New study: Understanding and Increasing Finance for Climate Adaptation in Developing Countries

February 21, 2019
Author
Climate Policy Initiative (CPI)/adelphi

This study by the Climate Policy Initiative (CPI) and adelphi explores the current state of finance for climate adaptation and proposes practical, near term solutions to both fill in knowledge gaps and to increase investment. While many of the suggestions can also be applied in developed countries, which often face similar challenges in measuring and deploying adaptation finance, the focus of the report and selected examples highlight the role for developing country national governments and stakeholders in supporting increased knowledge and investment in adaptation. Latter comprise development finance institutions, local governments, and civil society organizations including academic institutions.

Key takeaways:

  • Despite the significant climate risks at hand, investment in the sector has not taken off, with just USD 22 billion of tracked global investment to address climate change in 2015 and 2016 going towards adaptation activities.
  • Increasing investment in climate resilience will require increasing the ability of organisations to identify and evaluate climate risks, increase their awareness of resilient business models, implement climate risk reduction projects and policies, and harness the business opportunities deriving from them.
  • However, especially in developing countries, a set of barriers prevents or slows down the adoption of adaptation practices, services, and technologies at the scale that is needed. These include context, business model, and internal capacity barriers.
  • Finance ministries in developing countries could analyse the threat that climate risks might pose to their sovereign debt, and incorporate considerations regarding their mitigation as part of their strategy to ensure financial sustainability.
  • Developing country governments will need to support a multitude of efforts to meet their adaptation goals. These include efforts that help increase demand for climate adaptation products and services that measure, reduce, and/or transfer climate risks; increase supply of these products in local markets; and de-risk adaptation investments using different policy and financial tools. The interventions should seek to address specific, identified barriers to investment in adaptation by both the public and private sectors.
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