Investing in climate mitigation
Dr. Charles Donovan, Director of the Centre for Climate Finance and Investment at Imperial College Business School, said: "Our work demonstrates that climate change is not only imposing economic and social costs on developing countries, but it is also amplifying existing risks that are already priced in fixed income markets. These impacts will grow.
"The good news is that investments in climate adaptation can not only reduce social, ecological and economic harm but can buffer against fiscal impairments. But to be effective, these investments need to be made now."
Investments in effective climate mitigation and adaptation projects could include planting trees and building dikes for coastal protection in countries such as Bangladesh, Barbados, Cambodia, Fiji, Haiti, Honduras, Sri Lanka and Vietnam.
The research identifies several market and policy initiatives that could play a role in reducing the burden. The researchers found that to be effective from a financial perspective, climate adaptation initiatives must accomplish at least one of three imperatives: reduce the total economic costs of the impact of climate change, improve the speed of economic recovery and/or cost-effectively transfer climate-related financial risks.
The study was commissioned by the UN Environment with financial support from MAVA Foundation and prepared by the Centre for Climate Finance and Investment at Imperial College Business School and SOAS University of London. It is the first study to explore the relationship between climate vulnerability, sovereign credit profiles and the cost of capital in developing countries.
Source: Phys.Org | 2 July 2018