According to the UN Environment Programme (UNEP)’s Adaptation Gap Report 2023, the world is unprepared, underinvested, and lacking essential planning, leaving us all vulnerable. The report cautions that progress in adapting to climate change is not accelerating as expected; instead, it’s stagnating.
Key Findings
- Developing countries face a high financial burden due to climate changes; 10-18 times higher than public financing.
- COP26 in Glasgow committed to raise adaptation finance support to about $40 billion per year by 2025.
- However, bilateral and multilateral adaptation finances to these countries dropped 15% to nearly $21 billion in 2021.
- The estimated adaptation finance gap stands between $194-366 billion annually.
- The report reveals that 55 most climate-vulnerable economies suffered losses exceeding $500 billion in the past 20 years.
- In the upcoming decades, these costs are expected to surge if no drastic measures of mitigation and adaptation are taken.
- The newly established loss and damage fund is crucial for mobilising resources, but it needs innovative financing mechanisms to meet investment requirements.
- The report’s authors press for bold adaptation which will boost resilience, particularly crucial for underprivileged groups and low-income countries.
- For instance, investing $1 billion for coastal flooding adaptation can lower economic damages by $14 billion; investing $16 billion annually in agriculture could prevent 78 million people from facing chronic hunger or starvation due to climate effects.
Seven Ways To Bridge The Adaptation Financing Gap
The report identifies seven ways to bridge the adaptation financing gap.
- international public adaptation finance
- domestic expenditure on adaptation and
- private-sector finance for adaptation, even if relative contributions to closing the adaptation finance gap remain uncertain.
- remittances by migrants to their home countries which often contribute significantly to GDP
- increasing finance tailored to small and medium-sized enterprises since they comprise the bulk of the private sector in many developing countries
- reform of the global financial architecture, for instance as proposed by the Bridgetown Initiative, which has enormous potential to support developing countries in boosting their resilience against future climate shocks, including through changes in managing vulnerable countries’ debt burden, and
- implementation of article 2.1(c) of the Paris Agreement on making finance flows consistent with a pathway towards low-carbon and climate-resilient development.
It is crucial to recognise that these seven approaches present diverse opportunities and limitations across countries.
For instance, Least Developed Countries (LDCs) heavily depend on international assistance, particularly grants.
Closing the gap in adaptation finance necessitates addressing both quantitative and qualitative aspects, including financial accessibility and fairness.
Glossary
Adaptation
- Adaptation is the act of adjusting to the climate and its impacts.
- It’s a process that people use to reduce potential harm or to take advantage of positive outcomes.
- Sometimes, in natural environments, humans can help the system adjust to anticipated climate effects (IPCC 20221).
Adaptation Gap
- According to the UNEP, the “adaptation gap” refers to the disparity between actual changes made and the goals set by society.
- This gap is affected by how much climate change impacts a society is willing to tolerate.
- Resource limits and other priorities also influence the size of this gap.
Resilience
- Resilience refers to the ability of social, economic, and environmental structures to withstand adverse events, trends, or shocks. ((IPCC 2022)
- These systems bounce back by adapting or reorganising while preserving their main function, identity, and structure.
- Resilience is beneficial as it retains the capacity for adaptation, learning, and transformation.