How Much Does the Federal Government Spend on Climate Change Adaptation?

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Adaptation to the effects of climate change affects many policy areas. However, the amount allocated by the federal government for adaptation activities had previously been unknown. adelphi research has contributed to the development of a new methodology by the German Environment Agency, which enables an estimate of these expenditures. An initial evaluation of the 2022 federal budget plan reveals that between €2.1 billion and €3.4 billion was allocated for adaptation across 255 budget items.

Adapting to climate change is becoming increasingly important for Germany – and it comes at a cost. However, the extent to which the federal government, as a key actor in Germany, spends on climate adaptation had previously been unknown. Only the financial contributions made by the federal government as international payments within the framework of development cooperation for climate adaptation activities were known. Domestic expenditures had not been considered so far, and no estimates existed regarding total spending.

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To address this information gap, adelphi research, in collaboration with INFRAS AG, developed a methodology to capture adaptation expenditures as part of the "Adaptation Framework" project commissioned by the German Environment Agency. This methodology was coordinated with budget experts. For the first time, an assessment of federal-level adaptation expenditures is available for the 2022 federal budget plan. The methodology is intended to be further developed and applied regularly to ensure continuous monitoring of adaptation expenditures.

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Adaptation Frameworks – national adaptation in an international context

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The Project

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Methodology

The analysis methodology follows multiple guidelines and is applicable to the entire federal budget. It can be transferred to other government levels and allows for continuous refinement. A particular focus was placed on repeatability and transparency, while international payments were excluded. Key elements include the classification of budget items according to their proportion of climate adaptation and the estimation of this proportion, as many expenditures primarily serve other objectives. Working with experts, four categories were defined, each assigned a percentage adaptation coefficient to estimate the adaptation expenditures within a given item. The methodology was iteratively developed with the relevant federal ministries.

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Infographic on the analysis methodology for the entire federal budget.

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Key findings:

The analysis of the 2022 federal budget plan (BHHP) shows that 255 budget items contain expenditures for climate adaptation, amounting to €45.6 billion or 9.2% of the total budget volume. Using the methodology described above, the study estimated the specific adaptation expenditure shares. The results indicate that adaptation expenditures in the 2022 budget range between €2.07 billion and €3.41 billion, representing approximately 0.42% to 0.69% of the total budget volume. This range reflects the uncertainty in precisely allocating adaptation expenditures.

The majority of relevant expenditure items show only minor allocations for climate adaptation: in 122 budget items, the proportion is marginal; in 88 items, it is low; and in only nine items is the proportion high. This indicates that most expenditure items are not primarily or directly aimed at climate adaptation.

The analysis also shows that most expenditures were allocated within the "Land and Infrastructure" clusters and the overarching cluster. The overarching cluster accounted for the largest sum of adaptation expenditures, ranging from €861 million to €1.325 billion, primarily for fundamental research and items that could not be clearly assigned.

In the Infrastructure cluster, expenditures ranged from €399.57 million to €725.13 million, mainly covering investment spending. Research and personnel expenditures played only a minor role. The high expenditure in this area is largely due to major infrastructure projects, particularly in the transport sector. Similarly, expenditures in the Land cluster, amounting to €442.72 million to €619.23 million, were mainly investment-based. Key adaptation expenditure areas in this cluster include the Forest Climate Fund and various programmes within the Joint Task for Agricultural Structure and Coastal Protection.

It is important to note that these results cannot be directly assigned to individual ministries, meaning no conclusions can be drawn regarding high or low adaptation expenditures for any particular ministry.

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Ausgaben des Bundes für die Anpassung an den Klimawandel

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The Publication

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Conclusion

The findings published by adelphi research and INFRAS mark a significant step in quantifying and understanding the federal government's financial efforts in climate change adaptation. The Climate Adaptation Act mandates the regular collection of expenditure data, and the methodology developed here can be used for that purpose. This enables continuous monitoring of adaptation expenditures.

The analysis provides a preliminary estimate of federal adaptation expenditures, ranging between €2.07 billion and €3.41 billion for 2022. These figures should be considered indicative rather than definitive. The pilot analysis of the 2022 federal budget plan represents a crucial first step in systematically recording adaptation expenditures.

By comparison, estimates of climate-related damages between 2000 and 2021 indicate that at least €145 billion was incurred, primarily due to floods and extreme weather events. This equates to an average annual damage cost of €6.6 billion. These damages are expected to increase significantly in the future. This further underscores the urgent need to develop and implement effective adaptation strategies.

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