The Economics of Climate-Resilient Development
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The Economics of Climate-Resilient Development

Edited by Sam Fankhauser and Thomas K.J. McDermott

Some climate change is now inevitable and strategies to adapt to these changes are quickly developing. The question is particularly paramount for low-income countries, which are likely to be most affected. This timely and unique book takes an integrated look at the twin challenges of climate change and development. The book treats adaptation to climate change as an issue of climate-resilient development, rather than as a bespoke set of activities (flood defences, drought plans, and so on), combining climate and development challenges into a single strategy. It asks how the standard approaches to development need to change, and what socio-economic trends and urbanisation mean for the vulnerability of developing countries to climate risks. Combining conceptual thinking with practical policy prescriptions and experience the contributors argue that, to address these questions, climate risk has to be embedded fully into wider development strategies
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Chapter 5: Locking in climate vulnerability: where are the investment hotspots?

Simon Dietz, Charlie Dixon and John Ward

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5. Locking in climate vulnerability: where are the investment hotspots? Simon Dietz, Charlie Dixon and John Ward 5.1 INTRODUCTION Hundreds of billions of dollars are invested annually in countries vulner able to climate variability and change. In 2013, gross investment in the Least Developed Countries totalled about $205 billion, for instance, or about 25 per cent of their gross domestic product (GDP) (World Bank, 2014c). These countries, and others that support them, have a strong interest in ensuring investment is resilient to climate change. The most straightforward concern is that the direct economic, social and environmental returns on investment could be negatively affected by climate change. But, in addition, there is a concern that some investments could indirectly increase climate vulnerability (Klein et al., 2007), for example, road building that attracts development to vulnerable areas. From the point of view of ex ante appraisal, climate- esilient investment r is easier in some cases than others. Sometimes the primary purposes of the investment are well aligned with building resilience to climate change, for example, where the investment is intended to reduce vulnerability to current climate variability and this increases resilience to future climatic conditions too, or where the investment is intended to reduce poverty and this reduces climate vulnerability (McGray et al., 2007). In other cases, the project duration is just too short to make future climate a central concern. But some investments are long- ived and their net present value depends l on returns over many years, for instance, various...

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