This webinar elaborates on the adaptation finance gap in developing countries, identifies the knowledge gaps that impede the capacity of developing countries to scale up financing for adaptation, and discusses ways in which these knowledge gaps might be overcome.

2. Today’s agenda
Opening remarks:
• Anne Hammill, Senior Director, Resilience, IISD
• Erin Tansey, Director, Sustainable Inclusive Economies, IDRC
Presentation:
• Deborah Murphy, Senior Associate, IISD
Panel discussion:
• Andrea Fonseca, Project Manager, Libélula, Peru
• Joanes Atela, Senior Research Fellow, African Centre for Technology Studies, Kenya
• Raju Pandit Chhetri, Executive Director, Prakriti Resources Centre, Nepal
• Matthew Gouett, Sustainable Finance Analyst, Economic Law & Policy, IISD
Open discussion

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4. Informing National Governments’ Effort
to Scale Up Finance for Adaptation:
Where to next?
Deborah Murphy, Senior Associate
IISD-IDRC Webinar
26th May 2021

5. Overview
of presentation
• Adaptation finance gap
• Barriers and challenges to
scaling up finance for
adaptation in developing
countries
• Closing the gap – learning from
governments and development
partners

6. Adaptation finance gap
Analysis by GCF Independent Evaluation Unit (IEU) using OECD and Climate Policy
Initiative data in IEU 2021 evaluation of GCF adaptation portfolio (page 24)
Climate finance directed to non-
OECD countries (average 2017-2018)
• USD 27 billion directed
to adaptation – 7% of
total USD 357 billion.
• Addressed 12% of the
estimated global needs
for adaptation.

7. GIZ
GIZ
Analysis by GCF Independent Evaluation Unit (IEU) using OECD and Climate Policy
Initiative data in IEU 2021 evaluation of GCF adaptation portfolio (page 24)
• Climate funds are a small portion of flows of adaptation finance.
• Private donors/private investment in adaptation is very low.
• Domestic public finance plays a large role in adaptation
finance in developing countries.
Adaptation finance (million
USD) from different actors for
the year 2013-2018
Adaptation finance gap

8. Adaptation finance gap:
Impact of Covid-19 pandemic
• Global Centre on Adaptation reporting that
adaptation finance fell in 2020 with the
Covid-19 pandemic
• Disruptions in adaptation planning
• Competing priorities for scarce public
dollars: increases in emergency spending,
reductions in tax revenues and
remittances, oncoming debt payments
Pixabay

9. Barriers and challenges
to scaling up finance for adaptation
Investing in adaptation makes sense. The Global Commission on
Adaptation reported that the overall rate of return on investments in
improved resilience is very high, with benefit–cost ratios ranging from 2:1
to 10:1.
But…
• Upfront costs of adaptation can be significant
• Benefits take place in the long term
• Many adaptation investments do not generate revenue streams to cover the
added costs of addressing climate risk  less attractive to the private sector
• Developing country governments have many competing priorities for scarce
public dollars, and grants and concessional loans

10. Barriers and challenges
in developing countries
• Lack of knowledge of benefits of adaptation
• Lack of data and technical expertise to assess climate
vulnerabilities and climate risks, and include adaptation
in project design
• Accounting for adaptation finance is challenging
• Measuring adaptation outcomes is challenging
• Adaptation is context-specific, requiring solutions
tailored to local needs and circumstances

11. Closing the financing gap: Commitments
• Paris Agreement (Article 9.3) – scaled-up financial resources should aim
to achieve a balance between adaptation and mitigation.
• Green Climate Fund – aims to deliver a 50:50 balance between adaptation
and mitigation.
• Secretary-General of the United Nations – in 2021 called on countries
and development partners to commit up to 50% of climate finance to
adaptation.
UNFCCC Secretariat
UNFCCC Secretariat

12. Collective effort of nine MDBs to double the total level of adaptation
financing provided to clients compared to 2019, to US$ 18 billion by
2025.
• MDB country strategies and programming account for NDCs / NAPs
• Screening projects for climate risks and incorporating climate-proofing
measures in investment design
• Programming development finance in a climate-sensitive manner
• Tracking finance for adaptation (MDB methodology)
• Blended finance applications
Closing the financing gap:
Multilateral development banks (MDBs)

13. Closing the finance gap:
Private sector
• Encourage private enterprises to take action on
adaptation – capacity building, standards and
regulations, climate information, challenge funds,
loans, guarantees
• Encourage private investment – resilience and
green bonds, enabling environment and regulatory
framework, suitable projects
• Focus on sectors that hold opportunity – such as
agriculture, irrigation, wastewater management
• Encourage strategic use of public finance –
innovative financial instruments

14. Closing the finance gap:
Actions in developing countries
• Mainstream adaptation processes in national planning and budgeting processes, including
Covid-19 recovery – NAPs, NDCs, adaptation financing strategies
• Coordinated actions and engagement of ministries of finance – build awareness of benefits of
investing in adaptation; addressing climate vulnerabilities and climate risks in infrastructure projects
• Use public (domestic and international) resources in a strategic manner – e.g., to mobilize private
investment, to address adaptation priorities
that do not attract private investment
• Encourage the use of domestic resources in an adaptation
-friendly manner
• Build capacity and technical expertise – climate risk
assessment, adaptation finance tracking, building adaptation
projects
• Broad stakeholder engagement

15. List of references from presentation:
• Murphy, D. & Parry, J. (2020). Filling the Gap: A Review of Multilateral Development Banks’s efforts to scale up financing for climate adaptation.
https://www.iisd.org/publications/filling-gap-financing-climate-adaptation
• GCF’s Independent Evaluation Unit. (2021). Independent evaluation of the adaptation portfolio and approach of the Green Climate
Fund. https://ieu.greenclimate.fund/sites/default/files/document/210223-adaptation-final-report-top.pdf
• OECD. (2019). Climate Finance Provided and Mobilised by Developed Countries in 2013-17. Paris: OECD Publishing. https://read.oecd-
ilibrary.org/environment/climate-finance-provided-and-mobilised-by-developed-countries-in-2013-17_39faf4a7-en#page1
• Climate Policy Initiative (2020). Updated view on the Global landscape of Climamte Finance 2019. https://www.climatepolicyinitiative.org/publication/updated-
view-on-the-global-landscape-of-climate-finance-2019/
• Global Center on Adaptation. (2020). State and Trends in Adaptation Report 2020. Rotterdam: GCA. https://gca.org/reports/state-and-trends-in-adaptation-report-
2020/
• Global Commission on Adaptation. (2019). Adapt now: A global call for leadership on climate resilience. https://cdn.gca.org/assets/2019-
09/GlobalCommission_Report_FINAL.pdf
• Miller, A., Swann, S., Cheng S. & Eil, A. (2019). Driving finance today for the climate resilient society of tomorrow. Technical background paper prepared by
Climate Finance Advisors for the GCA. https://climatefinanceadvisors.com/wp-content/uploads/2019/07/GCA-Adaptation-Finance-background-paper_FINAL-7-17-
19.pdf
• NAP Global Network. (2020). How Covid-19 is reinforcing the need for climate adaptation in developing countries. https://napglobalnetwork.org/stories/how-
covid-19-is-reinforcing-the-need-for-climate-adaptation-in-vulnerable-countries/
• UN Secretary-General. (2021). UN Secretary-General António Guterres’ video remarks for the 2021 Ministerial on Climate Action convened by China, the
European Union and Canada. New York, 23rd March. https://www.un.org/press/en/2021/sgsm20645.doc.htm
• Asian Development Bank, African Development Bank, Asian Infrastructure Investment Bank, European Bank for Reconstruction and Development, European
Investment Bank, Inter-American Development Bank Group, Islamic Development Bank & World Bank Group. (2019). High level MDB statement. Made at the
United Nations Secretary General’s Climate Action Summit, 22 September. https://www.ebrd.com/news/2019/-mdbs-pledge-to-join-forces-to-raise-annual-climate-
finance-to-175-bn-by-2025.html

16. Libélula
Panel Discussion

17. THANK YOU!
Send us your questions at resilience@iisd.ca