Establishment of Asia-Pacific Climate Finance Fund

Abstract

Action on climate change mitigation and adaptation is crucial for sustainable development, economic growth, and poverty reduction in Asia and the Pacific. ADB’s developing member countries (DMCs) are affected by slow-onset events such as sea level rise, shifting seasonal precipitation patterns, and increasing salinity intrusion, and increasing frequency and intensity of extreme weather events caused by climate change.1 Related costs to mitigate such events will add significantly to the region’s infrastructure financing requirements. ADB DMCs will need about $22.6 trillion in infrastructure investment in the energy, transport, water, and information and communication technology sectors from 2016 to 2030, according to a recent ADB report. If the cost of mitigating and adapting to climate change in these sectors is factored in, however, the total infrastructure financing requirements increase to about $26 trillion, or $1.7 trillion per year to 2030. Despite the significant additional cost, key studies on the economics of climate change conclude that the long-term benefits of strong, early climate action considerably outweigh the costs. Measures such as increased penetration of insurance are also needed to enhance the financial management of residual disaster risk, since disaster risk cannot be entirely and cost effectively eliminated through disaster risk reduction. ADB DMCs already face increasing losses from extreme weather events, totaling $322 billion from 2006 to 2015 and affecting about 1.3 billion people, but most of these losses are uninsured. According to recent estimates, only about 100 million people in developing countries and emerging economies worldwide have access to climate risk insurance