Climate change, private sector and value chains: constraints and adaptation strategies

Working and discussion papers
June 2015
Alberto Lemma; Marie-Agnes Jouanjean; Emily Darko
Climate change can have significant impacts on economic activity and value chains. Understanding how climate change impacts private sector incentives and activities, and markets, is vital to understand not only the overall economic impacts of climate change in semi-arid regions, but also the social and environmental effects in these areas.

Private sector actors, including smallholder farmers and large multinational companies, are key agents of change. Though these actors can be heterogeneous and operate with varying rationalities, many of the constraints they face and that influence their decision-making – such as limited access to markets, finance or natural resources – are often similar. Crucially, these actors do not act independently, but interact directly or indirectly with value chains, or through the use of assets and resources.

This report sheds light on these interdependencies, and highlights the interactions between sectors and activities, both horizontal and vertical. Doing so makes it possible to identify multiple dimensions in climate risks to business models and supply chains, as well adaptation requirements and their costs and benefits. This new knowledge can help to identify new market opportunities for the private sector, enhance capacity to respond and inform policy frameworks that encourage private sector adaptation and risk management.