Adapting to climate change is increasingly becoming not only a necessity to protect communities but also an opportunity for technical innovation and competitiveness. Enhancing these technologies and services will support a more resilient economy, reindustrialisation and growth. Daisy Jameson and Raffaele Della Croce explain the issues and offer six recommendations to Andy Burnham’s government.
The UK’s climate is changing. The extreme temperatures of summer 2026 are likely to have cost the economy more than £4 billion in lost economic output, while the Environment Agency estimates the potential annual cost of flooding to property at £1.2 billion from surface water and £1.1 billion from rivers and the sea. These impacts pose a major challenge to the UK economy.
The technologies and services required to adapt to climate change exist, from flood defences and early warning systems to drought-resistant crops and weather-resistant building materials. The demand for these technologies and services will only increase in the coming decades, and becoming a world-leading innovator in this area poses a growth opportunity for British industry.
From local resilience to national policy
The Climate Change Committee’s fourth Climate Change Risk Assessment recommends that the UK prepare for the weather extremes it will experience if global warming reaches 2°C above pre-industrial levels by 2050. Reaching 4°C by the end of the century cannot yet be ruled out and must therefore be considered in effective adaptation planning.
Because climate risks differ so widely across regions, adapting to them must happen at the local level. But national adaptation policy is vital to provide the resources for effective local investment, and to realise the economic benefits of investing in adaptation technologies and services.
This is particularly important because the UK has lost industrial competitiveness, falling behind other countries and revealing vulnerability to a volatile global trading environment and fragile supply chains. Support to the areas in which the UK holds genuine economic strengths is therefore required, which include large parts of the climate adaptation economy.
The UK’s comparative advantage in adaptation technologies
For the UK, a growing body of evidence suggests that the net zero transition and adaptation represent some of the biggest economic opportunities associated with climate change. Exploring patent data, we find that the UK has clear technological advantages in climate change adaptation technologies overall, ranking second in the world for revealed technological advantage (a measure of specialisation). The UK is particularly specialised in engineering, where it ranks fifth globally; life sciences, where it ranks second; and ‘indirect’ adaptation technologies (such as early warning systems for climate hazards and climate scenario modelling), where it ranks third.
A new Government Office for Science report suggests that adaptation-linked revenue opportunities for UK businesses could be worth £154–355 billion over the next decade, based on 648 adaptation solutions already produced by UK firms across infrastructure and engineering, data, finance and advisory services.
There is also evidence that climate change adaptation technologies could support more regionally balanced growth: several coastal areas already specialise in these technologies. This concentration points to an opportunity for place-based industrial strategies that build on existing regional strengths while responding to future adaptation needs, delivering both growth and resilience. The UK also has significant strengths in professional and business services likely to see rising international demand as the climate changes, including engineering consultancy, environmental advisory services and climate-risk management. Its insurance and wider adaptation-finance sectors are similarly well positioned.
International examples the UK could learn from
Several countries have already developed clear strategic approaches to building expertise in adaptation technologies and services. In November 2021, three Danish ministries (Environment, Foreign Affairs and Business) launched an export strategy for water in partnership with the water sector, aiming to double Danish water-technology and services exports between 2019 and 2030.
In the Netherlands, the Delta Programme, an annually updated flood-protection plan, is being deliberately commercialised to export flood-risk modelling and delta-planning expertise to countries facing rising sea levels.
India has the world’s first comprehensive national cooling plan, framed around doubling farmers’ incomes through a better cold supply chain, a skilled workforce and domestic manufacturing of cooling equipment.
And Singapore, now preparing its first national adaptation plan, is building on its capabilities in water management and urban resilience to act as a regional financial and corporate hub, connecting South East Asian adaptation technologies with multinational corporations and international capital.
Adaptation as an enabler of the net zero and wider economy
Adaptation and resilience are also essential to the success of the UK’s net zero economy. Clean technology continues to be a significant driver of growth, jobs and investment across the nations and regions. The net zero economy now generates around £105 billion in gross value added and supports 1.1 million full-time-equivalent jobs across energy, manufacturing, construction, engineering and professional services, underpinned by more than 23,500 businesses, over 96% of them small or medium-sized, according to the CBI.
But achieving net zero will itself require a more resilient economy and infrastructure. The UK’s energy system faces major resilience challenges: an ageing asset base, increasing electrification and dependence on electricity, and more severe extreme weather. The period 2021 to 2026 saw an exceptional sequence of destructive winter storms (Arwen, Darragh and Éowyn), with Storm Arwen alone (in 2021) leaving around one million customers without power. Adaptation cannot be treated as separate from the transition to net zero: a resilient net zero economy requires resilient infrastructure, supply chains, technologies and institutions.
Recommendations for the new UK administration
The UK is well placed to compete in global markets for adaptation technologies, and targeted industrial-policy support could translate existing capabilities into commercial and export advantage. But this ambition needs a new approach from government, including:
- Set out a vision of a UK that is resilient to climate change in the Government’s 10-year plan and fourth National Adaptation Programme. This should commit the Government to taking action to build resilience against the key climate risks the UK faces. The Fourth National Adaptation Programme, due in 2028, should build on this plan with specific investment strategies and actionable targets for individual sectors. This would both indicate the actions needed to build resilient communities and signal to industry which technologies and services will see rising demand as the economy becomes more resilient, allowing firms to respond and capture the economic benefits of a growing market.
- Incorporate climate adaptation into the UK’s Modern Industrial Strategy. Adaptation should become a cross-cutting priority within the Industrial Strategy, driving technologies in which the UK has strong innovation potential. Adaptation technologies and services cut across existing Industrial Strategy sectors, including advanced manufacturing, life sciences and professional, business and financial services and identifying strategic adaptation technologies/services where there is overlap with the Industrial Strategy would benefit both innovation and resilience.
- Pursue a place-based approach within the Modern Industrial Strategy. The concentration of adaptation innovation in coastal and flood-exposed regions creates an opportunity to combine regional growth with resilience.
- Bridge the innovation–commercialisation gap. The UK’s adaptation innovation ecosystem is growing, but the dominance of small firms means innovators often face significant barriers to commercialisation, procurement and scale-up. Policy should create clearer pathways from innovation to deployment, e.g. networks or clusters connecting research centres and small innovators with larger industrial partners.
- Mobilise capital. Investment in adaptation remains too low, despite growing demand. The UK should develop a dedicated adaptation investment strategy to provide stronger demand-side signals and a visible pipeline of opportunities.
- Develop climate awareness and a skilled workforce. The UK must build the skills to capture these opportunities, bridging the green-skills gap with a workforce that combines climate science with engineering, finance and other professional disciplines.
This commentary builds on a recent report, ‘Catalysing climate resilience: an analysis of the UK’s strengths in the innovation of adaptation technologies and services’, by Daisy Jameson, Raffaele Della Croce, Anna Valero, Maxwell Read and Esin Serin. This report is a partnership between the Grantham Institute at Imperial College London and CETEx, the Grantham Research Institute on Climate Change and Environment and the Centre for Economic Performance at LSE.