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Development Under Climate Threat

Press Release No:2007/SDN/61

CAPE TOWN, August 29, 2006―The World Bank today urged the international community to integrate climate risk concerns now in development strategies in order to safeguard economic growth and poverty reduction gains in the short and long term.


According to Managing Climate Risk-Integrating Adaptation into World Bank Group Operations, a new report launched on the occasion of the Third Global Environment Facility (GEF) Assembly, held August 29th – 30th in Cape Town, “The impacts on investments, through increased costs or significant redirection, are estimated at 1 to 2 percent of the investment portfolio, or about $200 million to $400 million per year within the World Bank Group, and at least $1 billion for all official development assistance and concessional lending.”



1.   Direct threats to investments (e.g., effect of extreme weather events on infrastructure);

2.   Underperformance of investments (e.g., irrigation investments that fail to pay off when rainfall decreases); and

3.   Mal -adaptation, as when economic development triggers more vulnerability in high risk areas.

Adaptation to climate risks needs to be treated as a major economic and social risk to national economies, not just as a long-term environment problem.  By enhancing climate risk management, development institutions and their partner countries will be able to better address the growing risks from climate change and, at the same time, make current development investments more resilient to climate variability and extreme weather events, emphasized   Warren Evans, Environment Director at the World Bank.


According to the report, “Adaptation to climate change should be addressed through a climate risk management approach – that is, an ongoing process that starts with coping strategies for current climate variability, tries to anticipate changes in climate change, and seeks to evolve new coping strategies as necessary.”


Climate change, economic development, and poverty reduction


Climate variability is no longer an issue for the distant future, the report states. During the past century the global climate warmed by about 0.7°C because of human activities, with accompanying changes in rainfall patterns, extreme weather events, and sea levels, and another 1.4°C–5.8°C temperature rise is projected in the next hundred years.


According to the report, the impacts of higher temperatures, more variable precipitation, more extreme weather events, and sea level rise are already being felt and will continue to intensify. Although aggressive mitigation of greenhouse gas emissions is crucial if dramatic long-term changes are to be averted, most of the changes projected for the coming decades can no longer be avoided.


Commenting on the report, Monique Barbut, Chief Executive Officer of the Global Environment Facility (GEF), said that, “Funding for adaptation to climate change is absolutely critical for developing countries.  The best form of adaptation is mitigation, but we must also deal with the climate change that the planet is already signed up to.  I’m delighted that this Assembly has provided the opportunity to bring financing for adaptation forward in the global environmental agenda, and towards the next climate change Conference of the Parties in Nairobi in November.”



Impacts due to a changing climate

·    In the 1990s, disaster costs where $652 billion in material losses, 15 times higher than in the 1950s.

·    In the past decade 3 billion people in developing countries were affected by climate related disasters and at twenty times the rate of people in developed countries.

·   The costs of the 1997–98 floods and the 1999-2000 droughts in Kenya represented at least 11, 16, and 16 percent of the country’s GDP for the three consecutive years over which they occurred.

·    The Caribbean Community (CARICOM) countries are highly vulnerable to the impacts of climate changes, with potential damages in the absence of adaptation estimated at between $1.4 billion and $9 billion.

Severe impacts, particularly for the poor

The report says that the consequences of such changes include decreased water availability and water quality in many arid and semiarid regions; an increased risk of floods and droughts in many regions; reduction in water regulation by snow and glaciers in mountain habitats; decreases in reliability of hydropower and biomass production in some regions; increased incidence of vector- and waterborne diseases such as malaria, dengue, and cholera; increased heat stress mortality; increased damages and deaths caused by extreme weather events; decreased agricultural productivity with almost any warming in the tropics and subtropics; adverse impacts on fisheries; and adverse effects on many ecological systems.  Although climate change will bring some benefits to temperate and cold climates, losses will predominate in the developing world.


The World Bank Group’s Response


The World Bank Group can continue to help its clients better manage climate risks to poverty reduction and sustainable development by:

  • Integrating climate risk management at the outset in project design by using an early climate risk-screening tool.
  • Integrating climate risk management into country and sector dialogues, and development strategies, especially in vulnerable countries.
  • Supporting the creation of financing mechanismsfor adaptation, using, for example, the Investment Framework for Clean Energy and Development – being developed by the World Bank and other International Financial Institutions as a response to the call made last year by the leaders of the G-8 at the Gleneagles Summit.


In the past, the GEF has been the primary source of funding for the World Bank Group’s adaptation activities. In addition, $8 million has been provided by trust funds and the Bank’s budget over the past three years, in particular from the Trust Fund for Environmentally and Socially Sustainable Development (TFESSD), supported by Norway and Finland, the Japan Policy and Human Resources Development Fund (PHRD), and the Bank Netherlands Partnership Program (BNPP). The World Bank is currently developing an Investment Framework for Clean Energy and Development, which includes a work program for improving understanding of what is needed to better incorporate adaptation into development.  


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