India and Greater China could each incur more than $200 billion every year in climate adaptation expenses by 2050 if global temperatures rise by 2°C, a new analysis by the McKinsey Global Institute has found.
The report, ‘Advancing adaptation: Mapping costs from cooling to coastal defences’, provides a detailed assessment of adaptation requirements across climate hazards such as extreme heat, flooding, droughts and wildfires. Using pixel-level geospatial data, it maps the scale and location of risks with unprecedented precision, offering a clearer picture of future adaptation needs.
Globally, the study reveals a significant mismatch between climate risk exposure and existing protection measures. Around 4.1 billion people are currently exposed to climate-related hazards, yet present levels of spending only provide protection comparable to developed-economy standards for about 1.2 billion people. This shortfall underscores the scale of the global adaptation financing challenge.
India emerges as one of the countries facing the highest financial burden. Current annual expenditure on protecting against extreme weather events is estimated at roughly $15 billion. However, this represents only a small fraction of the investment required to safeguard the population adequately, with nearly 90% of people living in areas exposed to at least one major climate hazard.
The report further cautions that even if lower-income countries sustain today’s protection levels under a 2°C warming scenario, they would still address only a limited share of the total costs needed to effectively shield their populations. Without a substantial increase in climate adaptation investment, large sections of vulnerable communities are likely to remain exposed to escalating climate risks.
