We need a democratic debate about climate adaption – and we need to move fast

Clarifying the framework for climate adaptation has become urgent, says group executive director Tonny Thierry Andersen from Nykredit, who is heading the Advisory Board for the CIP Foundation’s new project. There are many difficult dilemmas in this area, he says.

With regard to climate adaptation, one of the major dilemmas is the contradiction between the necessary democratic debate and the need for urgent action.

This is how Tonny Thierry Andersen sums up the situation. He chairs the Advisory Board for the CIP Foundation’s project on climate adaptation, which aims to identify the barriers and opportunities related to organisation and financing.

“We’re not playing with Monopoly money here. It’s about climate-proofing the properties of everyday Danes. Those properties are their pension savings so, ultimately, their homes and everyday lives are at stake,” he says.

A report by the Technical University of Denmark (DTU) for the CIP Foundation and the Danish Insurance Association indicates that if we fail to adapt to climate change, the damage from storm surges and cloudbursts over the next 100 years will amount to DKK 406 billion at current prices. The calculation primarily includes buildings and certain business losses.

However, the good news is that it pays to adapt to climate change. It looks like climate protection against cloudbursts and storm surges will save almost DKK 2 in losses for every DKK 1 invested in prevention.

The figures are clear. Climate adaptation is a profitable investment. And the sooner we start, the more damage we can prevent.

“Unfortunately, it’s become clear that global warming is moving in the wrong direction. Keeping global warming below 1.5 degrees will be extremely difficult. That’s why we need to accelerate climate adaptation actions. It’ll be expensive, but ignoring it will be even more expensive,” Tonny Thierry Andersen says.

Climate adaptation is also a matter of cohesion

Climate adaptation is demanding. Homeowners may be able to install drains and a catch basin in their gardens, but at best, this can only prevent flooding during cloudbursts. Most damage stems from storm surges, where the combination of rising sea levels and more storms threatens several coastal areas.

Owners of houses or holiday homes cannot protect against coastal storm surges on their own. It requires joint decisions on dikes. And it only makes sense for larger areas.

Individual property owners do not have the means to establish climate protection, despite having the responsibility, and without the necessary funding, projects can come to a standstill. Even though delaying is much more expensive in the long run. There is therefore a need to review the regulation on the area.

And this raises a number of difficult questions. If we take outset in the principle that the price of insurance must not exceed the value of the insured, we quickly hit a number of the sore points in Danish social debate.

“It’s not just about buildings and value, it’s also about what kind of society we want. This is why we need a democratic debate and some general principles for discussing climate change adaptation, which is also a question of securing cohesion in our small but beautiful country,” Tonny Thierry Andersen says.

Paradoxes can quickly arise if we only look at the financial value of the houses saved by climate proofing. The market value of a detached house outside the big cities will be much lower than the market value of a house in the largest cities.

“The debate must reflect that climate challenges are created globally, but the local impact varies from place to place. We have to remember that homeowners in neither Haderslev nor Dragør have caused these problems,” the Nykredit group executive director says.

Stop to new construction in at-risk areas

One of the most difficult parts of the debate is whether there are areas society should give up trying to protect. At the local level, there may be areas where the cost of climate proofing is disproportionately expensive. And this will lead to regional or local situations similar to those depicted in the television series Familier som vores (Families like ours), where the whole of Denmark is evacuated.

Tonny Thierry Andersen will not identify specific areas where this may become relevant. However, he points out that we should consider whether there are high-risk areas where we should stop new building.

“There are areas where it makes sense to put a stop to new construction projects because we know those areas may face serious problems in the future,” he says.

Deciding on prioritisation can very quickly become a tough and difficult conversation. The time pressure exacerbates the challenge. We are already increasingly experiencing extreme weather events. Tonny Thierry Andersen sums up the situation with an American expression: The need for speed versus the voice of democracy. And in that nexus we have to find a balance – together.

Massive export potential

The political frameworks must be in place so the market can come into play. Pension companies, banks and other financial players have the capital to invest in climate adaptation.

In a way, Tonny Thierry Andersen has a foot in both camps. Nykredit is owned by an association, Forenet Kredit, and therefore it is a participant in the democratic debate. On the other hand, Nykredit and Totalkredit are banks and mortgage lenders, and thus also commercial players.

Clear ground rules are needed for commercial players because lending and investment must be balanced against the risks. However, there are also strong incentives for the financial sector, Tonny Thierry Andersen argues:

“Nykredit has some unique opportunities because we’re owned by an association and we think long-term. We’ve already developed several financing solutions for the utilities sector, including sewer systems and other initiatives to make the systems more robust. As a whole, the financial sector has an interest in climate adaptation because it helps to secure assets in which they have already lent money,” he says.

Looking forward and outward to the world, there are other gains from getting to grips with climate adaptation. The Danish water sector is uniquely strong in an international context. There is close a collaboration between universities, utility companies, consultants and equipment manufacturers. In this context, experience with climate adaptation will also help to create new value.

”We have very skilled engineers, and the fact that we are a small country surrounded by a lot of water contributes to fantastic export potentials,” Tonny Thierry Andersen says.

Even with such major challenges, there’s a lot to be grateful for, he points out. And he has an appeal to politicians.

”We’ve been exceptionally good at getting things together, and this is where we need to find the solutions. I’m very happy that I live in a country where I hope we can recognise the changing situation and act in time and with a proper democratic debate so that we fully understand the different considerations. I believe it’s possible. But it requires political leadership, because these decisions are urgent for us to have the right structures to act,” he says.