More Than Just a Plan B: Climate Change Adaptation and Potential Role of Trade

By Andreas Oeschger, Junior Policy Analyst, Sustainable Trade, IISD

Climate change is already re-shaping our world, but it affects different regions in different ways. Gradual changes in climate, like rising temperatures and shifting rainfall patterns, combined with more frequent and extreme weather events, are having greater impacts on some regions than on others. These changes not only affect local communities, but also their capacity to engage in international trade, which translates into challenges to the world economy on a broader scale. Trade and trade policy, however, can also help countries adapt to climate change.

To further explore the nexus between climate change adaptation and trade, the International Institute for Sustainable Development (IISD) and the Pacific Islands Forum (PIF) Secretariat organized an event titled, ‘Trade and Climate Change Adaptation,’ during the third edition of the annual Trade and Environment Week hosted by the World Trade Organization (WTO). The session, which took place on 19 October 2022, both in person and online, sought to reflect on key needs and the national adaptation planning process in developing and least developed countries (LDCs) and to examine possible ways in which trade can support adaptation actions and enhance economic resilience.

Alice Tipping, Lead for Sustainable Trade, IISD, opened the event by highlighting a common misconception of approaching adaptation as a “plan B.” She said adaptation cannot wait and must happen in parallel with mitigation efforts. Noting that the discussion on the role of trade in adaptation “is still in its infancy,” Tipping pointed to the value of connecting climate adaptation and trade policy to see how these can be mutually supportive.

This message was reinforced by Ambassador Nella Pepe Tavita-Levy, Permanent Representative of Samoa to the WTO, who said “climate change is the biggest challenge facing the blue continent.” She outlined PIF’s efforts to raise awareness of the issues on the ground, noting that in small island developing States (SIDS), “more severe and frequent weather events lead to a vicious cycle of rebuilding efforts and recovery.”

Tavita-Levy offered examples of adaptation efforts undertaken by SIDS regionally and globally, including:

the 2017 Pacific Resilience Partnership, which is ensuring resilience and empowerment of local communities;
the 2021 Pacific Islands Forum Leaders’ Declaration on Preserving Maritime Zones in the Face of Climate Change-related Sea-level Rise; and
the Pacific Aid-for-Trade Strategy in the context of the WTO-led Aid-for-Trade initiative, which seeks to help developing countries, in particular LDCs, to build the trade capacity and infrastructure needed to benefit from trade opening.

Emphasizing that for SIDS, climate change adaptation is truly about survival, Tavita-Levy said investment in renewable energy and resilience building needs to happen while also improving economic opportunities.

Anne Hammill, Senior Director, Resilience Program, IISD, outlined how governments can leverage trade to support climate adaptation in developing countries, drawing from IISD research. She highlighted that adaptation goes beyond “technical and physical structures” and includes a range of social, economic, and institutional measures. Hammill pointed to a “huge and growing” adaptation gap, with the speed of adaptation measures increasingly unable to cope with the speed of climate-related changes. She said this is because adaptation efforts are often small, fragmented, incremental, or sector-specific, rather than being transformative and taking a long-term view.

Hammill outlined the role of trade in addressing adaptation priorities, describing three pathways along which trade can support adaptation:

Domestic trade policy measures that enhance access to adaptation goods and services: trade policy instruments, such as tariffs, subsidies, and intellectual property rights, can be designed to facilitate the availability and accessibility of goods and services required to adapt to climate change, such as climate-resilient seeds or engineering and research services to build climate-resilient infrastructure;
Access to trade-related financing mechanisms that support climate adaptation: Aid-for-Trade, for example, presents entry points to integrate adaptation funding; and
International collaborative frameworks on trade in support of climate adaptation: trade agreements could facilitate adaptation by incorporating adaptation-related measures, such as information exchange, cooperative capacity building, and climate-resilient foreign direct investment (FDI).

Joel Richards, Senior Technical Specialist – Trade, Permanent Delegation of the Organisation of Eastern Caribbean States (OECS), emphasized that for the Caribbean community, adaptation is “not a theoretical debate but a very real one,” as shown by the growing number of category-five hurricanes in recent years. He said adaptation “is not as easy as it sounds,” and called for more focused attention to loss and damage, for example by linking debt instruments with a disaster risk clause that would automatically extend due dates of interest payments in case of disasters.

Describing the role the WTO could play in facilitating adaptation, Richards identified three entry points:

Conversations underway on WTO reform, suggesting members explore an index to quantify vulnerability of countries like SIDS. A similar multi-dimensional index is already established and operationalized under the recently concluded Agreement on Fisheries Subsidies;
Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement, indicating that that the urgent need for developing countries to access adaptation technology, financing, and know-how “makes the option worth exploring”; and
Working group on trade and transfer of technology, suggesting the working group be revitalized to discuss matters related to adaptation.

Fahmida Khatun, Executive Director, Centre for Policy Dialogue, discussed LDCs’ international trade priorities for climate change adaption. She said defining priority sectors enables countries to realize their national adaptation plans (NAPs) and implementation strategies. Khatun highlighted the importance of fossil fuel subsidies reform currently discussed by some WTO members and the need for rapid implementation of the Fisheries Agreement as harmful fisheries subsidies are endangering the livelihoods of many in LDCs. She called for facilitating LDCs’ access to finance, capacity building, and technology, and lamented the lack of funds in the Adaptation Fund. Khatun also flagged that graduation of LDCs to the “developing country” category deprives them of badly needed support measures such as finance and trade-related capacity building measures.

In ensuing discussion, participants emphasized, inter alia: the need to address how countries can shape and utilize their own unilateral trade policies to support adaptation; targeted approaches that account for local vulnerabilities; and the role of technology transfer in bolstering digitization, which can aid in both mitigation and adaptation efforts.