Private Sector Finance and Climate Change Adaptation

This policy brief examines the potential and limitations of using private sector finance to support climate change adaptation in developing countries. It argues that while private finance has historically focused on mitigation, there is an emerging market for adaptation-specific products like 'climate bonds'. The document highlights that debt is a more versatile instrument than equity for adaptation projects and suggests that public finance is essential to bridge gaps in project visibility and to ensure funds reach the poorest countries, which are often overlooked by private investors.

• The private sector is already a source of climate finance, often through generic bonds issued by development banks, though its primary focus has been on mitigation rather than adaptation.
• There is a growing interest among large institutional investors to fund adaptation activities, provided that appropriate investment products are developed.
• Debt is a more effective instrument for adaptation than equity because many adaptation projects, such as flood prevention and disaster planning, provide community-wide economic benefits rather than captureable private financial returns.
• Private finance for adaptation may not meet the 'new and additional' criteria required by developing countries, as it primarily consists of debt and equity, but it can supplement insufficient public funding.
• Private finance is unevenly distributed, concentrating in resource-rich countries and large emerging economies, leaving Least Developed Countries (LDCs) dependent on public finance.
• The World Bank and SEB 'Green Bonds' initiative demonstrates the viability of private finance for adaptation, with approximately 20 per cent of the initial bond release earmarked for adaptation projects such as food security and flood protection.

APA

Atteridge, A. (2010). Private Sector Finance and Climate Change Adaptation. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate-mitigation-adaptation/Atteridge-Private-sector-finance-PBupdate-101118-web.pdf

Chicago

Atteridge, Aaron. Private Sector Finance and Climate Change Adaptation. Stockholm Environment Institute, 2010. https://www.sei.org/mediamanager/documents/Publications/Climate-mitigation-adaptation/Atteridge-Private-sector-finance-PBupdate-101118-web.pdf.

Wikipedia

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BibTeX

@techreport{atteridge2010private, author = {Atteridge, Aaron}, title = {{Private Sector Finance and Climate Change Adaptation}}, institution = {Stockholm Environment Institute}, year = {2010}, url = {https://www.sei.org/mediamanager/documents/Publications/Climate-mitigation-adaptation/Atteridge-Private-sector-finance-PBupdate-101118-web.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }