Extreme weather events like floods and droughts are becoming more frequent and intense around the globe, disrupting communities and the infrastructure they rely on. In 2024 alone, the world endured 58 disasters that wreaked over a billion dollars in damages each. Yet finance to cope with and respond to these impacts falls persistently short: The gap between funding needed to adapt to climate change and what is currently available is as high as $359 billion per year.
Part of the reason is that adaptation measures, such as strengthening early warning systems or making infrastructure more resilient, are seen only as a way to avoid potential losses — not as a broader investment opportunity. But this underestimates the true value of adaptation and the returns it can bring.
New WRI research finds that investing $1 in adaptation can yield more than $10.50 in benefits over 10 years. This reflects not only the avoided losses from climate impacts, but also a wide range of economic, social and environmental benefits that are generated even when disasters don’t occur.
In other words, adaptation is not just a crucial response to the climate crisis; it is also one of the smartest investments of our time.
The ‘Triple Dividend’ of Adaptation Investments
In a new paper, Strengthening the Investment Case for Climate Adaptation, WRI analyzed investments in 320 adaptation and resilience projects spanning agriculture, water, health and infrastructure. These ranged from upgrading food storage facilities in Bangladesh to improving water management in Brazil.
Cumulatively, the investments we analyzed cost over $133 billion and are expected to generate $1.4 trillion in benefits over 10 years. Individual investments were estimated to generate an impressive average return of 27%.
Moreover, many of the benefits expected from these investments were neither monetized nor included in the projected returns because they are difficult to model and quantify. Researchers found that only 8% of investment appraisals estimated the full monetized values of these dividends — suggesting that the $1.4 trillion and the average rate of return are likely substantial underestimates.
So, where do these returns come from? Our research used the “triple dividend of resilience” framework to capture three key categories of returns on adaptation investments: avoided losses, induced economic development, and additional social and environmental benefits. We found that adaptation projects often have benefits evenly distributed across all three dividends — and generate higher rates of return than commonly assumed.
Consider an urban infrastructure project in Vietnam that aims to reduce flooding and improve water drainage. When estimating the return on this project, many models would consider only the avoided cost of flood damage. But investments in resilient infrastructure could also increase average land prices; decrease healthcare costs by reducing waterborne diseases; and boost workers’ productivity by reducing travel time, thanks to new and improved roads. The triple dividend framework would account for all these outcomes, offering a more complete picture of the value that adaptation and resilience projects can bring.
Good Adaptation Is Good Development
Part of the challenge with funding adaptation is that it’s often seen as an unaffordable, incremental cost that competes with other national development priorities. But the triple dividend framework reveals that the two often go hand in hand. In many of the investments we analyzed, adaptation efforts are key to unlocking resilient development.
Health
Adaptation investments in the health sector offer some of the highest returns of those we analyzed, averaging over 78%. This is because investing in more resilient health systems can save lives, improve public health and bolster economic productivity, especially among vulnerable populations.
For example, the Social and Economic Inclusion Project in Kenya targeted drought-prone regions, where climate shocks deepen poverty and vulnerability. Children are particularly affected: Droughts lead to increased levels of malnutrition and stunted growth, blocking them from reaching their full development potential.
Kenya’s project aimed to address these issues by offering cash transfers and nutritional counseling during droughts, or by deploying community health workers to remote areas affected by climate hazards. It also looked to expand access to healthcare services more broadly, which in turn would boost productivity and learning outcomes among poor and vulnerable households. This is expected to bring significant development gains on top of avoided losses, making the project a model for health-centered adaptation.
Disaster risk management
Investments in disaster risk management also deliver high returns — nearly 36% on average — by safeguarding lives and infrastructure while minimizing economic disruption. This is particularly true of cost-effective tools like early warning systems.
In Bangladesh, the Weather and Climate Services Regional Project piloted a community-level early warning system for flash floods, thunderstorms and droughts in four districts: Netrakona, Sunamganj, Rajshahi and Naogaon. It also set up an online information portal as well as physical kiosks and display boards to provide farmers with easier access to weather and water-related information. This is expected to help farmers better manage climate risks and protect their livelihoods — not only avoiding weather-related losses but also boosting their incomes in the long-term.
Sustainable agriculture and forestry
Adaptation returns in the agriculture and forestry sector average over 29%, largely driven by developmental gains like higher yields and productivity, as well as environmental benefits.
Ethiopia’s Resilient Landscapes and Livelihoods Project restored degraded landscapes in selected watersheds through measures such as hillside terraces and tree planting. At the same time, it trained communities in sustainable farming and grazing practices. Together, these measures could improve soil health, reduce erosion and enhance watersheds, making the area more resilient to floods and droughts while also improving crop and livestock production.
Resilient infrastructure
Projects focused on resilient energy, cities and transport systems offer wide-ranging benefits, with an average return on investment of close to 30%.
For example, the Sustainable Urban Development Project in Fortaleza, Brazil, restored natural wetlands in Rachel de Quieroz Park to help soak up and hold stormwater. This buffers surrounding neighborhoods from floods while enhancing biodiversity. It also created new public spaces and revitalized existing green areas, which can attract more visitors and businesses, raise property values, and improve water quality and living conditions. Crucially, the project emphasized social benefits for women, who make up most of Fortaleza’s population and are overrepresented in its low-income neighborhoods.
Water
Managing water is fundamental to climate resilience. Worsening storms and floods inundate entire cities; crippling droughts parch farmland; and intensifying climate risks threaten water supplies. In our study, water-related projects saw 19% returns on average — although this does not fully capture the range of benefits from investing in the water sector, which are often difficult to measure and quantify.
The Transformative Riverine Management Project in Durban, South Africa, is leveraging nature-based solutions, such as creating and rehabilitating wetlands, to address water risks. This generates benefits across all three dividends: It reduces flood-related losses by improving water absorption. It yields economic benefits, such as creating new jobs and increasing food production and bioenergy generation. It also brings social and environmental benefits, like reducing erosion, improving local water quality, sequestering planet-warming carbon and creating spaces to enjoy the outdoors. The estimated benefits from this project are valued at nearly six times the project cost.
Adaptation Yields High Returns Even when Disasters Don’t Strike
Although adaptation investments are primarily designed to avoid climate-related losses, their economic, social and environmental benefits accrue even when climate disasters don’t strike. In fact, over 65% of the monetized benefits in our study were unrelated to expected climate shocks — from job creation and productivity gains to healthier communities and environments.
In many cases, these broader development gains matched or exceeded the value of avoided losses.
For example, China’s Hubei Yichang Rural Green Development Project seeks to modernize the agricultural sector in Yichang Municipality by investing in modern agricultural practices and technology; installing treatment systems for agricultural waste and water; and improving climate-resilient rural infrastructure, such as building more efficient irrigation systems and better drainage. The projected productivity and resilience gains from these efforts surpass the amount that could be saved through avoided flood losses.
Adaptation Investments Also Curb Emissions
While our study largely focused on the triple dividend of adaptation investments, the benefits don’t stop there.
Climate mitigation — efforts to reduce greenhouse gas (GHG) emissions and curb temperature rise — has historically been siloed from adaptation in international climate negotiations and policy planning. The two are often viewed as competing priorities, vying for limited climate finance.
However, nearly half of the adaptation investments we analyzed helped to lower GHG emissions, revealing untapped opportunities to align strategies and unlock more finance. This shows that investing in adaptation can be a powerful tool to help curb temperature rise while also building resilience against future risks.
The Heritage Colombia Project, for example, is working to restore forest ecosystems in degraded areas and improve land and forest management: two strategies that can increase natural carbon removal. The value of these GHG emissions reductions is estimated at $1.45 billion — topping the estimated value of avoided losses ($1.2 billion) and significantly larger than the $31 million estimated in other social and environmental benefits.
Unlocking Adaptation’s Full Value
Looking at the full picture puts adaptation in a new light. Our research challenges the mindset that adaptation is a financial burden, pulling limited funds from other priorities. It proves that it is often much more profitable to adapt than not to do so — and that good adaptation is, in fact, good development.
But despite a compelling investment case, the adaptation finance gap remains.
More work is needed to build on these learnings and further demystify adaptation’s contribution to development goals. Improving the data collection, monitoring and evaluation systems for adaptation investments — both before and after implementation — can deepen our understanding of their diverse benefits. More evidence on the realized impacts of adaptation investments, coupled with improved cost-benefit methodologies, could help refine our understanding of their benefits across all three dividends and attract additional finance from more diverse sources.
The adaptation finance gap isn’t just a shortfall — it’s a missed opportunity. Every year of delay leaves communities exposed to escalating climate risks and foregoes significant economic, social and environmental benefits from resilient development. It’s time for governments and development partners to make one of the smartest investments for both people and the planet.