Navigant Research Blog

Facing Climate Change and Adapting

Dexter Gauntlett — August 29, 2013

Hopefully we’re better at adapting to climate change than we are at preventing it.

An analysis conducted by Environmental Business International (EBI) put the market for climate change adaptation services at $700 million in the United States and $2 billion globally — growing at 12%-20% through 2020.  Focusing on urban settings, the EBI report splits the climate change adaptation industry into three segments: climate risk assessment and analysis, climate adaptation planning, and adaptation design, engineering, and construction.

The EBI report is primarily focused on water-related industries, such as wastewater treatment, ports, and sea walls, while ignoring many of the power-related opportunities that a broader definition would include.  It therefore significantly understates the overall opportunity.  Outside of urban settings, the United Nations (UN) has already created a Green Climate Fund to implement adaptation projects in the developing world (including mitigation), with a target of disbursing up to $100 billion per year by 2020.  Since this would only be one funding mechanism, the adaptation services industry could be one of the largest industries in the world.  Projects totaling $180 million have been funded to date through the UN mechanism alone.  For comparison, Navigant Research valued the major cleantech electricity generation industries at $200 billion in 2012.

Many businesses are well-positioned to capitalize on the coming avalanche of adaptation dollars spent on creating more resilient communities in the United States and overseas.  A number of companies, ranging from GE to CH2M HILL, are already directly or indirectly providing adaptation services.  Cleantech, research and consulting firms, social enterprises, and non-profits similarly stand to gain from large contracts within the United States and overseas.

Taking It to the Streets

“Adaptation” is an imprecise term.  At the highest level, it refers to adjustment in natural or human systems in response to actual or expected climatic stimuli or their effects, intended to moderate harm or exploit beneficial opportunities.  A resilient energy system balances people and demand in the presence of internal and external developments, including climate change.  There is a strong degree of overlap between climate change mitigation and adaptation activities, as illustrated in the figure below:

(Source: CCAP)

An analysis by Oxfam, The New Adaptation Marketplace, did not assign a market value, but identified seven categories of services provided companies in the adaptation sector: disaster preparedness, water management, agriculture, climate information and consulting services, energy, coastal and natural resource management, and insurance

Cities have taken the lead in implementing climate change adaptation strategies.  The non-profit International Council for Local Environmental Initiatives (ICLEI) is a leading association of cities and local governments dedicated to sustainable development that highlights the adaptation efforts of 20 U.S. cities that are building more resilient communities.  These efforts include conducting adaptation assessments, enacting energy efficiency programs, increasing tree canopy, and other measures.

In the Pacific Northwest, where I reside, cities are taking meaningful steps to adapt to climate change today.  Many activities and strategies outlined in Portland’s Climate Action Plan qualify as both mitigation and adaptation, but other cities in Oregon are also taking action on adaptation.  For example, the city of Eugene is implementing a Community Climate and Energy Action Plan that includes increasing water conservation, increasing investment in the urban forest, removing essential services from the 100-year  flood zone, increasing energy efficiency to reduce demand for hydroelectricity (which is expected to decline with climate change), and conducting a food security assessment.

“Adaptation” and “resilience” are replacing “sustainability” as the buzzwords du jour – but that doesn’t make them any less real in terms of their impact on society and economic activity.

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