With the escalating impacts of climate change, the necessity of investing in adaptation, particularly for vulnerable regions, has become undeniable. As the world faces economic and political challenges, there are actionable steps that nations and financial institutions can take to address the significant adaptation finance gap. Commitment and reform in financial practices can pave the way for a global collaborative process aimed at enhancing adaptation finance.
Adaptation finance is a critical tool to safeguard lives, livelihoods, and societies. The link between adaptation and security is evident, as investment in resilience can mitigate climate-related conflicts and security risks. Economically, the stakes are high, with the world’s largest corporations projected to incur $1.2 trillion in costs annually by the 2050s if adaptation measures are not implemented. However, every dollar invested in adaptation and resilience is projected to yield more than $10 in benefits over a decade. This financial support is especially vital for countries most affected by climate change but with limited means to invest in their resilience.
The briefing complements an earlier report outlining a roadmap to advance resilience by 2025. It maps the current landscape of key adaptation finance types and identifies potential areas for progress in closing the adaptation finance gap during this pivotal COP30 year. The Brazilian Presidency’s focus on advancing resilience offers a platform for developing political and practical processes to deliver. In the interim, building momentum through the G20, multilateral development banks (MDBs), and the IMF is essential.
Finding Political Pathways
Galvanizing political and institutional action requires clearly stating ambitions. With the expiration of the Glasgow goal to double public adaptation this year, countries must unite with a clear direction for increasing ambition at COP30 and throughout the broader international financial system. As major development banks revise their climate strategies, there is an opportunity to enhance targets to improve both the scale and impact of adaptation finance.
Key Areas for Improvement
Getting public finance flowing is crucial. Countries recognizing the urgency need to maintain a credible level of concessional public finance. A new global goal alongside progress on how finance is best deployed, including through the Global Goal on Adaptation and Means of Implementation indicators agreed at COP30, can help meet adaptation needs.
Improving the quality of finance involves embedding qualitative principles, such as additionality and complementarity, protecting grants and highly concessional instruments, and making finance sources more accessible to developing countries.
Leveraging MDBs and their capacity to provide concessional or better-than-market rate financing is vital, with the G20 and board-level processes playing a critical role in achieving this.
Structural reforms are needed to address imbalances in the international financial architecture. Progress on tackling the debt crisis, regulatory reform, and de-risking can create opportunities to leverage more private finance for adaptation.
Laying the groundwork for new financing sources involves leveraging private finance through de-risking, regulatory reform, and improved data. Continued development work to explore how new global taxes could function and committing to use part of their proceeds for adaptation are also essential.
A detailed roadmap of key moments, processes, and actors involved in driving progress is outlined in the previous briefing, Pathways Towards Resilience.
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Note: This article is inspired by content from https://www.e3g.org/publications/bridging-the-finance-gap-for-adaptation/. It has been rephrased for originality. Images are credited to the original source.