consulting a range of external sources, and then considering the costs to abate those damages, said the press release.

Also, the economic benefit figures are calculated using a combination of the future damages avoided by the adaptation measures and the indirect economic impact of the investment of the activity on GDP.

Bitopi Das Chowdhury, head of corporate affairs, brand and marketing at Standard Chartered Bangladesh, said for Bangladesh, failure to invest in adaptation this decade can lead to significant lost opportunities for growth. “This report is another timely reminder that the time for us to act is now.”

Marisa Drew, chief sustainability officer at Standard Chartered, said, “This report makes it clear that irrespective of efforts to keep global warming as close to 1.5°C as possible we are going to have to incorporate climate-warming effects into our systems and adapt to its reality.”

Among the 10 markets in the study, India would require an estimated $11 billion to prevent climate damages and lost growth of $135.5 billion.

Meanwhile, China could avoid an estimated cost of $112 billion by investing just $8 billion, said the study.

The Adaptation Economy also surveyed 150 bankers, investors and asset managers and found that, currently, just 0.4 per cent of the capital held by respondents is allocated to adaptation in emerging markets where investment is needed most. However, 59 per cent of respondents plan to increase their adaptation investments over the next 12 months. And on average, adaptation financing is expected to go up from 0.8 per cent of global assets in 2022 to 1.4 per cent by 2030.