Decision Making Options for Managing Risk - Frequently Asked Questions from Chapter 17 of the IPCC's 6th Assessment Report

Submitted by Geena Goodwin | published 24th Jun 2022 | last updated 6th Sep 2022
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Introduction

This material is an abridged version of the Frequently Asked Questions (FAQs) section of Chapter 17 of the 6th Assessment Report of the International Panel on Climate Change, Working Group 2: Impacts, Adaptation, and Vulnerability. Chapter 17 assesses the options, processes and enabling conditions for climate risk management, a key component of climate resilient development.

Please access the original text (see 'Featured Download' in the right-hand column) for more detail, research purposes, full references, or to quote text.

Also see our related article on the full AR6 WGII report 'Summary for Policymakers'.

FAQs

1. Which guidelines, instruments and resources are available for decision-makers to recognize climate risks and decide on the best course of action?

Guidelines, instruments, and resources to identify options for managing risks, and support decisions on the most suitable course of actions to take, can be collectively referred to as decision-support frameworks. These can include data services, which enable the identification, location and timing of risks that could manifest with negative impacts, as well as potential opportunities. Decision-support tools range from qualitative approaches to determine overlap of areas of concern with those hazards in the future, to more quantitative and dynamic simulation approaches that enable dynamic stress-testing of adaptation options and strategies to determine if proposed plans for adapting to the future could be successful.

A great challenge for decision-makers is how to choose effective options when the future is uncertain. Uncertainty can arise not just in the statistical error of the magnitude of risk but also in the nature  and consequence of risk – from uncertainty about mechanisms that link areas of concern to hazards, uncertainty in the decision processes itself and so on.

Decision-support frameworks are most successful when they are iterative, integrative, and consultative. Rather than a single decision be made, and an action taken, there are processes for making the best decision possible, then monitoring progress toward delivering a successful outcome. Decisions can therefore be revised, updated, or changed as the future unfolds and foundations for the original decision tested. This is important because climate responses need to be initiated well in advance of them being needed, due to the time required to implement suitable responses. These forward-looking approaches allow errors to occur and corrections made before problems arise. Integrated approaches to risk management are available to help manage portfolios of interacting risks, including the potential for compounding and cascading risks when climate-related events arise.

Managing uncertainty with forward-looking processes needs to be more deliberative and oriented towards building trust in a collaborative process. Building relationships through informal, bottom-up processes enables this to occur. Top-down planning processes are important for ensuring the management of risks and  opportunities do not end up with maladaptations, and that the approaches are equitable and proportional to that which is needed to manage the risks.

2. What financing options are available to support adaptation and climate resilience? What do we mean by “climate finance”?

The current IPCC definition of climate finance is: “the financial resources devoted to addressing climate change by all public and private actors from global to local scales, including international financial flows to developing countries to assist them in addressing climate change”.


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What needs to be financed?

Financial resources might be needed for a range of adaptation and resilience building activities. These include research, education and capacity building; development of laws, regulations, and standards; provision of climate services and other information; reducing the vulnerability of existing assets, activities, and services; and ensuring future development - such as new infrastructure, settlements, health services and business activities - is climate resilient. Finance is also needed to recover and rebuild from the damage of climate hazards that cannot be completely avoided through adaptation.

How much finance is needed?

The amount of adaptation finance depends on global, regional, and local factors, including: the amount and timing of global warming, how this translates into impacts and adaptation needs across the world; the levels  of adaptation already in place; the type of risk being adapted to; and the adaptation options being chosen, including whether the adaptation required is incremental or transformational. Recent estimates of the global cost of adaptation by 2030 across developed and developing countries range between about USD 80-300 billion per year.

What types of finance are available?

Four main types (or instruments) of finance are currently being used to support adaptation: grants, concessional loans, non-concessional loans, and budget reallocation. These different types are not mutually exclusive. For instance, grants can be combined with loads to provide blended finance.

Where are different types of finance most useful?

Grants are useful for a range of adaptation actions where it is hard to generate a financial return. These include capacity building activities, piloting new adaptation innovations, high risk investment settings, or projects where there are considerable non-financial benefits. In contrast, loans and other debt instruments can often support larger investments, for example for scaling out of successful pilot projects or for building adaptation and resilience into general development investment.

To date, a large proportion of international climate finance for adaptation in developing countries, especially in sub-Saharan Africa and Oceania has been grant led, sourced from OECD public funds, indicating that in many instances, financing via loans is either considered too risky by the commercial investment sector or it has been hard to demonstrate sufficient return on investment.

3. Why is adaptation planning along a spectrum from incremental to transformational adaptation important in a warming world?

In a warming world, incremental adaptation, i.e. proven standard measures of adaptation, will not always suffice to adjust to the negative impacts from climate change leading to substantial residual risks and, in some cases, the breaching of adaptation limits. Transformational adaptation, involving larger system-wide change (as compared to in system change), will increasingly be necessary as a complement for helping individuals and communities to cope with climate change.

As an example of incremental adaptation, a farmer may decide to use drought-tolerant crops to deal with increasing occurrences of heatwaves. However, the impacts of climate change may necessitate the consideration of system-wide change, such as moving to an entirely new agricultural system in areas where the climate is no longer suitable for current practices; or switching to livestock rearing. Where on-site adaptation becomes infeasible and pull factors exist, the farming households may decide to seek employment in other sectors, which may also lead to migration for work.

4. Given the existing state of adaptation, and the remaining risks that are not being managed, who bears the burden of these residual risks around the world?

A warming climate brings along increasing risks, part of which can be reduced or insured. What remains is called residual risks and needs to be retained by households, the private and public sectors. People living in conflict-affected areas benefit only marginally from adaptation investments by governments, private sector, or other institutions. These people bear most of the changing climate risks themselves. Higher-income countries generally have invested heavily in structural adaptation to make sure people are not exposed to extreme events (e.g. dykes) and have developed a variety of private or public insurance systems to finance  the risk of the most rare or extreme events. In other, middle or lower-income countries, these very extreme events are less likely to be insured, and the impacts are borne by the most vulnerable people. Absent risk reduction or insurance, coping with residual risks generally means reducing consumption (e.g. food) or drawing down assets (selling machinery, houses etc), which all can bring along longer-term adverse developmental implications. Adaptation investments in low-income countries tend to focus more heavily increasing capacity and reducing vulnerability; people remain exposed to the changing climate risks, and bear the burden of reacting and responding.

5. How do we know whether adaptation is successful?

Adaptation aims to reduce exposure and vulnerability to climate change by responding to dynamic and multi-scalar combinations of climatic risks. What might be seen as successful at one scale or at one point in time might not be at another, particularly if climate risks continue to rise. Moreover, the benefits of adaptation interventions may not reach all intended beneficiaries or everyone affected by climate impact and risk, causing different people to have different views on how successful adaptation has been.

There is, therefore, no universal way to measure adaptation success, but there is high agreement that success is associated with a reduction of climate risks and vulnerabilities (for humans and ecosystems) and an equitable balancing of synergies and trade-offs across diverse objectives, perspectives, expectations, and values. Adaptation that is successful is also commonly expected to be inclusive of different socio-economic groups, especially the most vulnerable, and to be based on flexible and integrative planning processes that take into account different climate scenarios.

Conceptually, the opposite of successful adaptation is maladaptation, i.e. when adaptation responses produce unintended negative side effects such as exacerbating or shifting vulnerability, increasing risk for certain people or ecosystems, or increasing greenhouse gas emissions. Among the adaptation options assessed in this report, physical infrastructure along coasts (e.g., sea walls) has the highest risk for maladaptation over time through negative side-effects on ecosystem functioning and coastal livelihood opportunities. However, such adaptations may appear valuable in the short and even longer term for already densely populated urban coasts, demonstrating that an adaptation can be differently judged based on the context it is implemented in.

Monitoring and Evaluation (M&E) can be used to track progress and evaluate success and to identify if course corrections during adaptation implementation are needed to achieve the envisaged objectives. To date, assessments of progress of adaptation have often focused on processes and outputs (i.e. actions taken, such as adaptation plans adopted) that are easier to measure than the effects of these actions in terms of long-term reduction of risks and vulnerabilities. However, knowledge about the outcomes in terms of reducing climate risk, impact and vulnerability is critically required to know if adaptation has been successful.

Tracking progress, in particular outcomes and impacts of adaptation, involves a number of challenges:

  1. First, in order to determine progress over time, risk and vulnerability assessments need to be repeated at least once after starting an adaptation process. This is rarely done, as it demands resources that are usually not factored into the adaptation response.
  2. Second, attributing changes in climate risks and vulnerabilities to the adaptation response is often difficult due to other influencing factors, such as socio-economic development over time.
  3. Third, as adaptation can occur in multiple forms and target multiple temporal and spatial scales, the engagement of a diversity of stakeholders is vital to understand how responses enable adaptation and adaptation success across vulnerable groups. Though, stakeholder engagement can be time intensive and costly, in particular when reaching out to populations that are usually not part of policy and planning processes it can support evaluating co-benefits and trade-offs of adaptation responses.

Further resources