Effective financing of climate adaptation measures

In the context of the Paris Agreement from 2015, countries have set themselves ambitious national targets for climate change mitigation and adaptation that require significant financial resources. Given the direct, serious impacts of climate change on developing countries, they tend to focus on adaptation measures. However, the adaptation objectives in the contributions put forward by countries for the implementation of the Paris Agreement (nationally determined contributions, NDCs) often lack detail and are thus difficult to finance and implement. In addition, there is also a lack of convincing business models for adaptation finance to comprehensively engage the private sector, which is paramount to raise the required resources. Therefore, there is a need to further explore how the impact of available public resources can be maximised and how more private capital can be mobilised, particularly in developing countries, in support of adaptation activities.

With financial support from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) on behalf of the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety (BMU), adelphi analysed the ongoing debate and existing activities on climate adaptation finance, translated findings into policy recommendations, and developed action-oriented knowledge products. In doing so, adelphi collaborated with the Climate Policy Initiative (CPI), which based on the latest research prepared a high-level study focused on adaptation finance.

As part of the project, adelphi considered a broad range of thematic aspects, including both public and private finance, and developed a range of different publications. This includes a scoping study that identifies and analyses several key challenges and potential solutions for channelling money from the international to the local level with a view to improving the effectiveness of financing for adaptation. In addition to a briefing paper on the topic of adaptation finance, an introduction for practitioners shows that companies of any size, private associations and cooperatives, banks and investors as well as insurance companies can play three different roles in and for adaptation. In addition, adelphi supported the development of six innovative bottom-up adaptation financing approaches for small- and medium-sized enterprises (SMEs).