Assessing the Quality of Adaptation Finance

The report introduces a qualitative framework for public finance providers—including donor governments, MDBs, and DFIs—to evaluate the quality of adaptation interventions. It categorizes quality across three levels: project (direct resilience), market (incentives and scale), and system (structural shifts). The tool uses a three-stage diagnostic (Initial, Progressing, Transformative) across criteria such as climate risk integration, target population reach, and the minimization of maladaptation. The report also includes data analyses showing a disconnect between national adaptation priorities and sectoral ODA flows, particularly in energy and health, and a misalignment between sovereign debt risk and the choice of finance instruments in moderate-risk countries.

• High-quality public adaptation finance is defined as the efficient deployment of scarce public capital to deliver resilience at project, market, or system levels, moving solutions toward commercial viability or sustaining necessary activities where markets fail.
• The decision-support tool evaluates adaptation finance across three levels: the project level focuses on direct, measurable outputs; the market level assesses the shift in incentive landscapes and replication; and the system level examines structural shifts toward climate-resilient economies.
• Analysis of Official Development Assistance (ODA) flows from 2022–24 reveals that adaptation integration is uneven across priority sectors; while water supply and sanitation show 41% climate-tagged ODA, the energy sector has only 13% and health only 9%, despite both being frequent national priorities in National Adaptation Plans (NAPs).
• There is a systemic misalignment between sovereign debt risk and the choice of adaptation finance instruments, most notably in countries at moderate risk of debt distress, where non-concessional debt accounts for 90% of adaptation finance flows.
• The report identifies significant data gaps that hinder the assessment of adaptation quality, including a lack of disclosure on how climate risk assessments shape project design and a deficiency in reporting the financial performance (such as IRR) of blended finance vehicles.
• Minimization of maladaptation is a critical cross-cutting criterion across all levels, aiming to avoid interventions that increase long-term vulnerability, entrench inequality, or lock in climate-vulnerable trajectories.
• A case study of the Catalyst Climate Resilience Fund (CCRF) demonstrates that early-stage funds in nascent markets may show 'Initial' or 'Progressing' stages in financial disclosure and replication, but can be 'Transformative' in targeting pre-commercial adaptation solutions.

APA

Sherikar, P., & Allisy, J. (2026). Assessing the Quality of Adaptation Finance. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/06/Assessing-the-Quality-of-Adaptation-Finance.pdf

Chicago

Sherikar, Pallavi, and Juliette Allisy. Assessing the Quality of Adaptation Finance. Climate Policy Initiative, 2026. https://www.climatepolicyinitiative.org/wp-content/uploads/2026/06/Assessing-the-Quality-of-Adaptation-Finance.pdf.

Wikipedia

{{cite report |last1=Sherikar |first1=Pallavi |last2=Allisy |first2=Juliette |title=Assessing the Quality of Adaptation Finance |publisher=Climate Policy Initiative |date=June 2026 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2026/06/Assessing-the-Quality-of-Adaptation-Finance.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sherikar2026assessing, author = {Sherikar, Pallavi and Allisy, Juliette}, title = {{Assessing the Quality of Adaptation Finance}}, institution = {Climate Policy Initiative}, year = {2026}, month = jun, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2026/06/Assessing-the-Quality-of-Adaptation-Finance.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }