Climate Change Vulnerability, Adaptation, and Feedback Hypothesis: A Comparison of Lower-Middle, Upper-Middle, and High-Income Countries

Abstract

Governments and policymakers are increasingly concerned about climate change. To cope with this inevitable issue, the SDGs-13 target underscores the importance of developing adaptation measures that reduce its adverse effects and ultimately safeguard both society and the environment. This issue is critical in developing countries, which are unable to counter climate-related risks because they lack adaptive capacity, suitable infrastructure, technology and, most importantly, human and physical capital. By contrast, resource-endowed developed countries have succeeded in integrating adaptative and protective policies into their developmental agenda using human power, technology, and especially investment. Keeping these facts in mind, this study is framed to examine the nexus between climate change, adaptation measures, and economic development across different income groups (lower-middle, upper-middle, and high income), using the Driscoll–Kraay (D/K) standard errors method for panel data from the period of 1995 to 2020. This study incorporates two indices (i.e., adaptive capacity and adaptation readiness) in the adaptation framework. The results demonstrate that developed countries such as Australia, Austria, Belgium, Canada, Denmark, France, Germany, Ireland, New Zealand, Sweden, Switzerland, the USA, and the UK are highly adaptive countries due to their readiness for adaptation. Developing countries with very low levels of readiness have a lower adaptive capacity and are, therefore, more vulnerable to climate change. Additionally, a non-causality test demonstrates that a one-way causality runs from readiness, ecological footprint, GDP, renewable energy, FDI, and natural resource investment to the adaptive capacity in all panels. The developed countries are less vulnerable to climate change because of their well-established economies, rich capital resources, good governance, and timely and effective readiness strategies. Adaptation readiness is a vital tool in capacity building for societal adaptation to minimize the effects of disasters on the living standard of communities.