Climate adaptation finance gap widens as flows drop, needs climb: UN

Developing countries are facing their “highest-ever” adaptation financing gap as funding requirements are growing at a time when flows are declining, due to the Ukraine war and post-pandemic challenges.

The funds required for climate adaptation in developing countries have risen to a range of US$215 billion to US$387 billion per year this decade, and these financial needs are projected to rise significantly towards 2050, according to a new report released by the United Nations Environment Programme (UNEP) released on Thursday.

However, adaptation finance flows to developing countries declined by 15 per cent to US$21 billion in 2021 despite pledges made at COP26 in Glasgow to deliver around US$40 billion per year in adaptation finance support by 2025.

This has led to a finance gap of US$194 billion to $366 billion per year in developing countries, UNEP found, attributing the “U-turn” in the trajectory of investing in adaptation to the Covid-19 pandemic and the war in Ukraine. In addition to finance, progress on climate adaptation is slowing on all fronts including planning and implementation.

“While five out of six countries have at least one national adaptation planning instrument, progress to reach full global coverage is slowing,” the UNEP report said. “And the number of adaptation actions supported through international climate funds has stagnated for the past decade.”

Meanwhile climate change has become more “disruptive and deadly” as temperature records tumbled globally and regionally in 2023, according to UNEP. July 2023 was Earth’s hottest month on record, according to scientists from Copernicus Climate Change Service, a division of the European Union’s space programme.

Climate-related natural catastrophes are also becoming more frequent and ferocious. China, the world’s largest greenhouse gas emitter, which aims to peak emissions by 2030, suffered from record-breaking heatwaves and severe floods and rainfalls this summer, threatening electricity supplies and crops.

“A spate of climate disasters over the past few years have raised the alarm on climate adaptation inside China,” Li Zhao, senior researcher at environmental group Greenpeace East Asia, told the Post. “Flooding in and around Beijing and the surrounding Hebei province this year should be a wake up call. Our adaptation is far behind the rapidly compounding risk climate change poses. In the past few years, a series of adaptation policies have come out, and there remains an implementation gap.”

Analysts have raised concerns that underinsured China is particularly vulnerable to rising natural catastrophes, which could hurt its economy. The United States and Canada also suffered from wildfires and extreme heat this year.

The UNEP report shows “a growing divide between need and action when it comes to protecting people from climate extremes”, said UN Secretary-General Antonio Guterres in a statement on Thursday.

“Action to protect people and nature is more pressing than ever … Yet as needs rise, action is stalling,” he said. “The world must take action to close the adaptation gap and deliver climate justice.”

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The UNEP report highlighted the urgency for accelerating climate adaptation, which is a key issue for development and safety in all countries, especially low- and middle-income ones. Adaptation is also expected to be a central topic at the COP28 Climate Conference taking place this month in Dubai, United Arab Emirates.

Every billion invested in adaptation against coastal flooding leads to a US$14 billion reduction in economic damages, it is estimated. Meanwhile, US$16 billion per year invested in agriculture would prevent around 78 million people from starving or chronic hunger because of climate impacts, according to UNEP.

The failure to adapt to climate change has massive implications for losses and damages, particularly for the most vulnerable. The 55 most climate-vulnerable economies alone have experienced losses and damages of more than US$500 billion in the last two decades, and these costs will rise steeply in the coming decades, particularly in the absence of forceful mitigation and adaptation, according to UNEP citing previous studies.

“Even if the international community were to stop emitting all greenhouse gases today, climate disruption would take decades to dissipate,” said Inger Andersen, executive director of UNEP on Thursday.

The UN has urged policymakers, multilateral banks, investors, and the private sector to step up finance and use the COP28 as an opportunity to fully commit to insulate low-income countries and disadvantaged groups from climate impacts.

Countries globally must massively increase finance – developed countries must present a clear road map to double adaptation finance and prioritise grants over loans as a first step towards devoting half of all climate finance to adaptation, according to the UN. Multilateral Development Banks should also allocate at least 50 per cent of climate finance to adaptation, and change their business models to mobilise more private finance to protect communities from climate extremes.

By 2025, every vulnerable developing nation should have the support they need to develop and implement adaptation investment plans, and every person on earth must be protected by an early warning system by 2027, said Guterres. He also called on governments to tax the windfall profits of the fossil fuel industry and devote some of those funds to countries suffering loss and damage from the climate crisis.