A recent research paper published by the Asian Development Bank (ADB) suggested that the Governments should consider offering resilience tax credits as incentives to developers of climate-change adapted infrastructure. The suggestion is contained in its background paper for the G20 Climate Sustainability Working Group. Released last week, the Paper is captioned 'Building Resilient Infrastructure for the Future'.

As pitched by the research paper, national or sub-national authorities could promote 'code-plus' compliance in government-funded infrastructure investments,where standards exceed the minimum life safety requirements of local building codes. It also highlighted the need to accelerate investments in resilience by offering incentives, resilience tax credits, loans or grants. The paper also mentioned that in spite of the upward trend in reported investment in climate change adaptation and resilience, there remains a notable gap between what is required to deliver resilient infrastructure and what is currently available in the region.

The paper also stated that to deliver climate and disaster-resilient infrastructure at scale, significant finance, both public and private, had to be mobilized. The governments could use their purchasing power to increase the resilience of their investments. Underscoring private sector's role in developing infrastructure and in raising funds for it, the paper urged raising awareness of climate risks. This would help integrate these issues into financial markets, commercial lending and company risk analysis.

The paper further mentioned that incentives for financial markets to price in climate change risks had increased recently with initiatives such as the Task Force on Climate-related Financial Disclosures (TCFD). The initial focus has been on the risk of stranded assets because of mitigation policy and carbon taxation - the risk that investments in fossil fuel reserves or generation plants, for instance, are unable to earn an economic return sometime before the end of their originally assumed economic life. Disclosure will promote the integration of climate risks into private sector decisions, the paper concluded.