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Resilience of Human Systems and Climate Change

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Earth‚Äôs climate is changing faster than at any point in the history of modern civilization. The impacts of global change are already being felt in the United States and are projected to be intensify in the future. But the severity of future impacts will depend largely on the actions taken to reduce greenhouse gas emissions and to adapt to the changes that will occur. ‚ÄúWithout substantial and sustained global mitigation and regional adaptation efforts, climate change is expected to cause growing losses to American infrastructure and property and impede the rate of economic growth over this century‚ÄĚ, wrote the authors of the Fourth National Climate Assessment Volume II.

Observed changes

The global assessment show the widespread effects of increasing greenhouse gas concentration. Increased temperature and heavy precipitation events are recorded (common to many regions of the United States). Shrinking of glaciers and snow covers and retreating sea ice. Elevated level of sea with its acidic content has had the marine species to move cross borders to new locations with cooler water. Flooding is becoming more frequent along the U.S coastline (in Alaska, threats to coral reef ecosystems from warmer and more acidic seas in the U.S. Caribbean, as well as Hawaii and the U.S.-Affiliated Pacific Islands). The seasons are lengthening paving way for increased wildfires. According to the US Global Change Research Programme Assessment for 2015, the changes are as depicted ‚Äď

Effect on the States

Impacts can cascade across sectors and regions, creating complex risks and management challenges. For example, changes in the regularity, force, magnitude, and extent of wildfires can result in a higher occurrence of landslides that disrupt transportation systems and the flow of goods and services within or across regions. Without more significant global greenhouse gas mitigation and regional adaptation efforts, climate change is expected to cause substantial losses to infrastructure and property and obstruct the rate of economic growth over this century.

[image: ]Regional economies and industries that depend on natural resources and favourable climate conditions, such as agriculture, tourism, and fisheries, are increasingly vulnerable to impacts driven by¬†climate change. Reliable and affordable energy supplies are increasingly at¬†risk from climate change and weather extremes. Such events can grossly affect the financial well-being of nations and affect economic prosperity in the long-run. According to the second volume of the 4th National Climate Assessment coming from the US Global Chgange Research Programme, the estimated economic costs in various sectors are as follows ‚Äď

The impacts of climate change beyond our borders are expected to increasingly affect our trade and economy, including import and export prices and U.S. businesses with overseas operation and supply chains. Substantial net damage to the U.S. economy, especially in the absence of increased adaptation efforts. The potential loss in some sectors could be several hundred billion dollar by 2050. According to a recent survey conducted by Climate Impact Lab, after considering the recent climate impacting factors its costs would pan out across the states in US as follows-

Using Financial Instruments to tackle Climate Change Issues

Financial implications of climate change can have a cascanding effect on the global economy. As per the OECD ‚Äės 2015 report on Economic consequences of climate change,impact of climate change can reduce annual global GDP by nearly 4% by 2022. In such a situation financial instruments and policies are required to deal with threats posed by climate change. The big question infront of all nations currently is how do we acquire funds to deal with climate change? The four main methods to avert, minimize and address climate risks are as follows-

Climate Finance is the key for change and as per the¬†United Nations Framework Convention on Climate Change¬†(UNFCCC) Standing Committee on Finance it means ‚Äúfinance that aims at reducing emissions, and enhancing sinks of greenhouse gases and aims at reducing vulnerability of, and maintaining and increasing the resilience of, human and ecological systems to negative climate change impacts.‚ÄĚ As of now there exist tradition revenue streams to finance climate funds which they can use immediately. The following data shows the breakdown of these financing methods used commonly across many countries and how they proportionally fund climate funds-

Carbon markets have been the first global climate finance mechanism that attempted to use a marketplace mechanism to reduce international greenhouse gas emissions by using putting a rate on those emissions. Though these markets were introduced with an aim to keep a check on emissions, due to disparities among corporations and money power has started to play a major discriminatory role in this market along with difficulty in entry for developing countries.

Though there currently exists such financial mechanisms, investments and loans can only assist in the cause of climate change mitigation only to a certain extent. The challenges that remain infront of the world to finance climate funds currently are

  • ¬†Lack of international system for tracking climate finance
  • ¬†Bringing parity between Developed and Developing countries as well as their climate funds flows among them
  • ¬†Political and Regulatory challenges which decelerate implementation of climate policies and instruments to tackle them
  • ¬†Barriers to introduce new technology across countries
  • ¬†Absence of active role played by public sectors

To help overcome such challenges, innovation is required in the final stage through financial instruments which has a greater outreach and can create a impact which can be streamlined with the operations in an economy. Apart from the tradition financial instruments and methods of financing climate funds, here are some of the new financial instruments in line with the guidlines of the UNDP‚Äôs guidebook ‚ÄėCatalyzing Climate Finance‚Äô. They deal with areas where there is scope to bring in innovations for funding climate funds ‚Äď

  • ¬†Shifting funds from fossil fuel investments to climate-friendly alternatives

Though new renewable energy and clean-green projects earn a good return on invest and help economies move towards becoming climate-resilient, the upfront cost is very high. Along with that there is the problem of barriers relating to finance and information. As per the 1997 Kyoto Protocol, the initiative of Clean Development Mechanism was effective for a few countries, ignoring regions in Africa and Asia. To address this problem, new intiatives such as the Climate Smart Lending Platforms, the Energy Efficiency Enabling Intitiative and Blended Finance initiatives. Specific loans and grants in this area need to be developed to incentivize it.

  • ¬†New Trading Mechanisms and Result-based Financing

Though there currently exist carbon emission trading mechanisms and markets for carbon credits trading mechanisms such as carbon cap-and-trade and baseline-and-credit systems, their effectiveness has been limited and the outreach has been limited to developed countries and wealthy corporations. Linking them to these carbon credits and existing market indicators can develop new instruments such as the Transformative Carbon Asset Facility (TCAF), CPF Carbon Fund, Methane Facilities auctions. It can also cover areas of biodiversity conservation, water management and sustainable development

  • ¬†Blended Financing

Blended finance is defined as the strategic use of development finance and philanthropic price range to mobilize private capital flows to emerging and frontier markets resulting in wonderful outcomes for both investors and groups. Blended finance offers the possibility to scale up industrial financing for growing international locations and to channel such financing towards investments with improvement effect. This method solves the problem of lack of private funds penetrating into the system. It also leads to greater outreach for various regions and areas, addressing those specific problems.

  • ¬†Development Impact Bonds/Green Bonds

A green bond is a bond explicitly reserved to be utilized for atmosphere and natural undertakings. These bonds are regularly resource connected and supported by the guarantor’s accounting report, and are additionally alluded to as atmosphere bonds. These direct funds towards low-income countries and can help raise funds for climate-friendly projects through market mechanisms which improves its scope for raising more funds while making it more legitimate.

  • ¬†Risk sharing Instruments (Insurance Instruments)

Economically, it’s miles greater efficient to create risk transfer mechanisms which could offer the assets for these varieties of weather-associated failures and shift loss obligations from the sovereign authorities to the capital marketplace buyers. Recent tendencies in insurance evaluation and modeling have led to gadgets that make amends for some of the market screw ups which have prevented governments from the use of these units in the beyond. There is a big range of these styles of mechanisms, ranging in economic complexity, specificity, and management, used by developed countries mainly. Insurance linked securities, multi-country risk facilities and innovative schemes can help developing countries attain the goal of climate-resilient development.

  • ¬†Global Innovation Finance Lab initiatives

Such initiatives involve public-private partnerships that drive private investments into developing countries and towards new projects because of the larger scope of R&D involved in these initiatives. They involve transformative proposals which seek to find solutions for climatic problems in an innovative manner by utilizing technology and support from various entities. The Lab, the Climate Finance Lab and many more organizations are working towards a climate-resilient future through these initiatives.


According to the Climate Finance Landscape Organization’s report of 2015-16, 81% of finance was raised in the same country in which it was spent. The East Asia and Pacific (non-OECD countries) received 39% of flows over 2015/2016, followed by Western Europe at 23% and Americas (OECD countries only) at 12%. Such figures may seem sufficient but the Intergovernmental Panel on Climate Change document showed a $1.6 Р3.8 trillion power machine-funding requirement to keep global warming within a 1.5-degree state of affairs and avoid the most harmful consequences of weather exchange.

For this to happen and to promote economically as well as ecologically sustainable growth Investments must shift from high-carbon to low-carbon activities if we are to avoid dangerous climate change. Fossil fuels and other traditional sources of energy are still dominates the world’s energy resources. Total fossil fuel investment still dwarfs weather-associated funding. This decreases the effectiveness of weather investment.

When we make renewable energy sources incentivizing and attractive that is when we can see a better future in terms of lower carbon emissions worldwide.

Countries all over the globe too must make this their number one priority and need to change their political and regulatory frameworks so as to support new innovations to support the cause of climate change.


  1. http://www.bbc.co.uk/news/world-us-canada-46325168
  2. https://nca2018.globalchange.gov/chapter/1/
  3. https://nca2018.globalchange.gov/chapter/28/
  4. https://www.marketwatch.com/story/6-ways-to-prepare-your-climate-change-2018
  5. https://www.vox.com/2019/2/5/18207337/state-of-the-union-2019-climate-change
  6. https://www.seas.harvard.edu/content/from-sea-to-rising-sea-climate-change-in-america
  7. https://www.greenclimate.fund/documents/20182/24934/GCF_B.04_06_-_Business_Model_Framework__Financial_Instruments.pdf/7b8e96dd-4e06-46fd-b986-1b8743efa15b
  8. https://mediamanager.sei.org/documents/Publications/Climate/UNEP-Bilateral-Finance-Institutions-2010-report.pdf
  9. https://europa.eu/capacity4dev/climatefinance/blog/four-new-financial-instruments-catalyze-climate-action-climatefinance
  10. https://www.investopedia.com/terms/g/green-bond.asp
  11. https://nca2018.globalchange.gov/#sf-1
  12. https://www.undp.org/content/dam/aplaws/publication/en/publications/environment-energy/www-ee-library/environmental-finance/low-emission-climate-resilient-development/in-focus/catalyzing-climate-finance/UNDP-Financing-v3-web.pdf
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