From de-risking to diversification: Making structural change work for climate adaptation

As discussed in the previous chapter, growth prospects in many developing countries are already under threat from climate shocks, with worse to come. Adapting to these shocks is a major policy challenge. The favoured approach has so far emphasised “de-risking” development through a variety of market-based coping measures and relying on the public sector as a benevolent insurer of existing assets. While these may help address some of the immediate consequences of climate shocks, in particular for vulnerable populations, the only lasting solution is to reduce the dependence of developing countries on a small number of climate sensitive activities through a process of structural transformation that can establish more resilient economies.