A new report by the International Fund for Agricultural Development (IFAD), set to be launched at COP30, highlights the ‘compelling’ business case for investing in climate adaptation.
IFAD’s report, Adaptation Finance: Building the Investment Case, describes climate adaptation as an ‘engine of economic opportunities’, as well as outlining methods to make adaptation projects ‘bankable’ through the integration of financial and social impact metrics.
As an example, an IFAD project in Bangladesh generated a return of 35% per year on the investment made, and led to an 11% income increase for around five million people. The initiative reduced farmers’ transport costs by around 60%, raised trade volumes by 75%, and reduced post-harvest losses by around 30%.
Economic opportunity
“We must stop seeing investments in adaptation as a sunk cost and start viewing them as an economic opportunity,” commented Alvaro Lario, president of IFAD.
“Investments in climate adaptation are not just about protecting the livelihoods of the world’s poorest. They are a strategic and economic opportunity. By preserving the capacity of nations to produce food, create jobs and sustain growth, these investments strengthen economic and social stability as well.”
Other IFAD projects have also yielded dividends, the fund noted, with some leading to an income gain of 50% for farmers, according to the latest IFAD Impact assessment.
Farmers participating in IFAD-supported programs between 2022 and 2024 reported average income growth of 34%, production gains of 35%, and improved market access of 34%.
Return on investment
As IFAD noted, a global investment of $1.8 trillion in early warning systems, climate-resilient infrastructure, improved dryland agriculture, global mangrove protection and resilient water resources could generate more than $7.1 trillion in avoided costs and social and environmental benefits.
‘With the need for adaptation financing in developing countries 12-14 times as much as current flows, private investments are more urgent than ever,’ IFAD commented. ‘Acting as an investment platform, IFAD promotes solutions that aggregate finance, deploy risk-mitigation instruments, enable supportive policies, and connect investors through blended financing structures channelling resources directly to rural communities.’
IFAD will launch its report at an event entitled Reframing Resilience from Risks to Returns: Building the Investment Case for Adaptation Finance, taking place at the NDC Partnership Pavilion on 14 November, at COP30. Read more here.
