Abstract

Enhanced adaptation action is needed given the increasingly severe impacts of climate change. Particularly, developing countries, confronting challenges from economic disparities to developmental aspirations, are more vulnerable to the amplified threats of changing climate conditions. Achieving enhanced adaptation will require an increase in the overall volume of finance from all sources flowing to adaptation. In addition to this, enhanced efforts are also required to maximize the impact of financial flows and ensure that they reach those who are most vulnerable to climate change.

International public finance providers have a key role to play in scaling up and mobilizing finance for adaptation in developing countries. However, a range of financial, technical, and institutional constraints hinder public and private finance for adaptation in developing countries. The strategic use of international public finance can contribute to scaling up finance for adaptation in developing countries and to unlocking private investment in this context.

This report analyses current trends of adaptation finance provided and mobilized by developed countries for developing countries. It explores potential action areas for international providers to scale up funding for climate change adaptation, including by unlocking the potential of the private sector. The analysis is anchored in the context of the USD 100 billion climate finance goal, initially set for 2020 and extended to 2025, while also providing insights to the broader and longer-term objective of supporting developing countries’ ability to adapt to the adverse impacts of climate change.

The analysis suggests five action areas to support international public climate finance for adaptation:

1. Assess the consistency of forward spending plans with the call to collectively double climate finance for adaptation by 2025.
2. Support developing countries’ efforts to strengthen their capacities, policies and enabling environment for finance for adaptation.
3. Strengthen development practices and systems to ensure efficient delivery of adaptation finance.
4. Deploy public and blended finance instruments strategically to mobilize private finance for adaptation.
5. Explore and tap into alternative financing sources and mobilization instruments for adaptation.

The options presented across these five action areas offer possible ways forward to develop a comprehensive strategy for international providers to meet financing needs for adaptation in developing countries.