Respecting Mother Nature – the urgent need for climate adaptation

As a child growing up in Naples, Campi Flegrei was a particularly exciting place for me to visit. The site is a vast caldera, beneath which is a huge reservoir of magma and the steaming fumaroles are a constant reminder of the importance of respecting nature’s boundaries.  

That respect is warranted because Campi Flegrei hit the headlines recently, due to intensified seismic activities. The Italian government has made some preparations by earmarking 52 million euros for risk assessment, prevention and ex-ante disaster risk reduction. Indeed, it's better to build resilience against the destructive forces of nature rather than pay the human and economic price of lack of preparation. That's how we are helping the Swiss Government in enhancing operational preparedness against quake risk, and the Turkish and Morocco earthquake prefinancing schemes.

Whilst earthquakes occur along the earth's fault lines, similarly destructive weather-related events such as hurricanes, floods and droughts – start to show less predictable patterns and continue to increase in frequency and severity as our climate warms. These climatic natural disasters caused global economic losses of USD 275 billion in 2022 and this upward trend is expected to continue as urbanisation, property development and economic growth will increase the economic value at risk and number of lives exposed. Addressing vulnerability in our built environment has become a pressing priority.  

For example, in Australia, the 2011 Brisbane floods damaged over 420,000 buildings and homes. 10 years later, the landscape around the river has been adapted with 'floating ferry stops', raised living spaces and improved stormwater management systems. This has increased the city's flood resilience and also created a more attractive precinct for residents, businesses and tourists.  

Such examples of climate adaptation also highlight the importance of updating building code standards, in reducing the impact of the risk, as our retrospective on Hurricane Ian illustrates. Meaningful strides have been made on climate mitigation; collaborations such as the WEF Alliance of CEO Climate Leaders, where member organisations have in aggregate achieved a 10% emissions reduction between 2019 and 2021goes to illustrate the power of working together. But since our planet has already grown warmer, mitigation efforts aimed at cutting future emissions won't be enough. In parallel, society must redirect trillions of dollars to finance transformative climate adaptation actions  to make our world more resilient now, and be prepared for the future climate risk.

The public sector plays a central role in catalysing and enabling adaptation initiatives, in collaboration with other parties who can then further scale, maintain and embed the appropriate management actions. And the insurance industry can support the business case for climate adaptation.

For example, Swiss Re and other insurers have been working with Zep Re and the World Bank, on the DRIVE project. Here the aim is to enable pastoralists living in the horn of Africa countries to adapt to the changing climate, raise and commercialise high value livestock production and improve financial inclusion and access to markets. 1.6 million pastoralists and their families are already benefiting from DRIVE and the project has recently added a Takaful insurance product and is looking to grow further its reach and find more partners to support its ambitions.  

By including risk insights and analytics at the start of planning and design, the level of risk may be reduced and the likelihood of project completion on time and on budget is increased. For example, Swiss Re has a suite of risk insight tools that we continuously develop as our client needs evolve and data sets become available.  One example is Swiss Re's CatNet portal which is used by over 15,000 insurance professionals globally, plus governments and universities to better understand natural hazards, flood risk and potential vulnerability of biodiversity and ecosystem services. Another is Swiss Re Corporate Solutions Risk & Data Services platform which helps organisations understand and manage their operations to current and future climatic changes. Such insights supported a mutual of councils in Australia in a risk assessment of specific locations using global datasets and geospatial tools, a 'digital twin' of key assets, data visualisation, and expert consultation. The analysis enabled the councils to prioritise resilience planning for high-risk assets and communities.

Investing in climate adaptation supports economic stability, creates job opportunities as well as improves physical safety. But the inability to easily quantify and compare the indicative benefits has contributed towards a significant gap in adaptation financing. How can this chronic underfunding in climate adaptation projects be overcome? We need to start filling the gap and creating the structural conditions necessary for private capital to flow into climate adaptation projects as well as optimize the use of public funds, which will remain central.

I believe there is a way forward which is the introduction of a more systematic utilisation of a universal approach to measuring climate adaption interventions. Taking a consistent approach could be crucial to unlocking much-needed adaptation financing and accelerating decision-making on climate resilience actions.  

The Swiss Re Institute's latest research performed a review of modelled cases to give a sense of whether, over time, we can help address questions around value chain resilience, adaptation funds, systematic implementation of National Adaptation Plans. The initial findings indicate that, on average, the benefits of adaptation interventions outweigh the costs by a ratio of 10:1.

If we can elevate the perspective above the technically complex and nuanced considerations required at project level, this can help drive transparency and speed up investment decisions. A benefit-to-cost ratio (BCR) is a universally valid, easy to derive and trackable metric – consistent use of such metrics could be the first step to drive transparency and comparability across the expected value creation and impact of different adaptation interventions and therefore contribute to unlocking the funding shortfall.

It is in our collective interest to accelerate investment in adaptation and help society withstand the consequences of climate change. A BCR can trigger the decision for action, to then draw in the necessary expertise and local engagement to design and implement appropriate and effective adaptation programmes. It's in the correct execution of these programs that resilience can truly be built.  

Our initial comparative study of flood and heat related adaptation interventions suggests that BCRs are practical metrics, but it also brought to light the lack of data and examples of effective adaptation interventions.

At COP 28 I will be calling for partners, project developers and sponsors to develop and integrate this approach to jump-starting work on climate adaptation programmes and building a better repository of examples that we can learn from and compare. Mother Nature at her fiercest, is an unstoppable force, that must be respected. I learnt this from childhood. What we need now is to get organised on benefit realisation for climate adaptation. After all, they say, what gets measured gets managed…

If you are attending COP28 Blue Zone and would like to join Veronica Scotti at our climate adaptation session on December 4th please contact: lucia_schnorrerova@swissre.com