Prospects for Climate A&R market, or climate change adaptation, an opportunity for private capital

A UN-commissioned study shows that global demand for Climate Adaptation and Resilience (Climate A&R) investments will reach between $0.5 trillion and $1.3 trillion by 2030, indicating huge economic potential. A recent report by the Boston Consulting Group (BCG) summarizes considerations on which sectors will see the highest profitability for private capital.

Climate A&R market continues to grow

The year 2024 was the warmest on record and brought a string of costly natural disasters. BCG and the World Economic Forum forecast that with current levels of mitigation efforts, the increase in global average temperature will exceed 3°C over pre-industrial levels. For the utilities, telecommunications, construction and food industries, this will mean a drop in annual profits of as much as 5-25 percent.

The current value of the global Climate A&R market is estimated at $76 billion per year, with most projects financed by public capital. The Adaptation Gap Report prepared by the UN in 2024, meanwhile, estimates that investment needs in the Global South alone will be between $215 billion and $387 billion annually by 2030. With the development of national adaptation plans and strategies around the world, it is expected that there will be an intensive increase in the number of projects involving primarily companies that provide products and solutions to support climate change adaptation.

BCG estimates that the difficulties to date in capitalizing on the Climate A&R market are primarily due to ignorance about potential returns and unfamiliarity with adaptive solution providers. Published on May 6, 2025, the analysis, referred to as the Investment Opportunities Map, aims to address these concerns and identify the most promising sectors for private investors.

Climate intelligence

Companies and local governments need timely and accurate information on climate change to better prepare for its effects. The climate intelligence sector, according to BCG, will grow at an annual rate of 15 percent, and its main segments will include: providing short-term weather warnings, natural disaster risk analysis and long-term climate forecasts.

The most dynamic growth is expected in the latter segment, which is linked to regulations being introduced in many countries regarding the need to determine climate risk for plans and projects. According to BCG analysts, however, the source of the most reliable profits will be investments in weather warning technologies, based on already proven business models and guaranteeing stable cash flows.

Building materials resistant to climate change

Another attractive sector of the Climate A&R market will be the production of building materials that support the resilience of structures to natural disasters and weather extremes. This category includes structural materials, such as improved concrete or steel, as well as refractory façade materials and solar-reflective windows. The insulating materials segment is also promising, including aerogels and vacuum panels that offer high levels of thermal insulation with minimal thickness.

The climate-resilient building materials sector, according to BCG, will grow at a rate of 6-8 percent per year for the next five years. Large profit potential is forecast especially in niche solutions such as low-carbon alloy steel or self-healing concrete. We are already seeing rapid growth in plants specializing in environmentally friendly RES-based steel production.

Flood protection systems

By 2030, up to 30 percent of the global population will be in the danger zone of river and rainfall floods. The planning and installation of flood control systems, as well as the maintenance and upkeep of protective infrastructure, is a market sector for which an annual growth rate of 7-10 percent is forecast.

BCG also forecasts growing demand for the development of flood control and sewer infrastructure in cities. Important demand stimulators in this area will be amendments to local and international building codes and insurance company strategies. Examples of projects with high investment potential include the production of modular flood barriers, stormwater drainage components or high-efficiency pumps.

Agricultural inputs to support climate change adaptation

The Climate A&R market also includes agricultural production, which is particularly vulnerable to weather extremes. Ensuring food security will require a whole range of technological innovations and solutions to protect against crop failure. According to BCG, the sector’s annual growth rate will reach 4-7 percent in the next five years.

However, the profit potential will be limited by regulatory changes and the level of public acceptance of bioengineering. This is particularly true for the seed segment of climate-resilient varieties. Higher profits, on the other hand, can be expected in the segments of fertilizer improvement and abiotic stress protection, the development of which will be stimulated by increasingly popular precision agriculture.

Efficient management of water resources

By 2050, up to half of the Earth’s population will be living in water stress zones. Since the greatest losses of precious resources are associated with leaks during distribution, sealing and replacing water supply infrastructure appears to be a critical component of climate change adaptation. Among the most promising in this regard are investments in smart water consumption monitoring systems, leak detection and management systems, production of pressure-limiting valves, and water supply replacement or renovation services.

This sector of the Climate A&R market is expected to grow at an annual rate of 6-8 percent over the next five years. The highest potential is diagnosed in the leak detection segment, which will be supported by the rapid development of artificial intelligence.

Emergency medical services products and services

Climate adaptation and resilience also require preparation for the worst, namely the humanitarian impact of natural disasters. As a result, the emergency medical services (EMS) sector will grow at a rate of 8-10 percent over the next five years in an effort to address challenges such as respiratory illnesses and waterborne or vector-borne infectious diseases.

The greatest investment potential is related to the production of medical devices and innovations in them – such as more efficient batteries or automated life-saving measures. BCG also forecasts rapid growth in air and land ambulance services, in which private capital already owns 20-40 percent of the global market.

Climate investment strategy according to BCG

BCG’s analysis clearly indicates the huge potential associated with the Climate A&R market. Investment opportunities range from emerging startups specializing in adaptive products and solutions to large corporations looking to diversify their existing operations. The specifics of the projects, and therefore the technology solutions needed, depend closely on local conditions. In some regions, floods are the biggest challenge, in others, fires or droughts.

To the question of when to invest, BCG analysts answer clearly: now. The risks associated with climate change remain underestimated, and the best chances for success are for investors who will be one step ahead of ever-increasing demands.