123 Q UA RT E R _ 0 2 _ 2 0 2 6 Advancing Adaptation More than 70 percent of adaptation costs in sub-Saharan Africa, the Middle East and North Africa, and India would go toward heat hazards. Lower-income regions would incur the highest adaptation costs. For example, protecting everyone exposed to climate hazards to developed-economy standards will require the biggest investments as a share of exposed GDP in sub-Saharan Africa. Lower-income parts of the world face greater exposures and have a more limited capacity to pay. Average annual operating and amortized capital costs to adapt to 2ºC hazards, as share of 2050 exposed GDP, % Hazards: 106 114 209 155 81 46 253 41 97 51 1,152 0.8 0.3 0.3 0.5 0.7 0.9 1.2 1.4 1.7 1.8 3.0 Cost, $ billion (2020 dollars) EU-30 1 Advanced Asia Other Europe/ Central Asia Emerging Asia Middle East and North Africa Overall North America Greater China Latin America/ Caribbean India Sub- Saharan Africa Flooding Drought Wildfires Heat Note: Costs are for 20 adaptation measures used to protect against 4 categories of hazards: heat, drought, wildfires, and flooding. Our climate analysis is based on warming levels likely under current emissions trajectories, which project that the global temperature could rise 2°C relative to preindustrial levels sometime in the next 3 decades, as measured based on multidecadal average temperatures. Figures may not sum to totals, because of rounding. 1. Includes the 27 EU economies plus Norway, Switzerland, and UK. Source: Coupled Model Intercomparison Project (CMIP6), 2021; Fathom Global Flood Map Fathom 3.0, 2021; Inter-Sectoral Impact Model Intercomparison Project Phase 2b (ISIMIP2b), 2017; NASA NEX-GDDP, 2021; McKinsey Global Institute analysis » Mekala Krishnan is a partner at the McKinsey Global Institute (MGI) and is based in McKinsey’s Boston office, Olivia White is a director of MGI and is based in the Bay Area office, Sylvain Johansson is a director of MGI and is based in the Geneva office, Sven Smit is a senior partner emeritus and senior adviser in the Amsterdam office, Annabel Farr is a senior fellow at MGI and is based in the Denver office, and Kanmani Chockalingam is a senior fellow at MGI and is based in the Seattle office. An expanded version of this report is available on McKinsey.com