Little money being made available to developing nations for climate adaptation, need at least ten times more: UN report

The Adaptation Gap Report is an annual publication from UNEP, released just ahead of the year-ending climate change conference, and presents the global situation of adaptation to climate change. This year’s report focuses on adaptation finance, or the availability of money to carry out the adaptation projects.

Since there is no way to stop the unfolding impacts of climate change in the short run, adaptation is crucial to saving lives, livelihoods and ecosystems, especially in developing and most vulnerable countries with low resilience. Depending on their specific needs, countries have been taking a range of adaptation measures. These can be in the form of strengthening of coastlines, or building of sea-walls especially in island countries, experiments with newer temperature-resistant food crops, creation of climate-resilient infrastructure, securing sources of water, or a whole lot of other similar efforts that help the local populations cope better with rising temperatures and its impacts.

All these efforts require money. Under the international climate change architecture, developed countries are mandated to provide money, and technology, to help the developing countries adapt to climate change. Developing countries can do whatever they can with their own resources, but are entitled to seek international help for financing their projects.

Most of the developing countries have listed their adaptation requirements in their climate action plans, called Nationally Determined Contributions or NDCs. The NDCs seek to document every country’s ‘contribution’ to the global fight against climate change.

The combined requirement put forward by the developing countries far exceeds the money that is currently available.

The latest assessment by UNEF in the Adaptation Gap Report says the gulf between requirement and availability was only increasing.

The Adaptation Gap Report assessed the current need for adaptation finance in two ways. It put together all the requirements put forward by the countries in their NDCs, and that came to about USD 387 billion every year this decade. Separately, it did a modelling exercise of the kind of adaptation that was required across the world, and the money needed to support those efforts. That exercise yielded a sum of USD 215 billion every year in this decade. The numbers are expected to go up sharply beyond this decade as the risks from climate change increase rapidly.

“The adaptation finance gap – that is the difference between estimated adaptation financing needs and costs (USD 215 billion to USD 387 billion) and (existing) finance flows (USD 21.3 billion) – has grown. The adaptation gap is likely 10-18 times as great as current international adaptation finance flows — at least 50 per cent higher than previous range estimates,” the report says.

Efforts are being made to increase the finance flows, not just for adaptation, but for all other kinds of climate needs, together called climate finance. Developed countries had promised, way back in 2009, to mobilise at least USD 100 billion in climate finance every year from 2020 but even three years after the deadline, that amount has not been realised. In the meanwhile, the need for climate finance has skyrocketed and is now assessed to be in trillions of dollars every year.

At the Glasgow climate conference in 2021, the developed countries had committed themselves to double the money for adaptation. Separately, there is also an agreement that a new climate financing goal, over and above USD 100 billion every year, would be set by 2025.

But the Adaptation Gap Report suggests that the current ambition on raising climate finance would just not be enough.

“While the doubling of adaptation finance by 2025 and the new collective quantified goal for 2030 that is under deliberation will be instrumental in helping to close this finance gap, the increase in international public finance alone is unlikely to close it. For example, achieving the goal of doubling adaptation finance (by 2025) would only reduce the gap by between 5 per cent and 10 per cent,” the report says.

It says countries would have to increasingly depend on their own resources, and on private finance, to fund their adaptation efforts.

“Domestic expenditure and private finance are potentially important sources of adaptation finance… domestic budgets are likely to be a large source of funding for adaptation in many developing countries, ranging from 0.2 per cent to over 5 per cent of government budgets. There is also fragmented evidence of increasing private-sector adaptation interventions all over the world and in most sectors (e.g. water, food and agriculture; transport and infrastructure; tourism). These include ‘internal investments’ by large companies, financial institutions’ provision of finance for activities that contribute to adaptation, and companies’ provision of adaptation goods and services,” the report says.

It identifies seven ways to bridge the adaptation gap, which include an increase in international finance flows, and greater domestic mobilisation of resources. Besides these, it calls for a reform of global financial architecture, to ensure greater and easier access to finance for climate-related purposes from multilateral agencies the World Bank or the IMF. This is something that is being intensely discussed for the last few years after it has become evident that current levels of international financial flows for fighting climate change are woefully inadequate, and existing regulations too rigid for raising more resources for climate-related projects.

The Adaptation Gap Report is an important input in the discussions at the annual climate change conference that is being held in Dubai this year.