Helping People and Firms Adapt in South Asia

[Franziska Ohnsorge]
Good afternoon, good evening to everyone joining us from around the world on World Bank Live, Facebook, and X. Today’s discussion focuses on how South Asia can adapt and is already adapting to the growing impacts of climate change. The conversation is based on insights from our recent World Bank report, From Risk to Resilience: Helping

[People and]
Firms and Households Adapt in South Asia. As the report shows extreme heat, severe flooding, and other shocks related to rising global temperatures are already affecting people and businesses. And while households and firms are beginning to adapt to these shocks, there are more effective, and sustained, and scalable solutions available that are needed. Public resources are limited, so the private sector will be crucial, supported by smart government policies and financing systems. Please, join the conversation using the hashtag #ClimateResilience, and post your questions in the World Bank Live chat window. So, to dive deeper into the challenges and opportunities, we’re starting with a fireside chat that features Johannes Zutt, World Bank Vice President for South Asia, in conversation with Dr. Seema Jayachandran, Professor of Economics and Public Affairs at Princeton University. Over to Johannes.

[Johannes Zutt]
Seema Jayachandran, thank you so much for being with us today to discuss this great report from the South Asia region, From Risk to Resilience: Helping People and Firms Adapt in South Asia. You’re a Professor of Economics and Public Policy at Princeton University and helped us put this report together. We’d like to hear a few thoughts from you about the work that you’ve done in the climate space. I’d like to start with a question about adaptation and mitigation. A lot of your work is actually about helping achieve mitigation results, helping firms and countries to curb carbon emissions; but many countries, and certainly many households and firms today, are actually confronting more immediate problems of adaptation because they are facing extreme weather events with increasing frequency and trying to figure out what to do response to them. How do you see this balance between addressing climate mitigation and climate adaptation?

[Seema Jayachandran]
John, thanks for inviting me to participate in this conversation. My own research has mostly been on mitigation, mitigation opportunities in low and middle-income countries; but I think it’s clear that countries in South Asia and low and middle-income countries more broadly should be prioritizing adaptation. For the reason that when you spend money on adaptation, that’s helping your people. It’s a local benefit. Whereas mitigation, it’s a global benefit, and we want some countries to be funding that so that it’s a free rider problem. We want some countries to fund that, but the burden probably shouldn’t be on low and middle-income countries, both because they have fewer resources, the adaptation challenge is going to be bigger. At the same time, why do I do research on mitigation? Because there are really cheap ways to mitigate in developing countries. I work on deforestation, and if you want to protect forests in Uganda or India, that’s going to be cheaper than doing it in Pennsylvania, just because land prices are lower. So, as we, as a globe, as a world, try to tackle climate change, we should be going after those low-cost opportunities. But we can separate where does it take place and where is the finance? And so, the high-income countries who have the resources, and honestly, the moral responsibility to mitigate climate change can shop around the world, basically, and try to find opportunities that do well by the country so that there’s really a win-win opportunity. But I think, and this also is relevant for donors or people who are providing development aid or lending, which is that because adaptation is dollar for dollar helping the recipient country, that’s really development aid. If we have cheap ways to mitigate climate change, and they happen to be in a developing country, hopefully there are some local benefits. We’ve reduced particulate matter if we have clean energy or we’ve created jobs with the project. So, there’s some development aid, but probably not dollar for dollar. A lot of that money was just displacing electric vehicle subsidies in the US, and getting more carbon for that amount of spending. So, I think in the mitigation discussion, I think on the one hand, it’s important to take advantage of those opportunities in low and middle-income countries, but it’d be a real shame if we conflated the global public good and the real needs and benefits in the recipient country.

[Johannes Zutt]
Our report finds that something like four out of five South Asian households are already taking action to adapt to climate risk, and something like three out of five firms are doing the same, mostly adapting through low cost, low tech technologies of various kinds. There are a number of reasons why households and firms aren’t able to do more. These include things like lack of information, various behavioral biases, limited access to financial resources. In your experience, what type of low-cost measures could help these households and firms adapt more effective and sustainable responses to climate events today?

[Seema Jayachandran]
Just the fact that already you’re seeing adaptation is a reminder that climate change is here and people are experiencing it. And so, both you want to increase the number of households and firms that are adapting, and as you said, not just any adaptation, but really being on the frontier of that. I think one of the nice things the report highlights is thinking about these ways that, and sometimes the adaptation is in the interests, it’s in the personal interest of the household, or it’s profit maximizing for the company, and some simple public policy might be able to nudge them towards that. And so, I think information, as you said, is important. Some people know about climate change, and they’re more likely to invest in these adaptations. And so, the very clear opportunity is to make sure more people, more companies, more households are aware of climate change, what it means, and not just that there’s going to be hotter temperatures or higher chances of disasters, but also what to do to adapt. Some simple ideas that might be… Especially if they’re going to think about a company where it’s in their profit interest to do it. So, I think one example is just the cooling technologies in a lot of factories, just the fact that it’s under hot incandescent lights or no ceiling fans, or air conditioning. That makes workers less productive. It puts machinery at risk. And so, that technology is probably going to be good for profits, and it’s going to be increasingly important with climate change. And so, giving people those kinds of ideas. I think another one, in a small piece that I participated in this report was thinking about, again, with firms and thinking about weather insurance. So, just for both households and companies, it’s going to be more... Insurance is going to be an important product because part of what climate change is doing is making these extreme events worse and more frequent. Insurance is a tricky product. It’s hard to understand. You have to trust that you’re going to get paid in that event that you deserve a payout. All of our behavioral biases of regrets that, you know, “Oh, I paid for insurance and I didn’t get a payout this year.” So, I think they’re just helping develop those markets, helping sensitize customers to the value of insurance is going to be increasingly important. Both of those are information. You also mentioned finance. I think some of these differences between the simple adaptation and the more advanced are just needing to credit. So, just our bread and butter policies of better financing is going to help in this regard, too.

[Johannes Zutt]
Your comments about insurance piqued my interest as someone who grew up on a farm and had to cope with not very extreme weather events, but weather events nonetheless, which could make the difference between a very profitable year with high yields and an absolute wipe out year with almost no yield. Insurance is an obvious solution, but it does make me wonder whether all of our efforts to help people to adapt in place, as people say, in the situation in which they find themselves today, in the locality where they find themselves today, are always the most appropriate response. Insurance can, for instance, encourage farmers to continue to plant and grow heat sensitive plants, heat sensitive crops, which are not actually viable in the long term. And similarly, investments in infrastructure can encourage people to continue to live in floodplains that are very susceptible to annual or more frequent flooding. So how do we know when to shift from adaptation policies aiming to help people adapt in place to more radical solutions, helping them to move out of the places where they are today or out of the type of work they’re in today to something that’s more sustainable in a world that’s more impacted by climate change?

[Seema Jayachandran]
Yeah, that’s a very good question, a very tough question. I think, if we thought about this through our textbook economics, we would understand the moral hazard. If we subsidize or we insure people against something that’s probably not what makes the most sense, they’re going to do more of it. And so, that textbook answer would be we want to discourage them. We don’t want to be that underwriter of that activity. That works to an extent, but we can’t abandon everybody who’s living in a floodplain. Those transitions are hard. They might take a generation. And so, I think it’s a hard question. I don’t have a pat answer to it, but I guess I have a couple of thoughts. One is there’s a real case for complementary policies. At the same time that you are building a sea wall by Kochi, you’re also trying to do industrial policy and encourage economic development in other places that could become the population centers and the economic activity. So, you want to protect the place where there are a lot of people and understand that you can’t successfully move all of them, but at the same time, try to encourage movement elsewhere. I think then the other

[thing]
is, it’s going to depend on what those places are, how populated they are, how much they are the economic heart of a country or a region. If it’s a city, Jakarta, it’s not in South Asia, but

[there are]
10 million, 12 million people and

[it]
needs a sea wall, it’s going to be hard to just abandon Jakarta and say everyone should move elsewhere. They are, I think, just recognizing that you’re going to have to have some solutions in place,

[that]
matters. Last summer, I was in, not in South Asia, in East Africa, but a place that’s very dry, and there’s a well-intentioned development project that was putting in some irrigation so people could do some agriculture. It’s a pastoralist area. Part of me thought this was wonderful. These are some of the neediest people in the world, but part of me also said this is really cost-ineffective. This is one of the least hospitable places for agriculture. And so, by promoting it, we just spent a lot of money to boost income. There you could say maybe we want some sort of basic income. So, to decide a cash transfer is more cost-effective than building that infrastructure, trying to move people into agriculture. And as you said, don’t make it tied to place. So have people who are residents of their... Their ancestry is there, be eligible for it, they might choose to stay, and that’s what’s preventing them from falling into food insecurity and more cost-effective than trying to spur agriculture there. But they can also... It’s portable. So, if people say, “You know what?” “Now that I have some capital and I have some cushion, I can go try something else somewhere else.” So, I think a cost-effectiveness lens is really helpful here, where it’s not just dollars, it’s also human cost. But I think sometimes it’s a hard decision that places are already not that productive and probably will increasingly become less productive with climate change.

[Johannes Zutt]
Your comments about Indonesia and East Africa made me think of the challenges that those two parts of the world have, East Asia and East Africa. But Bangladesh is also a country that’s facing very, very extreme, almost existential challenges from accelerating climate change. You have the Bay of Bengal rising, you have the land mass subsiding towards the west. So, the whole landmass is tilting, getting lower. In part because of over-extraction of groundwater, which may be happening in your East African community as well. And you also have a lot of glacial melt moving through the Great Rivers, which is great from some perspectives, but very hard to manage from others because of the flooding risks, and so on. And also, as we all know, a resource that over time is likely to become less reliable as the glaciers continue to melt. One of the things that we struggled with in the World Bank when we were writing our country climate and development reports a few years ago was helping people to understand better that pursuing a positive climate future as well as a positive development future are not incompatible objectives. There are ways that you can invest both in improved development, and also improved climate adaptation and mitigation. I’d be interested to hear your thoughts about that, and in particular, how you see South Asian countries potentially exploiting this type of double dividend going forward.

[Seema Jayachandran]
Yeah, I think that maybe this is the most optimistic part of thinking about climate change adaptation is that our bread and butter ways of improving people’s lives, helping them have more human capital or more income is also going to help them adapt. It’s the flip side of why adaptation is going to be so challenging in developing countries and emerging markets. It’s partly because of their current climate, but it’s also because they’re poorer, and they don’t have those resources. So, if we can boost them up economically, that’s going to help them adapt. So, some of the things we know... I think the way I think about this is some of the things where already there’s too little investment for the current climate, those are ways where we should be doubling down and improving things because they’re going to become even more valuable with climate change. I think irrigation is something that comes to mind. So, if places we know that as is, irrigation, places that have less irrigation, that’s not great for agriculture. That’s going to become increasingly true with the water scarcity you mentioned. Having more irrigation is going to improve agricultural productivity even in normal times, and it’s going to be more needed with adaptation. It’s going to be an important cushion when it’s an especially dry year, I think. In addition to that, I think human capital is valuable. Climate change, we can give people information about what’s happening with climate change, but it’s a challenging problem to analyze, what should I do? What should I expect? So, I think our basics of education become more valuable. Health, if people are healthier to begin with,

[and have]
better nutrition, better preventative health, that’s going to mean a heat wave is going to be less damaging to their health. And we know that mortality and morbidity are a huge part of the economic and human burden from climate change. I think one thing that came out in the part of the report that I participated in is also just management practices of firms. Again, coming back to this, it’s a challenging problem that if firms in the economy were… If you have better managed firms where you had some sophisticated management to think about what should we be doing to adapt, that’s going to be good for all sorts of business decisions that they’re making. And that’s going to help the economy if those firms are more productive and hire more workers. It’s going to be especially valuable for climate change. It doesn’t have to be just teaching people management skills. It’s also just the competitive environment that allows the productive, dynamic firms to the ones that grow and hire more people and thrive.

[Johannes Zutt]
Thinking about South Asia in general, I’m going to ask a question about where you think the different South Asian countries should be putting most of their energy today. What do you see as the biggest climate threat that they are facing over the next, say, 20 to 30 years? And what should be the most basic strategy that countries should be trying to promote or adopt to help households and firms to meet that challenge, that climate challenge, over those 20 or 30 years?

[Seema Jayachandran]
Yeah, that’s a tough question. I’m probably going to differ across countries, so I’m not going to try to give the holistic answer you’re seeking from me.

[Johannes Zutt]

[Unintelligible]
countries?

[Seema Jayachandran]
Yeah.

[Johannes Zutt]
That’s totally fine.

[Seema Jayachandran]
Yeah, I think flooding in places like Bangladesh and parts of India and Pakistan that are at risk of flooding, that’s a huge risk that is going to require government action because

[there should be]
infrastructure projects. I think heat is going to be a problem. So having plans, contingency plans for heat waves and trying to have some encouragement of passive cooling or whatever to handle those increased heat waves is another one. And then, I think agriculture, a lot of people, especially the very poorest people, are in agriculture. And so, that’s probably the place where we have the best toolkit of what’s needed to help the drought-resistant or heat-resistant crops you mentioned, the irrigation. That behavior change, to do that is challenging, but we know that there are some, thankfully, some new technologies that are better suited to the weather that we’ll be expecting. So that seems like a huge priority as well.

[Johannes Zutt]
Have you seen any examples of adaptation in South Asia at the household level in poor families that really impressed you and left you hopeful about the ability of people who are less well-off to face a very uncertain climate future? And if so, would you be willing to share that with us?

[Seema Jayachandran]
Oh, that’s a good question. I’m not pollyannaish that this is going to happen on its own. I do think that people are really ingenious in coming up with things, but this is just something major that came out of nowhere that some people have… I’m not the expert on the specific things, but I’m sure there are building techniques that are used that have for painting roofs white or painting roofs blue. That’s not going to be the be all and end all for adaptation, but those are things that people have discovered without policy intervention. We should be thinking what those are and scaling them up. But I do think this is a problem that is so major, and that where innovation and ideas as part of figuring out what are the cost-effect of ideas is such an important part of the solution that that’s where there is a really important role for governments, advisors to governments, to give people a menu of here are the sorts of things to do. I gave the example of switching from incandescent lights to LED lights. Some companies would have discovered that on their own, or households would have discovered that on their own, but not everyone would. I really think this is something where it’s on policymakers to help households and firms to figure out those ingenious things that they can go run with.

[Johannes Zutt]
Yeah, interesting. I lived in Mali for three years, about 25 years ago, and it was super hot. I’m a Northern European. It was unbearable

[speaking in French]
, as people there would say. And like 90% of the people in Bamako, I lived in a house that was built out of concrete, which is basically a heat sink. It just absorbs the heat of the sun all day long and then radiates it back all night long. So, it was almost impossible to escape the heat. But what I quickly learned was that a lot of Malians living in these concrete houses would put a secondary roof on top of their roof of mats, just straight straw mats that they held down with... That they lifted above the roof on blocks and held down with rocks. And they would also shade the side of the house that got sun all day long. And it was amazing how much lower the temperature in the house came to be from this very, very simple intervention, which pretty much anybody could do. So, I think you’re right. People can be very ingenious in helping spread that type of low-tech technology around the communities that are trying to cope with these challenges would be extremely important, yeah. Seema, thank you so much for joining us today. We really appreciate your time and your insights. And thank you also for contributing to this flagship report, From Risk to Resilience, one of the South Asia region’s outputs this year. Thank you.

[Seema Jayachandran]
My pleasure. Thanks, John.

[Franziska Ohnsorge]
Thank you to Johannes and Seema for this interesting discussion. You’ve already drawn our attention to the close link between climate adaptation and development, and you’ve given us several specific examples. And that’s the perfect segue to bring in our panel to dive deeper into country experiences and explore how policy and innovation and private sector action, which you’ve already heard some examples, can help scale up climate adaptation across South Asia. So let me briefly introduce our panelists. We are joined by Sunita Narain, Director General of the Centre for Science and Environment. She’s also the Editor of Down to Earth, an online news platform at the intersection of Environment and Development. Then we are joined by Ms. Chamindry Saparamadu, the Executive Director of DevPro, a legacy organization of Oxfam Sri Lanka, who was working closely towards inclusive economic development. She was formerly the Director General of the Sustainable Development Council of Sri Lanka, and she spent many years working with UN agencies. And then, we’re joined by Siddharth Sharma, an editor and a lead author of the report, and a Lead Economist in our unit, the World Bank’s Office of the Chief Economist for South Asia. So let me jump right in with Siddharth. Our recent World Bank report, your recent World Bank report, From Risk to Resilience: Helping People and Firms Adapt in South Asia, it examines climate change impacts and adaptation in South Asia through comprehensive literature reviews that brings in the world, a global experience, but also specific surveys in South Asia and economic modeling for South Asia. Can you tell us a bit what are the main findings? What the main findings of the report are about how households and firms in the region are already adapting to climate change and what effects it’s having? Over to you, Siddharth.

[Siddharth Sharma]
Thank you, Franziska. Good morning and good evening, everyone,

[thank you]
for joining us today. It’s great to have the opportunity to talk about our report on climate adaptation in South Asia, From Risk to Resilience, Helping Households and Firms Adapt in South Asia. So let me start by just underlining something that we’ve already heard, that South Asia is very vulnerable to the impacts of climate change. According to the University of Notre Dame’s Climate Global Adaptation Index, it’s the most vulnerable region in the whole world. According to our calculations, nearly nine out of every 10 South Asians will face the risk of exposure to extreme heat by 2030, nearly two out of every 10 will be facing the risk of exposure to floods. Governments in the region are aware of this challenge and are acting on it, but their room to do so is limited by fiscal constraints. South Asia has the highest debt to GDP ratio among all emerging markets and developing economies. So, a large part of the burden of adaptation is going to fall on the private sector, on households and firms. And so, that is the thinking that motivated our report. We set out to understand better how households and firms in South Asia are being affected by climate change, how they are responding to it, and what obstacles they face in adapting to it. To start out, let me outline some of our key findings about how households and firms are affected and adapting to climate change. Households and firms in South Asia are aware of the climate risks they face. We conducted surveys among both, firms and households, in different parts of the region to better understand this. We found that in the survey areas, nearly 90% of households had been affected by some type of weather shock in the last five years, 42% of them had been affected by a weather shock in each of these five years, every year in the last five years. With firms, too, we found that nearly 70% of firms had been impacted by a weather shock in the last five years, and 75% expect to be affected by a weather shock in the next five years. Now, households and firms’ beliefs and expectations about the climate risks they face are also largely in line with the consensus expert projections. For example, when we ask households about their expected maximum flood depth in the next five years, the reply they give us is, on average, very close to the best expert projection. So, these beliefs, they matter because households and firms act on them. We find that households that have experienced a flood, and even more so, households that expect a flood in the next five years are more likely to have undertaken adaptation measures. Similarly, firms that expect a weather shock, and those that have experienced weather shocks are more likely to have taken adaptation measures. Clearly, the information and experience on which households and firms form their beliefs about climate risks do matter. What are these adaptations that households and firms are undertaking? We find that there’s a whole range of adaptation methods. It can range from something as simple as making small changes to your house or factory to something more deep-seated, like changing your job or moving somewhere else. But we find that the most common adaptations in South Asia are basic and low-cost ones. We find that 80% of households have adapted in some form, but the two most common ones are rainwater harvesting and reinforcing the housing structure. We observe that these are being done in very low-tech basic ways. Households are adapting in the ways that they can. Similarly, for floods, the two most common adaptations are planting trees and raising the level of the house. There are more sophisticated ways to adapt to floods, for example, using more flood-resistant seeds, but these are quite uncommon. Similarly, among firms, the most common adaptation is installing more fans, which is a very basic way of addressing heat. Firms also report installing air conditioning and building upgrades, but the cost, the expenditure on these is quite low. Overall, it seems like the most common method of adaptation among firms is small upgrades to buildings and machinery. Now, these adaptations that are common in South Asia are not the most effective ones. We did a review of the global research on climate adaptation, and it turns out that there are two types of adaptation methods that are most effective. The first one involves some technology like climate resilient seeds, which I just spoke of, or energy-efficient machinery. The second type of effective adaptation is an approach that leverages a core public good, like roads, to access more resilient jobs or to access health care or education during times of shock. Now, for households and firms to have access to these more effective adaptation methods is really important. We did some modeling exercises for the report and found that in the aggregate, if households and firms are able to adapt freely, then by 2050, market-driven adaptation by the private sector could offset the impact of climate change on the region’s GDP by as much as one-third. So, it’s very important, even in the aggregate, that households and firms are able to adapt, adjust freely. I’ll stop here, and leave it for the next panelist.

[Franziska Ohnsorge]
Thank you, Siddharth. Thank you. So let me turn to Sunita now. Siddharth just gave us examples of how households and firms are already adapting in South Asia, but the adaptation is limited. It’s basic and small scale. I know that spurring the adoption of climate-resilient technologies and practices by households and firms is one of the issues which CSE, under your leadership, has worked on for many years. Based on your experience, what prevents or slows the adoption of more resilient, climate-resilient technologies or practices? Is it the lack of suitable technologies? Is it the cost of these technologies? Is it that households and firms are not aware of them? Is it a matter of information? And which policies do you think can promote the development and adoption of these technologies and practices in South Asia? Over to you, Sunita.

[Sunita Narain]
Thank you, Franziska, and thank you, Siddharth. That’s an excellent overview of your report. I would disagree a bit with Siddharth’s analysis. I think the scale of adaptation at the individual level is much larger in South Asia because people do what they can to cope with the disasters that they see around them. I mean, take extreme heat, for instance. Extreme heat has been a major issue in our cities over the last some years. People are beginning and do what they can to try and protect themselves and their buildings from extreme heat by doing everything like double insulation, not double insulation in the way that the Western countries do with extreme expenditure. We don’t have that money. They do thatch on their roofs. They will do what we call a

[unintelligible]
or a shade or all the other indigenous methods they know of to be able to reduce the heat, and to be able to reduce the burden of heat, including planting trees. When it comes to floods, definitely rainwater harvesting, making sure that you can hold the water where it falls so that you reduce the amount of flooding that happens in your own community. The problem, Franziska, is that scaling up is not happening largely because of the technical mindset that exists in our world, that the solutions that exist which are appropriate, which will require a rethinking of the way we do our building, our architecture, our cities, and the way we do the management of our water system, our waste systems, the way we do city planning. And unfortunately, the idea of adaptation, and in fact, I believe the word adaptation itself is really creating confusion in the minds of policymakers because what we are really talking about is how do you do development in a way that it has less environmental climate change impact, less environmental impact on communities, and has better well-being and livelihood potential. And that’s what adaptation means. So, I think we need to rework that word because otherwise it becomes a new science. As it does with new science and new terminology, governments find a generation goes by before they can understand what it means. I do think that the biggest barrier today is the inability of the technical systems to understand what we need to do differently in our part of the world to have better air quality, better water management, better waste management. And that also helps us to adapt to the worst impacts of climate change. And that’s the co-benefit, the sweet spot that I believe most people in our world are beginning to understand. And that policy, and more than that, the technical, the financial systems are still behind the curve. And that’s what we need to catch up with as fast as possible. Thank you.

[Franziska Ohnsorge]
Thank you. Thank you, Sunita. And thank you also for making a bridge from the individual action to really a community action because this is a broader issue. As Seema already said, it’s something so big that the individual action can only do so much. And you’ve both said that, and you have given us wonderful stories of how people do as best they can, as you put it, Sunita. But there is a role for government to make sure that the whole comes together, that these things are scaled up. And with that, let me actually ask Chamindry this question. You’ve had a leading role in developing policies and programs for resilient and green growth in Sri Lanka, both in your current role at DevPro and your past role in the Sustainable Development Council for Sri Lanka. Based on your experience, what would be the main pillars of a National Adaptation Resilience Plan in the region, for the region, for countries in South Asia? How can national adaptation planning help spur private sector adaptation to get that bridge that Sunita mentioned between the individual action and what really needs to be at a bigger scale?

[Chamindry Saparamadu]
Thank you, Franziska, and good morning, and good evening to everyone. Firstly, my thanks to the World Bank team for engaging me in this very important and timely discussion. I want to start by saying that the National Adaptation and Resilience Plans must create a robust enabling environment that empowers and incentivizes the private sector to innovate and invest in resilience. This requires a critical paradigm shift from a government as a dual model to a government as a facilitator model. The plan’s success should be measured not just by the amount of public money that it spends, but by the private capital that it mobilizes. Having said that, I want to focus on three critical pillars for National Adaptation Plans. Firstly, it should have a system for actionable climate intelligence with a deep commitment to moving beyond simply generating climate data to building a system for delivering actionable climate intelligence. A national plan must include a clear strategy for translating complex meteorological projections into sector-specific, localized, and commercially relevant advice for firms and farmers. This means investing in last mile delivery infrastructure that can get the right information to the right person at the right time, for example, through mobile platforms, extension services, industry associations, etc. Now, in Sri Lanka, we have seen some promising initiatives in this area, including in strengthening early warning systems and developing digital climate advisories for the agriculture sector, particularly, recognizing the importance of timely intelligence as a critical asset for risk management. We have, for example, the IDAT project, that is the Inclusive Digital Agriculture Transformation Program that is supported by the Bill and Melinda Gates Foundation that looks at prioritizing weather and climate data into agricultural decision making to strengthen resilience. The second important pillar is climate resilience, social protection. Social protection instruments such as unemployment protection, social health protection, pension schemes, public employment programs, etc., can support people during and after shocks, and in the context of climate change mitigation and adaptation. Social protection can buffer against climate shocks, especially unforeseen disasters, addressing absorptive capacity. Social protection can also tackle vulnerability by anticipating and preparing for risk. Social protection can aid diversification and capacity building to reduce disruptive impact of shocks. Social protection can also address root causes of inequalities and can play an important transmutative role in climate adaptation. In Sri Lanka, the government has recognized in its NDCs the importance of integrating disaster management strategies into various policy areas such as social protection to enhance risk management. The third critical pillar that I want to highlight is adaptation finance and insurance to catalyze the system for the new normal by market transformation. Here, there needs to be a strong emphasis on de-risking and not subsidizing. The most effective role for public finance and development finance should be not to provide perpetual subsidies, but to strategically de-risk private investment in adaptation. This shifts the paradigm from government as a funder to government as a facilitator. There should be emphasis on specific mechanisms such as public-private, first loss guarantees for bank loans, blend of finance, vehicles that co-invest alongside private capital, and technical assistance programs that build the capacity of local banks to assess the climate-related projects. On your second question, Franziska, on how national adaptation plans for private sector adaptation is that by providing a long-term vision--

[Franziska Ohnsorge]
Just a moment.

[Chamindry Saparamadu]
A long-term vision for climate resilience and creating a stable roadmap for adaptation priorities provided that the private sector is included as an important stakeholder from an early stage of the process, given the importance in supporting and financing climate adaptation actions. They can also be considered as a valuable implementing partner for adaptation options and priorities. The engagement of MSMEs is extremely important in this process as they account for a significant percentage of all businesses in developing countries, and many of them work operating climate-dependent sectors such as fisheries, water, agriculture, etc. National adaptation plans can also foster public-private partnerships by integrating private sector perspectives into planning, which leads to more effective implementation and helps ensure that private sector investments are aligned with national goals and access climate finance. So, during the NAP process, the private sector can provide very valuable inputs given their own knowledge of their vulnerabilities and the existing work and the understanding of climate change. Governments can also use a number of entry points to support private sector engagement in adaptation, for example, by identifying opportunities for private sector actors to climate-proof their business operations, supply chains, and investment portfolios. The governments can also identify opportunities for private sector actors to develop and distribute climate resilient goods and services. Also, the NAPs can be an architecture, national architecture for de-risking private investments, as the NAPs can clearly signal to the market how the government will use its balance sheet and policy tools to strategically de-risk private investment. The goal is to use limited public funds catalytically. These NAPs can actually document and map some of these instruments from guarantees and blended finance, vehicles to insurance schemes. In Sri Lanka, the policy direction is moving in this way with the development of a sustainable finance roadmap 2.0 and a green finance taxonomy designed to guide capital. There are also active discussions around establishing a national blended finance facility to crowd in private investment for sustainable development and climate change mitigation and adaptation. Thank you.

[Franziska Ohnsorge]
Thank you, Chamindry. I want to come back to your pillar one, where you had the example of agriculture. Clearly, agriculture in South Asia is one of the most hurt sectors by climate change, if not the most hurt sector. At the same time, it has a lot of… Average incomes, they are lower. So, it has a double challenge, both by being more hurt and by having fewer resources or people in agriculture have fewer resources to deal with climate adaptation. Let me come back to Sunita to pick up this theme of agriculture that Chamindry started. India has rolled out several government initiatives to help address the challenges at the federal and state level, in agriculture in particular. So that includes agricultural weather insurance, and better early warning, and weather forecast system, technology extension, for example, subsidy reform. What have we learned from these initiatives? What should governments in the region prioritize for building resilience in agriculture?

[Sunita Narain]
Very good question, Franziska. I think the key issue is as follows. Number one, we know that extreme weather events are worst impacting the farmers, very rightly, as you have said. CSE puts out a state of extreme weather events report once a year, where we collect the data from the Indian Metrological Department to understand the scale of the change. You will be amazed when I tell you that it is one extreme weather event a day, almost in India. We don’t have data for South Asia. We have data only for India. One a day. Now, that’s incredibly devastating for the poorest who live on the margins. And farmers are the worst impacted because it is their crops, which are their livelihood. And every time there is too much rain or unseasonal rain, too much cold, too much heat, pest incidents, they are the ones who are worst impacted. Now, you and I, if it is very hot, we can still move into an air-conditioned space. We can change the way we do our clothing. They lose livelihood. So, for them, it’s a matter of survival. Now, a lot of plans have come in, and I think that’s important. I think the scale, that’s why I think we need to join the dots on it, because sometimes these are not seen as adaptation plans, and they need to be put together as adaptation plans, Franziska. Otherwise, as I was trying to say earlier, you will have a separate NAP, National Adaptation Program, which will be made by the Ministry of Environment, which will not reflect the integration of the plans that are happening in the name of development. We need to make sure that we can broaden the idea of adaptation as not the word “adaptation,” but really about coping and building resilient livelihoods and well-being as we move ahead. Now, the Indian government has had an incredible number of programs, starting with, in my view, the biggest adaptation or coping program in the world is the National Rural Employment Guarantee program, the MGNREGA program. The MGNREGA is incredible because it puts a floor to poverty. It really says that where you have extreme poverty you have, or even if you don’t have poverty, you don’t have livelihood, and you are impacted because of drought, you can call for work, and you get 100 days of work. And more than that, that work is put into building the ecological security framework for the future. MGNREGA has been the program that has built millions of tanks of ponds across the country. It now invests in the money of the poorest to even get them to improve soil and water conservation on their own land. It allows them to invest their labor for ecological security. I think this program has helped India to take away the worst of the shocks of the weather extremes that we are seeing. In fact, Franziska, just for your viewers to understand, the genesis of this program was the famine and in the drought of 1972 in Maharashtra, when instead of... When the Maharashtra government essentially said to stop the migration from rural to urban areas, they would put a tax on the professionals in Maharashtra, and that tax would be used to pay for employment where people live. Now, how much more brilliant can that be in today’s world? We know that migration is one of the hottest potatoes of our world. Resilience is about building local livelihood, local well-being. And that’s really the MGNREGA program. I don’t think there has been enough focus on the asset creation and the quality of assets in MGNREGA. That’s why we need now a new look at MGNREGA to say, well, that’s really about climate change. It’s about better resilience. How do we invest more in the assets and the quality of assets so we make sure that the water harvesting systems, the ponds, the tanks, the soil conservation, the planting of trees, the growing of grass, all that helps to build the local ability to be able to withstand the shocks. The second program has been the insurance programs. Now, the insurance programs, quite honestly, and I think this is where many governments have to relook the word insurance, because it’s a very convenient word for everyone to talk about, but we have to understand the insurance for the very poor in the world is a very tough call. Especially when it is weather-related insurance, it means you need really good data on local weather conditions, and you need to be able to understand crop damage at the very local level. Today, with climate change, you could have extreme rain in one district, one sub district, and no rain in another. You could have extreme loss in one place and not another. So, you need the variation because of climate change. That’s the real weather change. Now, that we need a much more sophisticated system. The government of India is introducing now satellite-based remote-sensing-based weather estimation. All those need to be supported, managed so that we can get better insurance, and we can get it in the hands of the poorest, because that is really where the real impact is. And the third, and the fourth, if I may, the third issue is really about forecasting and getting that information to farmers. Now, there have been two experiments in the country, which are very relevant for the rest of the world, where on one hand, there has been the Met. department, which puts out weather-related information. Now, this is getting more and more re at the local level. But how do you get it to the hands of the farmers when they need it? That’s improving. I have to say that’s improving much more with connectivity, with WhatsApp, with all the systems that farmers know when the next bad rain episode is going to come. But the question then is, what do they do? And that’s the other part of the question, what is the advice they need to be given? And that, frankly, we are struggling

[with]
because when we started this in India, we found that the advice was not disaggregated down to the agro-ecosystem where it needs to be. Also, the advice, and that’s my last point here, the advice often comes from a perspective of agriculture which is outdated in our world. The perspective of agriculture, which is high-intensive agriculture, which is going to improve productivity; and therefore, put money in the hands of farmers, is something that we are seeing today is failing across the world, not just in India, across the world. What we need is a form of agriculture which builds, local, which improves productivity with less inputs, low cost, high productive agriculture, which puts more money in the hands of farmers. And that really requires us to invest in the quality of soil, in the biodiversity, and improving the money to go to farmers. That’s really where the big challenge across the world today is, how do you do localization of agriculture? The best example in India, and something that should be captured, is really in the state of Odisha, for instance, where they have linked their Midday Meal Scheme, which is this phenomenal program in India, where you provide compulsorily cooked meals to children in school. They’ve linked that to the growing of millets and organic millets coming from farmer-producer organizations. So, you’re creating an organization, not just an individual farmer. You are then being able to grow the millets and you’re able to supply it. Andhra Pradesh is doing that with natural farming. And so, focusing on rebuilding the wealth of the soil so that you can improve agriculture. I’m sorry, I took a little longer to explain this, Franziska, but I just wanted to explain to you and your viewers that I think the issue of adaptation is something where governments are really learning that they’re going to have to speed up action because the speed of change of the disaster is so big. The speed of change of the devastation we are seeing is so huge and impacting the livelihoods of people that the speed, the nimbleness of being able to scale up the ideas and learn from the field to be able to improve the lessons as we move ahead is going to be absolutely critical. Thank you very much for listening to me.

[Franziska Ohnsorge]
Thank you, Sunita. Actually, you bring up... Thank you for mentioning that really development and climate adaptation are two parts, two sides of the same coin. And that’s something that has been mentioned before, that these development programs make people richer so they can face shocks, any shock, including climate. But also, the development program, like your example with MGNREGA, can be targeted towards building climate adaptation. That’s a nice add-on to this particular example of MGNREGA. You also mentioned the need to improve productivity in agriculture. And that is much--

[Sunita Narain]
No, no. Productivity versus money. Please.

[Franziska Ohnsorge]
Practices. Yeah

[Sunita Narain]
Because this word productivity is something that really bothers me. Economists love the word productivity, and that means more inputs, put in more fertilizer, put in more pesticides, put in more inputs. The costs of inputs are so high today that the cost of food is unaffordable for the farmer. And that’s where their risks, their ability to withstand risks is going down. Because when they have such high costs, they are more indebted to the money lender. So that’s really where the issue is. Sorry, I can see

[unintelligible]
telling us we’re over time.

[Franziska Ohnsorge]
The practices, the practices that have to improve. Chamindry, just very quickly, part of the agricultural practice is improving the whole agricultural sector, working better for the farmers, is small-medium enterprises. Can you give us a bit of a sense of... DevPro is working to build climate resilience with MSMEs, small and medium enterprises, in agricultural value chains. Can you share some success stories in that work of yours, that is particularly about small firms in agriculture culture?

[Chamindry Saparamadu]
Okay, thank you, Franziska. I want to also just refer to Sunita as an example from Andhra Pradesh, because this is something that we’ve tried to introduce in Sri Lanka, and we had

[unintelligible]
visit Sri Lanka as well. We were looking at natural farming, and also sustainable financing around that. Yes, DevPro is an organization that works towards inclusive economic development, leveraging our expertise in inclusive and climate resilient market systems. DevPro implemented this program called Resilient and Gender Inclusive Enterprise Systems project, which was supported by partners like Oxfam Australia, where we introduced a bundle of solutions such as good agricultural practices, and good manufacturing practices certification, and climate smart practices in the spice sector, for example. MSMEs, particularly spice growers and processors, were supported to adopt good agricultural practices and manufacturing practices, and a range of climate smart techniques. The interventions included awareness creation, hands-on training, and facilitation of certification. And some of the topics covered were in contour planting, shade management, organic soil amendments, and efficient water use. These practices helped reduce soil erosion on slope lands and improve soil moisture retention and buffering farmers against erratic rainfall and prolonged dry spells. Certification was not only a technical upgrade, but was also a market enabler. Like the good agricultural practices and good manufacturing practices provided these SMEs with credibility among exporters who increasingly demand traceability and compliance with international sustainability and quality standards. So, this certified SMEs were better positioned to demonstrate proper post-harvest handling and hygiene processing. Several of them reported that the certification allowed them to negotiate better terms with buyers in the center of Colombo and also in the export markets. For example, the Green Cinnamon Lung, which is one of the enterprises, obtained the GMP certification for processing and packing cinnamon, which strengthened its competitiveness in international markets. Now, the challenge with some of these is actually certification, as it involves extensive documentation, periodic inspections, and investments in technical and physical assets. For smallholders, these costs were challenging without external support or group support. Certifications also were provided on selected products at a given time for a given limited duration, for about two years. This is always difficult for smallholders for continuity and diversification. So DevPro actually developed certain gap training video series, enabling SMEs to self-learn and directly prepare for the audit process, reducing dependence on scarce extension services. So, these are some of the examples. Thank you.

[Franziska Ohnsorge]
These are great examples. Thank you very much. Now, the hallmark of a good discussion is that it runs over. So, thank you very much, Chamindry, Sunita, Siddharth. Thank you very much for your insight. This was a very engaging discussion and with lots of actually very encouraging examples. Thank you very much. A big thank you also to our viewers for engaging via World Bank Live, Facebook, X. Do please keep the conversation going with hashtag #ClimateResilience, and do read the full report. Thank you.