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As climate risks intensify, investing in children is no longer a social priority alone—it is the foundation of any serious adaptation strategy.
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The State of the World’s Children 2025 (SOWC), published by the United Nations Children’s Fund (UNICEF), serves as a reminder that children are not incidental beneficiaries of development; they are at its very core. They are the drivers of future development. Every human aspiration, starting from sustained growth, social equity, and climate resilience, to the Government of India’s vision of Viksit Bharat@2047 (i.e. the ambition to evolve as a developed nation by its 100th year of independence in 2047), rests fundamentally on the well-being, capabilities, and opportunities afforded to children.
SOWC argues that childhood poverty is not a consequence of insufficient global resources, but of misplaced priorities. Presently, 412 million children live in extreme poverty (surviving on less than US$3.00 per day). By adjusting the poverty threshold to US$8.30 per day, considered typical for upper-middle-income countries, the estimates of children living below monetary poverty increase dramatically to almost 1.4 billion. These are not statistics on deprivation alone; they are indicators of weakened human capital formation, diminished resilience, and compromised life trajectories.
Climate change is the most severe threat multiplier confronting children.
What distinguishes this year’s Report is its powerful presentation of a stark reality – climate change is the most severe threat multiplier confronting children. Globally, four out of every five children are now exposed to at least one major climate hazard annually. In 2023 alone, disasters displaced nine million children, and by 2050, the frequency and magnitude of heatwaves, floods, and wildfires that children are bound to face will increase manifold. These disruptions are not merely environmental episodes – the intersectionalities of climate change with various other Sustainable Development Goals (SDGs) are well established by now. In the context of human capital, including child poverty, health and education, climate change has profound impacts. Climatic forces interact with nutrition, health, schooling, safety, earning capacity, and psychological well-being. Therefore, every disruption caused to the child, in the form of every interrupted school year, every migration triggered by climatic distress, and every episode of malnutrition caused by a heatwave or flood, is associated with a direct assault on the human capital base of the future.
On the other hand, the United Nations Environment Programme’s (UNEP) Adaptation Gap Report 2025 presents the stark reality that adaptation financing needs in developing countries are 12-14 times the current flows. The prime reason is that, in most cases, adaptation projects are not “bankable” by the existing institutional financial architecture, as they result in the creation of public goods with imperceptible returns on investments (RoIs). This creates a problem for the north-south flow of funds, even though the imperative for adaptation for the Global South is rooted in the fact that large parts of the developing and underdeveloped world are climatically vulnerable and lack the wherewithal to adapt. On the other hand, a skilled, educated, and healthy populace has a far higher adaptation capacity. While the accumulation of skills drives adaptation options, a well-endowed human capital exhibits greater occupational mobility and migration opportunities across sectors and political boundaries than a less-skilled and unhealthy populace.
In this context, the Report’s emphasis on health and education as core climate adaptation sectors is vital. Yet, paradoxically, only a minuscule share of global adaptation finance reaches these domains—about 6 percent to health and barely 1.3 percent to education. These numbers reflect a critical misalignment, for it is health, nutrition, and foundational learning that build a population’s adaptive capacity over the long term. A child who grows up healthy, cognitively strong, nutritionally secure, and emotionally resilient becomes an adult capable of adapting, innovating, and withstanding climatic and economic shocks. Climate adaptation, therefore, must begin with the systems that nurture children. In other words, investment in children serves the purposes of equity from the perspective of distributive justice by nurturing healthy and educated children, thereby circumventing the poverty trap; efficiency through the creation of a productive human capital base for the future; and sustainability by augmenting the climate adaptation capacity.
A child who grows up healthy, cognitively strong, nutritionally secure, and emotionally resilient becomes an adult capable of adapting, innovating, and withstanding climatic and economic shocks.
The challenge, however, emerges at a moment of severe fiscal stress across much of the developing world. Nearly 45 countries now spend more on interest payments than on health, and 22 spend more on interest than on education. Aid budgets have contracted, domestic budgets are tightening, and social sector allocations are becoming more vulnerable to macroeconomic volatility. The conclusion is inescapable: public finance, though indispensable, is no longer sufficient to support child development in a world of rising climate risks. A new financing compact that mobilises private capital, philanthropic resources, impact-linked instruments, and blended finance is the need of the hour.
The economics of investing in children make this case even stronger. For instance, generally, every US$1 invested in resilience yields as much as US$10 within a decade. A one-time investment of US$18.51 per child can ensure learning continuity during climate shocks. A 2018 estimate by the World Bank across 34 developing economies accounting for 90 percent of the world’s stunted children suggests that the rate-of-return from gradually introducing a nutritional intervention program over a period of 10 years was 17 percent, with the corresponding benefit-cost ratio is 15:1. Similarly, improvements in foundational learning yield lifetime productivity benefits that surpass the returns of most physical capital investments. These are extraordinary rates of return, both in economic and social terms. Children constitute the world’s largest reservoir of future human capital, and nations that invest in this reservoir systematically outperform those that do not.
With public sources of financing failing either due to fiscal constraints or fiduciary needs, a new form of private capital that is structured, catalytic, and aligned with long-term outcomes is needed to cater to this human capital and climate adaptation nexus. Investments in child development cannot remain the exclusive domain of governments and philanthropic actors, but need a broader financial ecosystem. Innovative instruments such as impact bonds, child-sensitive adaptation bonds, blended finance platforms, and Environmental, Social, and Governance (ESG)-linked resilience portfolios can de-risk investment and link financial returns to measurable improvements in child outcomes. Philanthropic wealth, both global and domestic, including India’s rapidly expanding philanthropic sector and the vast Indian diaspora, offers an underutilised reservoir for child resilience financing. Integrating these diverse pools of capital is not charity; it is strategic macroeconomic planning for a climate-volatile world.
Integrating these diverse pools of capital is not charity; it is strategic macroeconomic planning for a climate-volatile world.
This perspective has profound implications for India’s long-term development trajectory. The discourse around Viksit Bharat@2047 needs to highlight and strengthen the human capital of its children today, along with infrastructure, manufacturing, digital capabilities, and macroeconomic performance. While well-endowed human capital will drive future growth and innovation and promote institutional stability, a child population equipped with strong adaptive capacities becomes the backbone of a climate-resilient India. Conversely, without investments in children, the demographic dividend risks becoming a demographic burden.
In the end, the messages are simple but profound: a) investing in children is investing in the future; b) investing in children is investing in a climate adaptation project with a high RoI. It is not a moral appeal alone; it is an economic and strategic imperative. Reducing child poverty strengthens resilience, accelerates growth, enhances social stability, and fulfils our intergenerational contract. UNICEF has provided the data, the urgency, and the evidence. What is now required is political commitment, institutional innovation, and a financing architecture which allows public and private capital to work in tandem. The story of Viksit Bharat will not ultimately be written in Gross Domestic Product tables; it will be written in the lives and capabilities of every child whose future we choose to secure today.
Nilanjan Ghosh is Vice President - Development Studies at the Observer Research Foundation.
This article draws on the author’s remarks delivered at the India launch of UNICEF’s publication, State of the World’s Children Report 2025: Ending Child Poverty – Our Shared Imperative, held on 20 November 2025 at UNICEF House, New Delhi.
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Dr Nilanjan Ghosh heads Development Studies at the Observer Research Foundation (ORF) and serves as the operational and executive head of ORF’s Kolkata Centre. He ...
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