Economic development is the surest path to climate resilience

In her fury, Mother Nature is supremely impartial. Since 1960, natural disasters have struck high-income countries at roughly the same rate as low- and middle-income countries. The disparities lie simply in the consequences: the wealthiest economies bounce back swiftly, while the poorest suffer acutely. For poorer countries, the death toll of each disaster can be six times as high, and the economic damage can persist for decades.

Climate change has widened the gap in countries’ ability to recover. Between May 2023 and May 2024, people endured an average of 26 more days of stifling-hot weather than they would have without climate change. Rising temperatures impede progress on nearly all fronts: they jack up mortality rates, depress children’s math and reading scores, and shrink the productivity of businesses and workers. A reckoning therefore awaits many low- and middle-income countries: unless they step up efforts to adapt, studies show rising global temperatures could slash the economic potential of nations in Africa and Latin America by as much as 15 percent.

Success in adaptation will depend on policies that put individuals, households, farms, and firms in the driver’s seat. That will require rethinking the current approach, which relies too much on government programs and investment. Governments reflexively prioritize subsidies, cash transfers, and a variety of other interventions aimed at helping people cope with the aftermath of disasters. But they don’t do nearly enough to prod individuals, firms, and markets to take actions that could reduce the severity of disasters in the first place. 

There’s a good reason for that. It takes money to systematically damage-proof an economy. In wealthier countries, people and businesses can afford to protect themselves against extreme temperatures by investing in air-conditioned homes, schools, and offices. They have ready access to information that helps them take precautionary measures: accurate weather reports and public early-warning systems, for example. They benefit from high-functioning markets that allow households and farmers to buy flood or crop insurance. And they reap the rewards of modern infrastructure like roads, bridges, and public transit systems, which enable emergency relief to arrive swiftly and keep vital economic links mostly intact when disaster strikes.

Developing economies usually lack those privileges. Poverty is the first and biggest hurdle: In an emergency, more than two-thirds of households in Bangladesh, Colombia, Kenya, and Vietnam would have neither sufficient savings nor assets to sell to cover their basic needs for three months. Low incomes usher in a range of bad outcomes for climate resilience. In Bangladesh, for instance, just 2.3 percent of households own an air conditioner. In developing countries other than China and India in 2020, fewer than 10 percent of farms had any form of agricultural insurance. Information that people need to assess climate risks is also scarce. Sub-Saharan Africa, for example, has just 1.6 weather stations for every 1 million people compared with 217 in the United States.

That can and must change. Poor people in poor countries today are disproportionately vulnerable to climate change because they lack the resources to cope. Yet they can be exceptionally resourceful. In flood-prone areas of Bangladesh, for example, more than 100,000 children continued their education uninterrupted during the monsoon season thanks to an ingenious idea by a private citizen: classrooms on a boat. The idea has since spread to Indonesia, Nigeria, the Philippines, Vietnam, and Zambia, which all now provide “floating schools” in flood-prone areas. Policy makers in these countries should ask, how can we mobilize ingenuity of this kind to turbocharge economy-wide adaptation efforts?

Our recent report, Rethinking Resilience, proposes a five-pronged strategy called the 5i method to help countries build climate resilience. The first prong is intuitive: income. Broad and sustained economic development is the most reliable predictor of a country’s ability to cope with a climate shock. World Bank analysis suggests that a 10 percent increase in gross domestic product per capita can reduce by 100 million the number of people most vulnerable to climate shocks. Achieving such a boost will not be easy. In all regions, except the Middle East and North Africa, economic growth over the next few years is expected to be slower than the average of the 2010s.

The second prong is information. Access to reliable information allows people to turn a fog of uncertainty into a concrete set of risks—each with discrete probabilities—that guide their decisions on mitigating those risks. High uncertainty is often a recipe for paralysis or error. Farmers, for example, might forgo using a new high-yield crop variety if they have no quantified information on how it will perform under unusually bad weather. The scope for progress in this area is large. Weather forecasts, for instance, have become far more reliable: A four-day forecast today is as accurate as a one-day forecast 30 years ago. Satellite data and analysis powered by artificial intelligence could also help lower the cost of delivering risk information to people.

Insurance becomes a more feasible option once risk information becomes widely available. It allows individuals, businesses, and governments to recoup at least some of the financial losses from a disaster. In most developing countries, residents are required to buy insurance to drive a car but not to protect property against floods, fires, or other climate shocks. This approach should be reconsidered—because mandating insurance in hazard-prone areas could reduce the need for government bailouts. Insurance providers also have much to gain by simplifying their products or offering packages that make coverage more appealing for hesitant customers. 

The fourth prong is infrastructure. The government plays a crucial role here. Access to safe water, improved sanitation, and electricity is essential for development but these services are doubly desirable because they also reduce health-related risks from climate-related disasters. All infrastructure should be designed with resilience in mind. Dams, for example, should be built to better withstand floods. Roads, drainage systems, water supply, and power-generation systems should be upgraded with climate risks in mind.

Yet even when executed perfectly, these four steps will not be enough. Government interventions remain essential to protect the most vulnerable households. Prompt rollout of cash transfers and other social-protection benefits can prevent both short- and long-term increases in poverty in the aftermath of  a climate disaster. These benefits, however, should be targeted, temporary, and rule-based. Poorly designed protection programs could leave farmers stuck with crop choices that undermine climate resilience or drive households and firms to settle in climate-vulnerable areas. Social protection benefits, in other words, should be portable—not tied to a specific place.

In the coming decades, economic growth and progress on key development objectives will depend on countries’ ability to adapt to rising temperatures and to limit them wherever possible. That’s a job too big for governments alone. Success will also hinge on private action: how individuals, households, farms, and firms adjust to protect themselves and their communities. Humans are infinitely resourceful: it can be done. But success will depend on the implementation of all five prongs of this adaptation strategy.