Climate Change

Adaptation Gap Report 2023: Funding to developing nations declines 15% despite international pledges, rising costs

Neither domestic nor private funding sources could help bridge the adaptation finance gaps, report notes

By Rohini Krishnamurthy
Published: Thursday 02 November 2023
Photo: iStock

Climate adaptation finance flows from public multilateral (like the World Bank) and bilateral sources (from a developed to a developing nation) declined by 15 per cent to around $21 billion in 2021, according to the 2023 Adaptation Gap Report.

This dip, according to the United Nations Environment Programme (UNEP), is despite pledges that were made at the 26th Conference of Parties to the United Nations Framework Convention on Climate Change in Glasgow to double 2019 adaptation finance support to around $40 billion per year by 2025.

Domestic budgets seem to be the largest source of funding for adaptation in many developing countries, according to the report released by UNEP. They shell out between 0.2 per cent to over 5 per cent of their government budgets, it added.

The authors also noted that neither domestic nor private funding sources could help bridge the adaptation finance gaps, especially in low-income countries including Least Developing Countries and Small Island Developing Nations.

Moreover, 85 per cent of countries have at least one national-level adaptation planning instrument such as a policy, strategy, or plan in place to cope with climate change. 

The report has estimated that the current global adaptation finance gap (difference between needs and actual financial flows) is $194-366 billion per year.

Read more: Adaptation gap in developing countries widening even as extreme weather events worsen: UNEP

The finance needs of developing countries are now 10-18 times as big as international public finance flows.

"The widening gap in adaptation finance is a stark indicator of years of neglect, leaving countless vulnerable people exposed to escalating climate calamities. Instead of providing finance to developing countries, affluent nations have exacerbated the climate crisis with their persistent investments in fossil fuels,” Harjeet Singh, head of global political strategy at Climate Action Network International, said in a statement.

Estimated cpst of adaptation for developing countries by sector (A), region (B) and income group (c) for 2030



Source: Adaptation Gap Report 2023, UNEP

For developing countries, the total cost of adaptation amounts to $215 billion per year. The cost of adaptation is the amount needed for planning, preparing for, facilitating and implementing measures to reduce harm or exploit beneficial opportunities arising from climate change.

Adaptation measures such as river flood protection, infrastructure and coastal protection demand the highest adaptation costs in regions of East Asia and the Pacific as well as Latin America and the Caribbean. 

Read more: COP28 Presidency: Triple renewable energy capacity, double energy efficiency by 2030 to limit global warming

Though absolute costs in upper and lower-middle-income countries are much higher, adaptation costs expressed as a percentage of Gross Domestic Product are much greater for low-income countries (3.5 per cent of GDP) compared to lower-middle (0.7 per cent) and upper-middle (0.5 per cent). 

Modelled adaptation costs for Least Developing Countries and Small Island Developed nations are estimated at $25 billion per year (2 per cent of GDP) and $4.7 billion per year (0.7 per cent of GDP), respectively. 

With extreme weather events battering countries across the world, adaptation financing is the need of the hour. Studies have estimated that every billion invested in adaptation against coastal flooding leads to a $14 billion reduction in economic damages. Similarly, when $16 billion per year is pumped into agriculture, the world can bring 78 million people from starvation or chronic hunger because of climate impacts.

“I urge policymakers to take heed of the Adaptation Gap Report, step up finance, and make COP28 the moment that the world committed fully to insulating low-income countries and disadvantaged groups from damaging climate impacts,” Inger Andersen, Executive Director of UNEP said in a statement.

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