Global Climate Adaptation Finance Falls Short of Pledges

• 07 Nov 2023

The 2023 Adaptation Gap Report released by the United Nations Environment Programme (UNEP) reveals a 15% drop in climate adaptation finance from public multilateral and bilateral sources, reaching around $21 billion in 2021, despite pledges made at COP26 to double support.

Key Points

• Dwindling Funding despite Promises: This decline is in contrast to the pledges made at the 26th Conference of Parties to the United Nations Framework Convention on Climate Change (COP26) in Glasgow, which aimed to double 2019 adaptation finance to about $40 billion annually by 2025.
• Challenges in Bridging the Gap: Neither domestic nor private funding sources prove sufficient to close the adaptation finance gaps, particularly in low-income countries, including Least Developing Countries and Small Island Developing Nations.
• National-Level Adaptation Planning: The report highlights that 85% of countries have established at least one national-level adaptation planning instrument, such as a policy, strategy, or plan, to address climate change challenges.
• Enormous Global Finance Gap: The report estimates the current global adaptation finance gap, representing the disparity between financial needs and actual flows, to be in the range of $194-366 billion per year.
• Regional Disparities in Adaptation Costs: Adaptation measures such as river flood protection, infrastructure development, and coastal protection carry the highest costs in regions such as East Asia and the Pacific, as well as Latin America and the Caribbean.
• Income Group Variation in Costs: While the absolute costs are significantly higher in upper and lower-middle-income countries, the proportion of adaptation costs in terms of Gross Domestic Product (GDP) is much greater for low-income countries (3.5% of GDP) compared to lower-middle (0.7%) and upper-middle (0.5%) income groups.
• Estimated Costs for Vulnerable Nations: The report estimates adaptation costs at $25 billion per year (2% of GDP) for Least Developing Countries and $4.7 billion per year (0.7% of GDP) for Small Island Developed nations.
• The Urgent Need for Adaptation Financing: With the increasing frequency of extreme weather events globally, adaptation financing is an immediate requirement.