Protecting lives and livelihoods depends on helping households and firms adapt
NEW DELHI, June 3, 2025—South Asia is facing a sharp rise in extreme weather, with nearly 90 percent of the population expected to be exposed to intense heat and more than one in five people at risk of severe flooding by 2030. With public budgets under pressure, much of the adaptation effort will need to come from the private sector. A new World Bank report lays out policy reforms that would help households and firms adapt to increasingly frequent and damaging weather events.
Released today, From Risk to Resilience: Helping People and Firms Adapt in South Asia, finds that awareness of climate risk is high. More than 60 percent of households and firms have experienced extreme weather in the last five years, and more than 75 percent expect it for the next decade. Many households and businesses are already taking steps to adapt to climate risks. Around 80 percent of households and 63 percent of firms have taken some measures to adapt. However, most of these measures are basic, such as raising house foundations or installing fans. More advanced options, like using climate-resilient seeds, or relocating from high-risk areas, remain less common.
“The urgency is growing. People and firms are already adapting, but they are doing so with limited tools and few resources,” said Martin Raiser, World Bank Vice President for South Asia. “Governments must act quickly to remove the barriers that prevent more effective adaptation. This includes removing distortions in land and labor markets, expanding access to finance and investing in public infrastructure to support people and businesses as they respond to climate risks.”
The report finds that market barriers and income constraints are holding back stronger adaptation. Households with more education or access to formal finance are more likely to adopt advanced strategies. Similarly, better-managed firms with fewer regulatory barriers tend to be more adaptive. Removing these barriers would enable more effective adaptation by households and firms.
“Private sector adaptation could reduce one third of the region’s projected climate damage, but this requires governments to strengthen enabling environments,” said Franziska Ohnsorge, World Bank Chief Economist for South Asia. “Adaptation is most effective when markets function well and when essential services like transport, water, healthcare, and digital connectivity are widely accessible.”
The report calls for both targeted adaptation efforts and broader development measures that also build climate resilience. Governments have a critical role to play, even with limited fiscal space. They can expand access to localized climate information, promote weather-indexed insurance, and support the use of resilient technologies such as energy-efficient cooling systems. Public investments in infrastructure that keep people safe and connected, such as roads, drainage, power supply, and mobile networks, are also essential.
In Bangladesh, investments in early warning systems and cyclone shelters have helped reduce fatalities during major storms. In India, cities like Ahmedabad are leading with heat action plans to protect urban populations from rising temperatures. They demonstrate how targeted investments, and effective institutions can help scale up local adaptation successfully.
The report calls for policy action guided by three core principles. First, implement a comprehensive package of adaptation measures. Second, prioritize solutions that support both development and climate resilience. Third, align adaptation strategies with long-term development goals to ensure lasting progress. Governments in South Asia can best build resilience by creating the conditions that empower households and firms to adapt.
