The finance sector's response to pressures around climate change has emphasized disclosure, notably through the recommendations of the Financial Stability Board's Task Force on Climate-related Financial Disclosures (TCFD). The implicit assumption-that if risks are fully revealed, finance will respond rationally and in ways aligned with the public interest-is rooted in the "efficient market hypothesis" (EMH) applied to the finance sector and its perception of climate policy. For low carbon investment, particular hopes have been placed on the role of institutional investors, given the apparent matching of their assets and liabilities with the long timescales of climate change. We both explain theoretical frameworks (grounded in the "three domains", namely satisficing, optimizing, and transforming) and use empirical evidence (from a survey of institutional investors), to show that the EMH is unsupported by either theory or evidence: it follows that transparency alone will be an inadequate response. To some extent, transparency can address behavioural biases (first domain characteristics), and improving pricing and market efficiency (second domain); however, the strategic (third domain) limitations of EMH are more serious. We argue that whilst transparency can help, on its own it is a very long way from an adequate response to the challenges of 'aligning institutional climate finance'.

Purpose -The purpose of this paper is to present a formal framework of vulnerability to climate change, to address the conceptual confusion around vulnerability and related concepts. Design/methodology/approach -The framework was developed using the method of formalisation -making structure explicit. While mathematics as a precise and general language revealed common structures in a large number of vulnerability definitions and assessments, the framework is here presented by diagrams for a non-mathematical audience. Findings -Vulnerability, in ordinary language, is a measure of possible future harm. Scientific vulnerability definitions from the fields of climate change, poverty, and natural hazards share and refine this structure. While theoretical definitions remain vague, operational definitions, that is, methodologies for assessing vulnerability, occur in three distinct types: evaluate harm for projected future evolutions, evaluate the current capacity to reduce harm, or combine the two. The framework identifies a lack of systematic relationship between theoretical and operational definitions. Originality/value -While much conceptual literature tries to clarify vulnerability, formalisation is a new method in this interdisciplinary field. The resulting framework is an analytical tool which supports clear communication: it helps when making assumptions explicit. The mismatch between theoretical and operational definitions is not made explicit in previous work.

No abstract

Recent rapid changes in global scale drivers of desertification, land degradation and drought (DLDD) have two important consequences for drylands. First, changes in these drivers, for example in food and energy prices, make improving interventions in drylands more urgent because of their potential impacts. Second, these changes introduce new knowledge gaps regarding both the potential impacts on social‐ecological dryland systems and the design of options to take advantage of opportunities. This paper identifies the most salient research needs in DLDD in drylands brought on by global drivers. The question was addressed through an iterative stakeholder consultative forum. First, relevant global scale drivers were identified through a literature review and preliminary consultation. Next, stakeholders and experts were further consulted to identify research priorities given rise to by these drivers. Identified research priorities were as follows: (i) assessing impacts of rising prices on DLDD in mixed market and subsistence production contexts; (ii) assessing options and limits of agricultural modernisation on fragile lands; (iii) developing methods for assessing land‐use trade‐offs and mapping productive lands; (iv) modelling and participatory methods for monitoring and evaluating soil carbon sequestration; (v) developing policy frameworks to regulate impacts of investment on the environment and local livelihoods; (vi) participatory modelling for regional and local adaptation planning; and (vii) valuation of non‐market land degradation outcomes including biodiversity loss. Concluding, we call for a forward‐looking interdisciplinary drylands research agenda with an increased emphasis on governance to address these priorities. Copyright © 2013 John Wiley & Sons, Ltd.

Coastal adaptation can reduce climate change impacts and investing now, though costly, will bring greater benefits over the longer term, particularly in urban areas. Yet public actors currently cover a small fraction of needed coastal adaptation investments, a finance gap set to widen as coastal adaptation costs continue to increase. Mobilizing private finance for coastal adaptation is thus a salient challenge, as emphasized in the Paris Agreement. Key under‐researched dimensions of this challenge are what promotes private investment in coastal adaptation and how can public actors’ interest in adaptation be aligned with private investor interests. To address this, we review the literatures on coastal adaptation finance and on financial arrangements involving both public actors and private investors. We describe key actors and interests, and identify coastal financial arrangements that align public actor and private investor interests, finding that private provisioning, public–private Partnerships (PPP), and public debt arrangements are promising. We then survey empirical examples, finding that private provisioning attracts investment when returns are high, for example, in urban real estate, and that PPPs attract dredging and construction companies’ investment, particularly for adaptation measures with a large share of operational costs, for example, beach nourishment. We find little evidence of institutional investment through public debt instruments. A number of policy instruments, for example, concessional loans, tax incentives, and standards, may address this gap and enhance private coastal adaptation investment. Our results are also relevant for other sectors that involve long‐term infrastructure adaptation measures. This article is categorized under: Climate Economics > Iterative Risk‐Management Policy Portfolios Vulnerability and Adaptation to Climate Change > Learning from Cases and Analogies