Engaging the private sector in adaptation to climate change in developing countries: importance, status, and challenges

Abstract

In developing countries there is a need for the private sector to be more engaged in identifying climate change risks, response measures, and adaptation, and to prioritize these more highly. The importance of the role of the private sector is evident from lessons drawn from the increasing amount of empirical experience on adaptation projects supported by climate funds: successful private sector engagement in adaptation will catalyse greater investment in reducing vulnerability; this in turn will accelerate the replication of climate-resilient technologies and services in core development sectors, especially in developing countries where investment in long-lived infrastructure is growing rapidly. Private sector companies should integrate adaptation into their strategies and investments for their own economic interest, as well as for their clients’ interest and for the interests of the countries in which they operate. Unfortunately, private sector efforts on adaptation are not widely understood or seen as good business practice, and generally face several obstacles. Public policy should incentivize such investments by communicating risks, offering incentives for resilience enhancing measures, and where necessary by putting in place regulation to avoid shifting risks onto the public. Stronger public–private partnerships will also help to enhance climate resilience, and at the same time create business opportunities. Private firms will develop many of the products and services that will enable lower cost and more effective responses to climate change, which can be the basis for growing businesses. Ultimately, a paradigm shift is required for business to fully integrate the value associated with managing climate risks.

Keywords:

• adaptation
• climate change
• climate risks
• development
• developing countries
• insurance
• least developed countries