Partnering for Finance Adaptation

The report analyzes the roles of various public development banks (PDBs) in climate adaptation, identifying significant gaps in collaboration between international multilateral development banks (MDBs) and national development banks (NDBs). It highlights barriers such as misaligned project ticket sizes, lack of shared adaptation taxonomies, and local currency risks. To address these, the report recommends developing complementary taxonomies, utilizing country platforms and regional hubs, enhancing capacity-building, and leveraging blended finance to de-risk adaptation investments.

• Adaptation finance significantly lags behind mitigation, with an all-time high of USD 63 billion in 2021/22, representing only 5% of total climate finance. Developing countries are estimated to need USD 212 billion per year in adaptation finance until 2030, and USD 239 billion per year between 2031 and 2050.
• Collaboration between MDBs and NDBs on climate finance has been limited; between 2016 and 2023, only USD 7.5 billion in financial transactions were identified, and less than 5% of analyzed collaborations were specifically related to adaptation.
• A significant barrier to collaboration is the misalignment of project sizes. MDBs typically target large ticket sizes, whereas climate finance projects in emerging markets and developing economies have an average ticket size below USD 2.2 million, which is one-third of the average in developed countries.
• NDBs face internal capacity constraints that hinder adaptation finance, including a lack of tools for comprehensive climate-risk assessments, difficulty in quantifying returns for adaptation projects compared to mitigation, and exposure to currency risk when borrowing in hard currencies for local-currency revenue projects.
• The report proposes five recommendations to enhance PDB cooperation: developing complementary taxonomies for shared definitions, using country platforms to align international finance with national needs, establishing regional development banks as adaptation hubs, strengthening capacity-building, and using concessional and blended finance to de-risk investments.

APA

Martinez, G., Schell-Smith, K., & Nirula, A. (2024). Partnering for Finance Adaptation. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/CPI_Partnering-for-Finance-Adaptation.pdf

Chicago

Martinez, Guillermo, Ken Schell-Smith, and Abha Nirula. Partnering for Finance Adaptation. Climate Policy Initiative, 2024. https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/CPI_Partnering-for-Finance-Adaptation.pdf.

Wikipedia

{{cite report |last1=Martinez |first1=Guillermo |last2=Schell-Smith |first2=Ken |last3=Nirula |first3=Abha |title=Partnering for Finance Adaptation |publisher=Climate Policy Initiative |date=September 2024 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/CPI_Partnering-for-Finance-Adaptation.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{martinez2024partnering, author = {Martinez, Guillermo and Schell-Smith, Ken and Nirula, Abha}, title = {{Partnering for Finance Adaptation}}, institution = {Climate Policy Initiative}, year = {2024}, month = sep, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2024/09/CPI_Partnering-for-Finance-Adaptation.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }