Published by
Climate Policy Initiative (CPI) / adelphi

Finance for Climate Adaptation in Developing Countries

This report 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, such as development finance institutions, local governments, and civil society organizations including academic institutions in supporting increased knowledge and investment in adaptation. The report benefits from discussions held during three adaptation finance focused workshops organized by CPI and adelphi in 2018 to present and discuss preliminary findings of this study.

There is an urgent need to spur greater investment into climate adaptation and resilience, in both the public and private sectors. The frequency and magnitude of natural hazards triggered by climate change has been increasing globally, leading to USD 1.5 trillion in economic damages from 2003 to 2013 (FAO, 2015),1 in addition to impacts to human and ecosystem health. However, current investments in adaptation constitute only a fraction of what is needed to avoid costly and catastrophic future impacts. The costs of adaptation in developing countries could range from USD 140 billion to USD 300 billion per year by 2030 (UNEP 2016). At the global scale, costs are likely to be between USD 280 billion and USD 500 billion per year by 2050, with even higher costs possible under higher emissions scenarios (UNEP 2016). Despite the significant climate risks at hand, combined with countries’ efforts to implement policies that are conducive to scaling-up finance for climate change, investment in the sector has not taken off, with USD 22 billion of tracked global investment to address climate change going towards adaptation activities in 2016 (Oliver et al., 2018).