Innovative mechanisms have been demanded to ensure up to $200bn (£130bn) is spent every year from 2035 on protecting global assets from the effects of climate change.
A report by engineering consultants Mott MacDonald said governments alone would be unable to fund the huge number of projects required as weather became more extreme.
Heatwaves, cyclones, droughts and floods will increase in frequency and intensity, wreaking havoc with vital infrastructure and having a knock-on effect on supply chains around the world, it warned.
Climate Change and Business Survival said the global economy could suffer $1trn in annual losses directly related to changing conditions within 20 years.
It said 20% of this figure should be dealt with as residual – to be picked up by businesses, insurance companies and society.
But expenditure of $200bn per year would be needed to create projects that could effectively eliminate the remaining $800bn of potential losses, according to Mott MacDonald.
“Key challenges are the allocation and management of risk and creating connectivity between the resilience planning and investment of multiple players,” said the report.
“New funding mechanisms are needed so governments, international institutions and the private sector can pool resources, and share and manage risk.
“Public and private sectors need to explore many more opportunities to mix funding, with governments acting to prevent loss of common services with perceived low economic value but high social or ecological value.”
The report warned that if solutions could not be found, governments may have to impose climate change resilience taxes.
“Private sector organisations need to step up to the plate, being mindful that if they are not proactive in addressing the resilience funding gap, governments will have no choice but to impose purpose designed resilience levies,” it said.
Ian Allison, Mott MacDonald head of climate resilience as well as one of five report authors, told NCE much of the $200bn required each year would go on retrofitting existing infrastructure to make it suitable for future weather conditions, alongside designing resilience into new infrastructure.
“It is highly unlikely we can invest our way out of the impact of climate change,” Allison said. “We need to invest in making sure businesses are resilient in terms of withstanding extreme weather and recovering quickly from such events.”
This could mean making waste water treatment plants less likely to flood, for example, or it could mean relocating vital parts of the plant higher above sea level so the plant can be active again sooner after a flood.
The aim, where possible, is not to build defences to protect existing infrastructure, but to make the assets themselves more resilient.
The effects of damaged infrastructure can be extremely costly, the report said, with the relatively minor destruction of rail line in Dawlish, Devon, in storms last year (pictured) leading to more than £1bn of economic loss as a vital transport link was cut off.
Allison said he hoped the report would contribute to an ongoing debate about dealing with the impacts of climate change in the run up to the United Nations Climate Change Conference in Paris at the end of this year.
“A key theme in Paris will be mobilising private sector support,” said Allison.
“We are not the only ones talking about this. We can see that key [business leaders] are thinking that the private sector will have to shoulder more of the burden.
“We understand from talks with insurance brokers and finance companies that there is no shortage of investment capability.”
The report called for policy, finance, insurance and investment experts to come together to explore and develop innovative financial mechanisms to encourage private sector investment in resilience projects.
It added that the government should make climate resilience a planning requirement for infrastructure projects.
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