Climate adaptation is chronically underfunded in the UK, and is falling short of what the country needs to insulate it from impacts such as heatwaves and increased rainfall, according to a new report from the Government’s advisory body, the Climate Change Committee (CCC).
The country’s adaptation needs include things like preparation for flooding, future-proofing of housing and infrastructure, and investment in public water supply and nature restoration. In these areas alone, the report predicts, it is plausible that up to £10 billion per year will be needed to prepare the UK.
The report “Investment for a Well-Adapted UK” identifies several areas the CCC believes the Government should prioritise in its Third National Adaptation Plan (NAP3), due in Summer 2023.
As PwC’s Global Climate Leader Emma Cox commented, this kind of investment “cannot be unlocked without the Government tackling adaptation at a policy level in the same manner it has with Net Zero.
A recent report from PwC and the World Economic Forum indicated that companies are increasingly taking steps to assess their climate risks and plan for resilience, she said, but that “action on adaptation remains challenging.”
“It is highly context-specific and there is no unified ambition or target to act as a rallying point.”
The Government has so far failed to set out a vision and define priorities, says the CCC report, and that uncertainty is preventing progress on appraising the country’s investment needs and closing the adaptation gap.
Its own analysis attempted to detail the key priorities. For example, with flood protection, it cites Environment Agency estimates which indicate that “overall investment flows of around £1 billion per year will be needed to ensure that the UK is prepared for a probable range of flood hazards that can be caused by global climate change.”
Other key areas requiring investment include the public water system, where “investment on the order of £0.7 bn per year will be needed to build resilience to a 1-in-500 year drought event accounting for both future climate change and population growth.” For housing retrofit, “it is plausible that investment needs could be on the order of order of £1 billion per year this decade.” For nature restoration, it says “around £3 billion per year of investment might be required this decade.” And for infrastructure, says the report, “The Infrastructure and Projects Authority estimate that £650 billion of public and private investment will be required to 2030-2031.” However, the report adds that the investment needs required for “climate proofing” of infrastructure more generally are not well understood.
As to who will deliver this investment, the report speculates on the contributions likely needed from the public sector, households, regulated infrastructure (sectors such as energy, water, road and rail and communications) and private enterprise,
The report said Government “should prioritise creating markets for adaptation outcomes across relevant legislation and policy programmes, including initiatives on carbon market integrity and the Environmental Land Management Schemes.”
PwC’s Emma Cox said: “Demonstrating value in adoption outcomes will be of primary importance for unlocking private investments.” She cited investment cases studied by PwC.
For example looking at why insurance companies should invest in adaptation including Nature Based Solutions such as restoring mangroves to help prevent coastline erosion and hence avoid losses.
“Government incentives such as regulatory changes or R&D tax credits would help to effectively direct funds into adoption strategies thereby stimulating competition and driving down costs of such measures.”
The report said the forthcoming NAP3 document will be critical to setting out this vision of what a well-adapted UK looks like. It should back this up with clearly laid out specific and measurable resilience standards and targets.
