The increase in weather-related disasters worldwide has helped galvanize attention on the need for climate change adaptation and risk mitigation.

Long term, the climate change adaptation business will be in the tens of billions of dollars annually, including design and construction, and will most likely cross the $1 billion mark in project revenues in the next three to four years, according to Climate Change Business Journal’s recent edition on Emerging Markets in Climate Change Adaptation.

Climate change adaptation work ranges from climate risk assessment and planning for infrastructure agencies such as water utilities, to major construction projects (e.g., desalination plants, levees and sea walls) designed to help communities and businesses adapt to the “new normal” of climate change.

“However, while design, engineering and construction of responses or preventive measures will eventually represent the bulk of the adaptation market for C&E firms, today it is skewed towards the front end, i.e., analysis, assessments, mapping and planning,” observed CCBJ Senior Editor Jim Hight.

Climate Risk Analysis Business Small But Fast-Growing

A relatively new climate change consulting industry segment is emerging to help governments, businesses and institutions assess and model their risks from climate change. The climate risk analysis business, also known as climate services, is not large but growing rapidly; CCBJ estimates annual revenues in 2011 were between $30 million and $40 million worldwide.

Specialized climate risk companies often collaborate with consulting & engineering firms to integrate climate risk assessments into major building projects and planning engagements. “These organizations don’t perform basic meteorology or climate research per se, but draw on the existing global climate models and other climate and atmospheric data to perform more customized and user-defined research and analysis,” noted Hight.

Adaptation Planning: Global Clientele Led By Water Utilities

Who are the clients for climate change adaptation? Despite the absence of significant progress toward the global mitigation and adaptation fund envisioned at Copenhagen in December 2009, there is still a significant amount of funding from developed countries and multilateral lending agencies like the Asian Development Bank for climate risk assessment and adaptation planning in developing countries.

In North America, Australia and Europe the primary client group paying for climate change assessment and adaptation services are water utilities, with the most likely projects being risk assessments in the context of asset management and long term planning. In particular there is a great deal of the emphasis on increasing diversity of water supplies, including desalination and re-use of treated waste water.

“Companies with expertise in water security are on the front lines of addressing changing climate adaptation,” said Hight. “Several leading consultancies have cut their teeth in Australia and other countries where governments have been forced to come to terms with chronic water scarcity. And now they’re bringing that expertise to Texas and parts of the United States hit hard by drought and extreme heat.”

Public agencies that operate drainage, sewerage and wastewater treatment systems are also increasingly considering climate change in their plans.

Meanwhile, in the private sector, business is slower to take off. However, vulnerable industries like mining; food and beverage manufacturers, wholesalers and retailers; and hydropower generators are slowly integrating climate change into their long-range planning, CCBJ found.