Understanding the current landscape of
institutions and funding arrangement for L&D
Input by Sönke Kreft MCII / UNU-EHS

Widespread and rapid changes in the atmosphere,
ocean, cryosphere and biosphere have occurred.
Human-caused climate change is already affecting
many weather and climate extremes in every region
across the globe. This has led to widespread adverse
impacts and related losses and damages to nature and
people (high confidence). Vulnerable communities who
have historically contributed the least to current climate
change are disproportionately affected (high
confidence).
IPCC Synthesis Report 2023

Focus of the L&D Finance Decision
Economic L&D
Non-Economic L&D
Extreme
Weather
Events
Slow
Onset
Processes
Ex-Ante During Ex-Post
including rehabilitation,
recovery & reconstruction
Focus of Decision 2 / CMA.4
Avert and Minimize L&D Address L&D
Risk Identification Risk Prevention Risk Preparedness Risk Finance Recovery
→ Without action to avert and minimize L&D, addressing L&D
will become unattainable
→ Transformation is needed:
Build forward together
• Address L&D while minimizing L&D
• Make a business case for public and private sector
investment/engagement
• Make loan-based instruments really count
• Prioritize the needs of the most vulnerable
3

Funding Types and Sources to Address L&D
Based on UNFC C C 2019
Grants Debt Finance - bonds Contingency Insurance
UNFCCC Funds
Multilateral Development Banks and Multilateral Climate Funds
Bilateral sources of climate finance
Domestic public climate and disaster expenditure
Regional Risk Financing
Thematic Finance
• Humanitarian Finance
• Disaster Risk Reduction Finance
• Development Finance
• Private Sector
• Philanthropic Funds
Decision 2 / CMA.4
6.a Current landscape of institutions (global,
regional and national) and enhancing synergies
6.b. Gaps depending on type of challenge
(e.g. slow onset, sudden onset, human mobility,
data accesses, recovery)
• Speed
• Eligibility
• Adequacy
• Access to finance
( 6.c Priority gaps )
( 6.d Most effective solutions especially for the most
vulnerable people and ecosystems )
( 6.e Potential sources of (innovative) funding )
Source
of
Funds
Type

Risk Finance at various levels
The CDRFI instruments that will be used vary according to
different levels. At the macro level, governments have a
variety of tools available to them to manage disaster risk.
At the meso level insurance or other services may be offered
to groups (e.g., cooperatives) or risk takers (e.g., MFIs).
Individuals of households make up the micro level and may
access insurance, savings, or credit.
• Sovereign risk insurance,
often regional pools
• Other government tools,
such as social protection
instruments
Macro
• Company or group
insurance
• Targeted at MFIs,
cooperatives
Meso
• Individual level policies
• Market-based or subsidized
• May include savings or
credit services
Micro

Benefits of Diversifying / Pooling Risk
• Premium reduction = less cost
• More and improved risk information
• Increased sustainability
• Works for adding risks and regions
Based on World Bank 2017

Thank you!
MCII is hosted at the United Nations University Institute for
Environment and Human Security (UNU-EHS)
UN CAMPUS, Platz der Vereinten Nationen 1, D-53113 Bonn, Germany