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The United Nations Environment Programme (UNEP) released the Adaptation Finance Gap Update in Paris on Saturday, December 5. This was the second volume after the first Adaptation Gap report released in Lima in 2014. While the first volume was a more comprehensive one that had looked into gaps in finance, technology and knowledge, the current Update has focussed only on the financial gap.
The key finding of the report is that there would be a major gap (between the needs and the availability) of adaptation finance in the years to come, particularly after 2020. It estimates that adaptation costs are going to rise to about US$140 billion-US$300 billion per annum by 2030 and further increase to about US$280 billion-US$500 billion by the year 2050, considering global warming by 2 degrees C.
The report also warns that since adaptation costs are related to climate change induced by rising emissions, inadequate mitigation efforts could make the adaptation cost estimate rise even higher. The current Intended Nationally Determined Contributions (INDCs) of all countries are insufficient to keep global warming to under 2 degrees and sets the world on a path of 3 to 4 degrees. According to the report, under a 4 degree scenario, the adaptation costs could be twice as high as the 2 degree scenario.
Adaptation finance in 2014 was about US$25 billion, but 80% of it in form of loans
The international public finance contribution to adaptation was about US$25 billion in 2014, the report claims—of which 84 per cent was from development finance institutions, 13 per cent from governments and only about 3 per cent from dedicated climate funds. A closer examination of the numbers suggests that of the 25 billion, about 20 billion is in the form of loans—some provided at market rates and some of it as low cost debt. Grants were estimated to be about US$ 5 billion but this includes some amount of Overseas Development Assistance from developed to developing countries. Only about 0.7 billion was from climate funds committed to developing countries.
One of the key demands of developing countries in the ongoing climate negotiations has been that finance should be in the form of no-strings attached grants. Keeping that in mind, the figure of US$ 25 billion that includes loans and components of overseas development assistance is not a very encouraging figure. Developing countries are particularly looking for the contribution from dedicated climate funds—such as the Adaptation fund, the Green Climate Fund—to be scaled up.
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