Learning from missed opportunities to ‘Build Back Better’

Published in Social Sciences and Economics

As governments began to make substantial investments into the COVID-19 recovery, they assured the public that they would ‘build back better,’ including building back more resilient to future crises. However, over three years working with Ministries of Finance across 20+ countries to analyse and advise on COVID-19 policy responses, a startling pattern emerged: leaders often failed to incorporate adaptation and resilience (A&R) into their strategies. This oversight was not just a matter of prioritising scarce resources; there appeared to be a lack of recognition that even minor policy tweaks could significantly bolster long-term resilience.

In 2020, alongside our policy advisory efforts, we were collaborating with global partners including UNEP, IMF, GIZ, GFPN, UN PAGE, UN ECA, and UNDP to analyse the likely impacts of COVID-19 responses on climate mitigation pathways1–5. The findings suggested that investment in climate mitigation initiatives was limited, hinting that a similar analysis for A&R could uncover equally useful insights.

This led us to question: are we really ‘building back better’? And how we might better track the alignment of government expenditure with A&R goals?

The theoretical groundwork for such an analysis was sparse, which led us to develop the Climate Resilience and Adaptation Financing Taxonomy (CRAFT). CRAFT maps policies to 293 exhaustive and mutually exclusive policy types, allowing policies to be scored according to their expected impacts on both direct and indirect climate change adaptation and resilience. For this purpose, we define direct A&R as explicit efforts to adapt to current or expected climate effects. We define indirect A&R as efforts that increase resilience or reduce vulnerability to climate change effects, regardless of whether the intention was to directly address climate risks.  

Applying CRAFT to approximately 8,000 government policies from 88 countries, we discovered that only US$279-344bn (10-11% of recovery spending) during the recovery phase of the pandemic explicitly focused on A&R. This figure is worrying on an absolute basis because of the much larger volume of finance that is needed for A&R (estimated at US$160-340 billion per year by 2030 for developing economies alone6).

What is perhaps more concerning is that many A&R-neutral or negative policies could easily have contributed to A&R goals through minor tweaks in policy design. For example, long-term infrastructural projects could have had positive A&R impacts by incorporating A&R planning into policy design. In other words, policymakers wasted trillions of dollars in what could have been a powerful boost to A&R without major sacrifice to any other policy objectives. Indeed, growing research suggests that turning ‘traditional’ or ‘dirty’ spending A&R-positive can boost economic and social outcomes4,7,8.

When we expanded our lens to include policies with indirect A&R benefits (like education and healthcare), the investment figure rose to US$748-845bn (26-28% of recovery spending). This finding is also crucial: it suggests that many investments contributing to A&R are not recognized as such. On the flip side, our findings suggest that 28% of recovery spending could potentially undermine A&R, with long-term negative economic consequences. In all cases, these findings emphasize the need for holistic consideration of A&R in national budgeting processes.

So, how can we learn from these oversights to ensure future policy-making better incorporates climate adaptation and resilience?

Part of the solution seems to be integrating ex-ante and ex-post A&R impact evaluation across all scales of public and private spending and doing so on a systematic basis to build knowledge.

At an international level, adaptation finance conversations have tended to focus on securing the $100 billion in additional annual investment that was agreed upon at COP15. While mobilising additional funds is indeed essential in order to meet the substantial A&R finance gap, our research demonstrates the importance of simultaneously evaluating the A&R potential of immense existing financial flows to consider where there might be missed opportunities. There are notable synergies between our findings and the Bridgetown Initiative, which highlights the need to make the global financial system more shock-resistant and to unlock additional funds to bolster the resilience of vulnerable nations.

At the national and subnational levels, the Sustainable Budgeting Approach (SBA), which applies CRAFT, offers a practical methodology for policymakers9. The decision-making support tool enables comprehensive analysis of the likely economic, social, and environmental impacts of proposed policies, helping to also identify policy gaps and enhance financial transparency. This shift is already underway as we see rapidly growing interest in the SBA. The SBA has been formally endorsed in various regional UN processes, supported by major international efforts for international finance reform including the Sustainable Debt Coalition, and has garnered significant interest from senior policymakers as it is piloted by a growing number of countries.

The journey towards a more resilient and adaptable future benefits from grand gestures; but systemic change comes through policymaker education and the nuanced integration of A&R considerations into policy and decision-making across the board. The lessons from the global COVID-19 response are clear: we have the tools and the knowledge to make smarter, more resilient choices. By embracing frameworks like CRAFT and the Sustainable Budgeting Approach, we can transform our approach to climate change, turning every policy decision into an opportunity for sustainable, resilient growth, and be much more transparent and accountable in doing so.

For policymakers reading along, our experience shows that the path towards resilient economic systems need not be a solitary one. It benefits from collaboration – and learning from failures – across countries, sectors, and disciplines. The future may be uncertain, but our resolve to create a more resilient world must remain steadfast. Failure to do so will result in lost lives, missed prosperity gains, and the perpetuation of an unsustainable status quo.


  1. Hepburn, C., O’Callaghan, B., Stern, N., Stiglitz, J. & Zenghelis, D. Will COVID-19 fiscal recovery packages accelerate or retard progress on climate change? Oxford Review of Economic Policy 36, S359–S381 (2020).
  2. O’Callaghan, B. & Murdock, E. Are We Building Back Better: Evidence from 2020 and Pathways to Inclusive Green Recovery Spending. https://recovery.smithschool.ox.ac.uk/are-we-building-back-better-evidence-from-2020-and-pathways-for-inclusive-green-recovery-spending/ (2021).
  3. O’Callaghan, B. et al. Global Recovery Observatory. (2021).
  4. O’Callaghan, B., Yau, N. & Hepburn. How Stimulating Is a Green Stimulus? The Economic Attributes of Green Fiscal Spending. Annual Review of Environment and Resources 47, 697–723 (2022).
  5. Ranger, N., Marotta, F., Fankhauser, S. & O’Callaghan, B. Reforming the Global Financial Architecture to Drive a Resilient Net-Zero Transition. https://t20ind.org/research/reforming-the-global-financial-architecture-to-drive-a-resilient-net-zero-transition/ (2023).
  6. United Nations Environment Program. Adaptation Gap Report 2021: The Gathering Storm - Adapting to Climate Change in a Post-Pandemic World. (2021).
  7. Mimura, N. et al. Adaptation planning and implementation. in Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral Aspects. Contribution of Working Group II to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change 30 (2014).
  8. Dicker, S., Unsworth, S., Byrnes, R. & Ward, B. Saving Lives and Livelihoods: The Benefits of Investments in Climate Change Adaptation and Resilience. https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2021/03/Saving-lives-and-livelihoods_the-benefits-of-investments-in-climate-change-adaptation-and-resilience.pdf (2021).
  9. Smith School of Enterprise and the Environment, University of Oxford & United Nations Environment Program. Introducing the Sustainable Budgeting Approach. https://greenfiscalpolicy.org/introducing-the-unep-university-of-oxford-sustainable-budgeting-approach/ (2024).

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