The Global North must prioritize funding climate adaptation in the Global South to protect its own economic interests. With significant foreign direct investments and vital supply chains at risk due to climate change, action is essential. The Global North faces potential productivity losses, increased costs, and disruption to essential goods unless adequate resources are allocated to adaptation efforts. Immediate funding and private investment engagement are crucial for sustainable growth.
The Global North’s economies depend significantly on funding climate adaptation in the Global South, where cities such as New Delhi, Manila, and Jakarta face extreme climate risks. While immediate climate impacts might seem concentrated in the Global North, neglecting the Global South’s adaptation efforts threatens foreign investments, supply chains, and productivity, with the Global South expediting its urban population growth to 2050.
According to the UNCTAD World Investment Report 2024, the Global South received approximately $866 billion in foreign direct investment (FDI), representing over 60% of global FDI. Noteworthy investments include Apple’s substantial investments in India’s supply chain, highlighting the vulnerability of these investments to climate change. Should climate adaptation efforts falter, the Global North risks losing substantial returns from these investments.
Climate change further threatens supply chains by jeopardizing the quality of crucial goods imported from the Global South, such as coffee, which is vital in a $40 billion industry. Significant disruptions in production could arise from climate impacts, leading to increased operational costs and, consequently, heightened prices for consumers in the Global North.
Additionally, productivity issues in the Global South arise from climate-induced factors, with the International Labour Organization estimating that rising temperatures may lead to a reduction of 2.2% in global working hours, equating to a loss of 80 million jobs. This erosion of economic stability directly threatens the Global North’s return on investments and could result in a surge in the cost of living.
The Global North must recognize the crucial link between its economies and the need for enhanced climate adaptation funding in the Global South. Despite the pressing requirement for $212 billion annually by 2030, only $63 billion was allocated for climate adaptation in 2021-22, revealing a substantial funding gap.
It is imperative that private capital actively engages in financing climate adaptation, leveraging an existing cash reserve of $4.6 trillion in the Global North’s corporations. Creating targeted models that facilitate straightforward value capture for private investments in adaptation activities can elevate the urgency of this funding.
Ultimately, maintaining economic stability in the Global North necessitates proactive investment in climate adaptation in the Global South, ensuring resilience against climate-related disruptions.
The urgency of climate adaptation in the Global South arises during an era where cities like New Delhi and Manila face escalating climate risks. Despite significant climate impacts in these regions, many in the Global North may prioritize local issues over international climate concerns. However, neglecting climate adaptation in the Global South has direct consequences that can adversely affect industries, supply chains, and economic growth in the Global North.
In summary, the Global North’s economic well-being is intimately tied to effective funding for climate adaptation in the Global South. The risks to investments, supply chains, and productivity underscore the necessity for immediate action. By addressing the financial gap in climate adaptation funding and engaging private capital, the Global North can ensure the resilience of both its economies and its global partnerships in combating climate change.
Original Source: www.orfonline.org
