Understanding and Increasing Finance for Climate Adaptation in Developing Countries

This report by the Climate Policy Initiative examines the current state of climate adaptation finance, identifying significant funding gaps and barriers to investment, particularly in developing countries. It proposes a framework for increasing investment by boosting demand for adaptation services, supporting suppliers, and de-risking investments, while urging developing country governments to improve risk assessment and tracking.

• There is a substantial gap between current adaptation investment and the projected costs required to avoid catastrophic impacts. In 2016, only USD 22 billion of tracked global climate change investment was directed toward adaptation. By 2030, adaptation costs in developing countries are estimated to be between USD 140 billion and USD 300 billion annually, while global costs could reach USD 280 billion to USD 500 billion per year by 2050.
• Tracking and measuring adaptation finance is hindered by the lack of a standard reporting format for developed and developing countries. Challenges include a lack of agreement on what constitutes adaptation finance and the difficulty of distinguishing adaptation projects from standard development projects, as adaptation often involves mainstreaming resilience into general investment decisions.
• Investment in adaptation is slowed by three primary types of barriers: context barriers related to policy and institutional environments; business model barriers such as uncertainty over returns and high upfront technology costs; and internal capacity barriers that prevent service providers from operating at scale.
• To increase adaptation investment, the report suggests three strategic areas: increasing demand through policy reforms and risk disclosure; sustaining suppliers via data standards and public weather data; and de-risking investments through early-stage funding, soft loans, and direct investments in government assets.
• Developing country governments can drive adaptation finance by integrating adaptation into national planning, adopting climate risk disclosure best practices (such as TCFD), and analyzing the impact of climate risks on sovereign debt. Specific near-term actions include implementing mandatory disclosure requirements, supporting local catastrophe risk models, and utilizing resilient infrastructure bonds or regional insurance pools.

APA

Climate Policy Initiative (2018). Understanding and Increasing Finance for Climate Adaptation in Developing Countries. https://www.climatepolicyinitiative.org/publication/understanding-and-increasing-finance-for-climate-adaptation-in-developing-countries/

Chicago

Climate Policy Initiative. Understanding and Increasing Finance for Climate Adaptation in Developing Countries. 2018. https://www.climatepolicyinitiative.org/publication/understanding-and-increasing-finance-for-climate-adaptation-in-developing-countries/.

Wikipedia

{{cite report |author=Climate Policy Initiative |title=Understanding and Increasing Finance for Climate Adaptation in Developing Countries |date=13 December 2018 |url=https://www.climatepolicyinitiative.org/publication/understanding-and-increasing-finance-for-climate-adaptation-in-developing-countries/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{climatepolicyinitiative2018understanding, author = {{Climate Policy Initiative}}, title = {{Understanding and Increasing Finance for Climate Adaptation in Developing Countries}}, institution = {Climate Policy Initiative}, year = {2018}, month = dec, url = {https://www.climatepolicyinitiative.org/publication/understanding-and-increasing-finance-for-climate-adaptation-in-developing-countries/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }