Building resilience to climate change

Hot spots: Cities lead the way in building resilience to climate change

Suffering from amplified temperature rises, cities are serving as laboratories in the quest for innovative infrastructure solutions to environmental change.

Global temperatures are expected to rise at least 2.5°C on average above pre-industrial levels this century, far above the Paris Agreement goals1. Cities can expect to feel even more heat.

With people crammed together, urban areas experience an environmental amplifier effect because of air and noise pollution, congestion and the heat “island” effect. Extreme weather events, such as this year’s searing heatwaves in Delhi and deadly floods in Dubai, stretch cities’ infrastructure beyond breaking point.

City planners and builders are responding to the alarm signals.

The result is that urban areas act as early warning systems of climate change. The good news is that city planners and builders are responding to the alarm signals these systems are sounding by harnessing innovative clean technologies and smart solutions to tackle urban challenges. These innovations should, in turn, provide a template for the rest of the world to address its environmental problems.

To have meaningful impact, these solutions require infrastructure investment, presenting opportunities for new markets to grow. Carbon dioxide removal (CDR), a method of removing and storing CO2 from the atmosphere, is becoming one viable solution, and potentially a commercially attractive one too. Some investors believe the carbon removal business will create an industry the size of the oil and gas sector.

While some scientists and policymakers warn that CDR is no substitute for reducing emissions in the first place, it is nonetheless increasingly seen as vital to net zero goals. The UN Intergovernmental Panel for Climate Change (IPCC), for instance, now recognizes that the deployment of CDR is critical and 'unavoidable' to fight climate change. The IPCC says CDR can achieve and sustain net negative greenhouse gas emissions in the long term and is required to limit warming to 1.50C.

Other solutions to address environmental problems in urban areas include less industrialised and tech-heavy methods of solving urban ecological and resource challenges. These centre on harnessing nature’s ecosystem services in cities – such as pollination, provisioning of clean air, food and fresh water and flood prevention.

Such adaptation methods are known as Nature-based solutions (NbS), designed to protect and restore nature, address environmental and societal problems and increase resilience at the same time.

The use of timber in cities, in particular, is becoming more popular as new technologies like cross-laminated timber (CLT) and changes in building codes allow architects to swap concrete for wood even in skyscrapers2. It is also a growing market – the global CLT industry is forecast to expand at nearly 15 per cent on a compound annual basis by the end of this decade from the current USD1.1 billion3.

The UN estimates that investing in nature-related targets – such as nature restoration, the efficient use of resources and reducing water and air pollution – will help plug an estimated USD7.4 trillion gap in natural capital by 2030 and have the potential to deliver more than 20 times the return on investment4.

1 UN Emissions Gap, Report 2023
2 For more, see Reimagining wood: bringing timber to the masses, February 2024
3 Grand View Research, April 2023
4 UNEP-WCMC, June 2024

The content of this article is not intended for persons who are citizens of, domiciled or resident in, or entities registered in a country or a jurisdiction in which its distribution, publication, provision or use would violate current laws and regulations. The information and data furnished in this content are disclosed for information purposes only and do not constitute a solicitation to subscribe to products or services of Pictet Wealth Management*. Pictet Wealth Management is not liable for the use, transmission or exploitation of the content of the site. Therefore, any form of reproduction, copying, disclosure, modi­fication and/or publication of the content is under the sole liability of the addressee of the content, and no liability whatsoever will be incurred by Pictet Wealth Management. All rights reserved. Copyright 2024

*Pictet Wealth Management includes the entities mentioned in the report published under the following link: www.pictet.com/reports.

Confirm your selection
By clicking on “Continue”, you acknowledge that you will be redirected to the local website you selected for services available in your region. Please consult the legal notice for detailed local legal requirements applicable to your country. Or you may pursue your current visit by clicking on the “Cancel” button.

Welcome to Pictet

Looks like you are here: {{CountryName}}. Would you like to change your location?