Climate Change: The financing gap
Sohara Mehroze Shachi, from Paris

  • Environmentalists demonstrate during a street parade as part of the ‘Global Village of Alternatives’ events held in Montreuil, near Paris, France yesterday as the World Climate Change Conference 2015 (COP21) continues at Le Bourget near the French capital 
    Photo- REUTERS

Climate change is occurring faster than ever before. The adverse effects are being felt strongly around the world in the form of changing weather patterns and increasing frequency and magnitude of extreme weather events such as floods and cyclones.

While reducing greenhouse gas emissions i.e. mitigation is vital to reduce the rate of climate change, adaptation efforts are needed now to safeguard vulnerable people already experiencing climatic impacts. Rightly, adaptation to climate change has become an integral element of climate change negotiations taking place in COP 21.

In Lima COP last year, countries were asked to publicly declare in Paris what actions they intend to take to combat climate change. These intended nationally determined contributions (INDCs) of countries form an important basis for negotiating the Paris agreement. So far adaptation components have been included by 135 countries in their INDCs, which is about 85% of all submissions, showing strong interest.

“Maybe by the end of COP we will have INDCs from everyone,” says Matti Goldberg of the UNFCCC Secretariat.

Adaptation needs

The priority areas identified in the adaptation components of submitted INDCs are water, agriculture, health, ecosystems, forestry, infrastructure, disaster risk reduction,
energy, food security, fishing and biodiversity. Many of these goals are framed in terms of countries’ long term development aspirations.

Estimates of adaptation costs in developing countries are US$ 70bn to US$100 bn. However, costs are likely to be 2-3 times higher than these estimates, as these only provide partial coverage of sectors and impacts, do not incorporate uncertainty or costs of delivering adaptation interventions and assume high levels of carbon dioxide emission reductions, which may not be the case.

Current adaptation finance flows

While vulnerable countries such as Bangladesh are financing a majority of their adaptation expenses domestically, the adaptation needs far outweigh the available resources, so international assistance is crucial.

According to the Global Landscape of Climate Finance project, the amount of public finance committed for adaptation focused projects was a mere US$25 bn. Currently, 84% comes of adaptation finance from development finance institutions, 13% from governments and 3% from climate funds.

In 2014, only 3% of the climate funds committed to developing countries were adaptation finance. 

The adaptation finance gap

In view of the above, it is clear that there is a major gap between the costs of adapting and the amount of finance available to do so.

Adaptation costs are emissions dependent – even in the next few decades high emission pathways will translate to high costs of adaptation. According to UNEP findings, by 2050, adaptation costs with 4 degrees temperature rise could be double those of a scenario with 2 degrees rise.

The costs of adaptation in climate vulnerable nations are significant and increasing, and call for immediate enhanced mitigation action. So the adaptation gap is expected to grow, unless new and additional climate finance becomes available.

COP 21 and beyond

Although adaptation finance flows have increased, they are likely to fall short of current adaptation needs and would have to increase tremendously to match future needs. So a better balance between adaptation and mitigation finance should be accompanied by an overall increase in finance.

 “In order to encourage ambition in adaptation, a qualitative global goal will be required, as well as collective and individual efforts to allow closing the gap in adaptation,” reads Peru’s INDC. And for this global goal, it is crucial that adaptation finance commitments are ensured in the Paris agreement. 

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