Introduction

This report assesses the costs and benefits of adapting to four climate hazards: heat, wildfires, drought and flooding. It evaluates 20 established measures, including air conditioning, irrigation, levees and mangroves, using geospatial modelling aligned with IPCC approaches. Around 40 per cent of global landmass is currently exposed to extreme weather at magnitudes typically protected against in developed economies. Exposure is projected to increase under 1.5°C and 2°C warming scenarios to 2050, particularly for heat and drought.

Chapter 1: The world today spends $190 billion annually to defend against extreme weather

Global adaptation spending is estimated at $190 billion per year, safeguarding about 1.2 billion people to developed-economy standards. Extending comparable protection to all 4.1 billion people in exposed areas today would cost around $540 billion annually.

The 20 measures assessed vary in cost and effectiveness. Structural defences such as levees and stormwater networks can prevent most targeted damages when well designed. Lower-cost measures such as fans, white roofs and urban trees offer partial protection. On average, measures deliver benefits at least 1.5 times their costs globally, with co-benefits including higher agricultural yields and improved urban amenity. However, relatively few national adaptation plans include quantified investment estimates or clear prioritisation frameworks, indicating planning gaps.

Chapter 2: Adapting to developed-economy standards at 2°C could cost $1.2 trillion annually by 2050

Under a 2°C warming scenario by around 2050, maintaining current protection levels would require 2.5 times today’s spending. Achieving developed-economy standards globally would cost approximately $1.2 trillion per year.

Heat and drought account for more than three-quarters of projected costs. Over half of total spending would address heat, with air conditioning representing 38 per cent of overall costs. Irrigation accounts for about 16 per cent. Coastal flooding represents a smaller share at 2°C by 2050 due to lower population exposure compared with heat stress.

At 2°C, adaptation measures are estimated to deliver benefits around seven times their costs on average. More than 80 per cent of spending would fund measures with benefit-to-cost ratios above three.

The report highlights maladaptation risks. Seawalls can shift flood risk, irrigation can strain water basins, and cooling increases energy demand and refrigerant emissions. It recommends careful spatial planning, efficient irrigation, drought-tolerant crops, high-efficiency cooling technologies and coordination across jurisdictions to reduce these risks.

Chapter 3: How much will be spent on adaptation?

If adaptation spending grows in line with GDP, around 60 per cent of required 2°C costs could be covered globally, but significant gaps would remain, particularly in lower-income regions. More than half of projected costs relate to private actions such as air conditioning and flood proofing. Around 30 per cent involve public goods, including sea dikes and early-warning systems, with the remainder spanning mixed public–private measures such as irrigation. Affordability constraints, competing fiscal priorities and institutional capacity limit implementation.

Chapter 4: A view of adaptation across the world

Regional burdens differ. Sub-Saharan Africa and parts of Asia face higher costs relative to GDP, while advanced economies face larger absolute costs. At 2°C, over 40 per cent of people could be exposed to heat stress, compared with less than 1 per cent to coastal flooding. Benefit-to-cost ratios vary by location, with urban sea dikes exceeding ten in some cases, reinforcing the need for place-based planning.

Chapter 5: Who pays?

Financing will require both private and public capital. Many high-return measures are privately implemented, but public investment is essential for infrastructure and early-warning systems. Adaptation at 2°C is economically justified, but delivery depends on scaling finance, strengthening planning and overcoming political and operational barriers.