Keywords: climate change, developing countries, natural disasters, risk assessment, risk management, investment risks
Climate change and investments in developing countries: weighing risks and response options
This paper focuses on the practical implications of the risks that potential climate changes represent for investors in developing countries. To this end, it sheds light on the question of when investors should take precautions regarding future climate change. Moreover, it discusses how investors can take account of climate change risks at different levels of investment activities, namely at the project level (of relevance for both private investors and public investors) and at the national level (mostly of relevance for aid agencies). This includes a review of available methods to identify and prioritise responses within the activities or countries at risk. Finally, the paper classifies response options into generic types, arguing for each of them when it is most appropriate to be applied. It also discusses key potential constraints on these response options; and how investors can attempt to predict the performance of each response option with respect to the stated objectives.