The ASEAN+3 region faces several hazards due to changing climate patterns. More frequent and/or intense climate-related disasters are likely in the future, which will threaten the region’s natural capital and populations. In response, most economies have, or are developing, strategic plans for climate change adaptation and disaster risk reduction. Adapting to climate change is estimated to cost the region over USD6 billion annually over the next three decades. Various forms of adaptation assistance— technical, policy, and financial—are available to ASEAN+3 economies from multilateral development banks and other international bodies. The region’s economies also have several financing options that they can tap in the aftermath of a natural disaster, and experience shows that they rely most on ex post—rather than ex ante—financing instruments. With adaptation and disaster risk management likely to become more expensive, fiscal policymakers will need to increase their influence in accelerating the climate adaptation process and monetary authorities will need to prepare against physical risks to ensure climate-resilient financial systems. Regional financing arrangements specially designed for the ASEAN+3 climate risk profile may have a role to play in expanding its adaptation financing instruments.
Policy Perspectives