Climate Finance Fundamentals 3: Climate Finance Thematic Briefing - Adaptation Finance

The costs of adaptation to climate change in developing countries are substantial. Developed countries have committed to scale up support for adaptation in developing countries, particularly in Least Developed Countries (LDCs) and Small Island Developing States (SIDS), with promises made to double adaptation finance between 2014 and 2020 under a roadmap presented for COP22 and at COP26 pledged to at least double their collective provision of adaptation finance from 2019 levels by 2025. The largest sources of approved funding for adaptation projects are currently the Green Climate Fund (GCF), the Least Developed Countries Fund (LDCF) administered by the Global Environmental Facility (GEF), the Pilot Program for Climate Resilience (PPCR) of the World Bank’s Climate Investment Funds (CIFs) and the Adaptation Fund (AF). However, developed countries’ contributions to these funds remain low compared to funds supporting mitigation; at a global level, adaptation remains underfunded. The GCF – set to devote 50% of its resource mobilisation to adaptation, with half of that going to the SIDS, LDCs and African states (see CFF 11) – is the largest provider of adaptation finance. In 2021 alone, and now halfway through its first replenishment (GCF-1), it more than doubled its previous contribution by approving USD 727 million for 15 projects targeting adaptation. The amount of cumulative finance approved for adaptation from key climate funds tracked by Climate Funds Update (CFU) grew to USD 6.7 billion in 2021. Directing adaptation funding to countries most vulnerable to the impacts of climate change as well as to the most vulnerable people and population groups within recipient countries in a gender-responsive and equitable manner remains an imperative, with grant financing continuing to play a major role.