The projected impacts of climate change, including its potential to multiply threats to other critical issues such as biodiversity and food security, necessitate concrete action at all levels of policy and economic activity. The global financial crisis can impact resources available for climate change solutions, in the short term because of funding gaps and falling carbon credit prices, and in the long term because of reduced expenditure in critical areas such as research and development in clean energy technologies. This lack of funding is exacerbated by the fact that private sector investments, which are most affected by the crisis, comprise 86% of investment and financial flows for climate change.

Despite these threats, there is vast potential to integrate adaptation and mitigation measures in economic activities to minimize the “extra” cost of the climate change financing. These strategies include:

Integrating climate change into business cycles: In developed economies, while the opportunities for new infrastructure may be relatively limited, those for the renewal of existing infrastructure may be higher. For example, investments in energy infrastructure, expected to total over $20 trillion between now and 2030, will have significant long-term impacts on greenhouse gas emissions because of the longevity of energy infrastructure.

Integrating climate change into development: Adaptation and mitigation initiatives can be integrated into economic and social development policies with multiple benefits. Under South Korea’s Green Growth Plan, for instance, the government will invest about $2.7 billion in the next five years to develop the green energy sector. The Asia-Pacific region alone is estimated to need as much as $6.4 trillion in new energy infrastructure by 2030, which provides enormous potential for mainstreaming climate change into development policy.

While there are several opportunities to integrate climate policy into mainstream economic policy, it is crucial to ensure a conscious effort on the part of policymakers to maximize and utilize these windows of opportunity before it becomes too late or economically unviable. The U.S. stimulus package, for instance, contains provisions for federal “green” buildings and funding for renewable energy projects. According to a study by ICF International, the $838 billion package would reduce greenhouse gas emissions by a minimum of 61 million tons per year, possibly more.

These policies can also leverage benefits that include energy security, job growth in the relatively employment-intensive renewable energy sector, and cost reductions from energy efficiency initiatives. In addition, the crisis may enable a paradigm shift towards a more long-term perspective in formulating investment decisions, which will necessitate a consideration of climate change. For instance, it is likely that insurance companies will need to integrate at least some degree of climate risk in their valuations.

The global economic downturn indicates the inevitable adverse consequences of unsustainability and the lack of appropriate policies in a particular dimension of economic activity. It is vital to ensure that unsustainable economic policies are modified to take into account broad-based and climate-friendly development by synergizing public and private sector initiatives and by establishing policies and targeted regulations to facilitate financial flows where they would be most effective.