For every $1 invested in climate-resilient infrastructure, $87 goes towards infrastructure that does not adequately account for climate risks. At the same time, climate-related disasters result in significant economic losses, while the adaptation finance gap in emerging markets and developing economies continues to grow
Yet private capital provides less than 2% of tracked adaptation finance.
The Invisible Dividend, a new white paper co-authored by ALTÉRRA and 500 Global, argues that this is not simply a shortage of capital or that investors are indifferent to climate. It is a structural challenge: the financial architecture needed to recognize, price and capture the economic value created by resilience has not yet developed at scale.
The paper identifies an invisible dividend embedded in adaptation investments: the incremental value potential created by reducing physical climate risk. It is the flood that does not destroy the supply chain, the drought that does not wipe out the harvest, and the insurance losses that may potentially be avoided because assets and communities are better protected.
The dividend is real. It is simply invisible to capital markets as they are currently structured. The purpose of this paper is to change how we think about adaptation. Too often, adaptation is framed solely as risk mitigation. While it reduces risk, it also has potential to create value by improving resilience, productivity, and long-term economic performance. Recognizing and measuring that value is critical to unlocking private capital and repositioning adaptation as an investment opportunity rather than a defensive cost.
$417B
Economic losses from global natural catastrophes in 2024
< 2%
Share of tracked adaptation finance provided by private capital
$300B+
Annual adaptation finance gap in emerging markets and developing economies
$10+
Economic, social and environmental benefits generated over ten years for every $1 invested in adaptation
$1T
Projected climate resilience technology opportunity by 2030
$7T
Approximate assets held by the global insurance and reinsurance industrycription
Adaptation can potentially generate value through three interconnected dividends: avoided losses; broader economic benefits; and social and environmental co-benefits. Taken together, they represent a vast reservoir of economic value.
Research finds that every dollar invested in adaptation yields more than ten dollars in economic, social and environmental benefits over a ten-year horizon. Importantly, induced economic gains and social and environmental co-benefits were, on average, double the value of projected avoided losses.
This means that adaptation investments have potential to generate significant value even if the disaster never occurs.
.
ALTÉRRA and 500 Global propose the Resilience Premium Initiative as a conceptual new architecture for translating this value into investable form. The integrated platform comprises two components:
Designed to start conversations, not to be an immediate solution, the proposed architecture seeks to convert the insurance industry’s existing financial self-interest into a contractual return mechanism, creating a vehicle where resilience generates a premium for investors and insurers, while strengthening the communities and economies that adaptation protects.
The Resilience Premium Engine would identify, prepare and structure adaptation opportunities into an investable pipeline, supported by accelerator programs, market intelligence, transaction support and policy engagement.
The Resilience Premium Fund, a proposed pooled investment vehicle in which insurance and reinsurance companies could serve as the catalytic layer, reflecting their direct commercial interest in reducing future claims exposure.
THIS DOCUMENT HAS BEEN PREPARED BY ALTERRA MANAGEMENT LIMITED (“ALTÉRRA”) FOR INFORMATION AND DISCUSSION PURPOSES ONLY. ALTÉRRA IS REGULATED BY THE FINANCIAL SERVICES REGULATORY AUTHORITY OF ABU DHABI GLOBAL MARKET UNDER FINANCIAL SERVICES PERMISSION NO. 200001. ITS PERMISSIONS INCLUDE MANAGING ASSETS, MANAGING A COLLECTIVE INVESTMENT FUND, ADVISING ON INVESTMENTS OR CREDIT, ARRANGING DEALSIN INVESTMENTS AND ARRANGING CREDIT. ALTÉRRA IS NOT PERMITTED TO DEAL WITH RETAIL CLIENTS OR HOLD CLIENT ASSETS. THE RESILIENCE PREMIUM INITIATIVE, FUND AND RELATED ARRANGEMENTS DESCRIBED IN THIS DOCUMENT ARE PRELIMINARY CONCEPTS ONLY AND REMAIN SUBJECT TO LEGAL, REGULATORY, COMMERCIAL AND TECHNICAL REVIEW. NO FUND OR SECURITIES ARE BEING OFFERED FOR SUBSCRIPTION/INVESTMENT THROUGH THIS DOCUMENT. THIS DOCUMENT DOES NOT CONSTITUTE INVESTMENT ADVICE, INVESTMENT RESEARCH RECOMMENDING A PARTICULAR INVESTMENT, OR AN OFFER, INVITATION OR SOLICITATION TO ACQUIRE ANY INVESTMENT. ALL RETURN FIGURES, AVOIDED-LOSS ESTIMATES AND OTHERPROJECTIONS ARE HYPOTHETICAL AND ILLUSTRATIVE ONLY AND ARE NOT GUARANTEES OR RELIABLE INDICATORS OF FUTURE PERFORMANCE. ECONOMIC AND SOCIAL BENEFIT MEASURES CITED IN THIS DOCUMENT DO NOT REPRESENT FINANCIAL RETURNS AVAILABLE TO INVESTORS. INVESTMENTS MAY BE ILLIQUID AND INVOLVE SIGNIFICANT RISK. INFORMATION HAS NOT NECESSARILY BEEN INDEPENDENTLY VERIFIED AND MAY CHANGE WITHOUT NOTICE. RECIPIENTS SHOULD OBTAIN THEIR OWN INDEPENDENT PROFESSIONAL ADVICE.ALL CONTENT CONTRIBUTED BY 500 GLOBAL TO THIS DOCUMENT IS PROVIDED FOR GENERAL INFORMATIONAL PURPOSES ONLY. WHILE 500 GLOBAL HAS TAKEN REASONABLE STEPS TO ENSURE THE ACCURACY OF THE INFORMATION IT HAS CONTRIBUTED, 500 GLOBAL MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY NATURE AS TO THE ACCURACY OF SUCH INFORMATION AND ACCEPTS NO LIABILITY FOR ANY ERROR OR OMISSION. UNLESS OTHERWISE STATED, ANY PREDICTIONS, FORECASTS, CONCLUSIONS, VIEWS OR OPINIONS ATTRIBUTED TO 500 GLOBAL REPRESENT 500 GLOBAL’S CURRENT THINKING BASED ON INTERNAL DATA AND/OR ANALYSIS THAT HAS NOT BEEN INDEPENDENTLY VERIFIED, AND 500 GLOBAL DOES NOT GUARANTEE ANY FUTURE RESULTS FOR DECISIONS MADE IN RELIANCE ON THEM. NOTHING IN THIS DOCUMENT SHOULD BE CONSTRUED AS AN OFFER TO SELL OR SOLICITATION OF INTEREST TO PURCHASE ANY SECURITIES ADVISED BY 500 GLOBAL OR ANY OF ITS AFFILIATES OR REPRESENTATIONS. UNDER NO CIRCUMSTANCES SHOULD ANYTHING HEREIN BE CONSTRUED AS FUND MARKETING MATERIALS BY PROSPECTIVE INVESTORS CONSIDERING AN INVESTMENT INTO ANY 500 GLOBAL INVESTMENT FUND. THIS DOCUMENT IS INTENDED ONLY FOR PROFESSIONAL CLIENTS AND MARKET COUNTERPARTIES AND MUST NOT BE RELIED UPON BY, OR DISTRIBUTED TO, RETAIL CLIENTS. THIS MODEL IS ILLUSTRATIVE AND IS INCLUDED SOLELY TO SHOW THE INDICATIVE RANGE OF RETURN UPLIFT TO SENIOR LPS BASED ON THE CONTEMPLATED STRUCTURE. ACTUAL RETURNS WILL DEPEND ON FUND DEPLOYMENT TIMING, J-CURVE DYNAMICS, GEOGRAPHY- AND PROJECT-SPECIFIC CATASTROPHE MODELING OUTPUTS, AND THE REBATE SHARE NEGOTIATED WITH ANCHOR REINSURERS. NOTHING HEREIN REPRESENTS ANY ACTUAL, TARGET OR GUARANTEED RETURN OF ANY FUND.
