Private finance for adaptation in LDCs? Spelling out the options

This discussion brief examines the challenges and potential pathways for mobilizing private finance for climate change adaptation in Least Developed Countries (LDCs), arguing that a compelling business case for large-scale private investment in this area has not yet been established.

• There is a significant disparity between private finance for climate mitigation and adaptation. In 2014, an estimated US$243 billion flowed into mitigation-related activities, but only 8% of that was invested outside the country of origin, with even lower amounts reaching Least Developed Countries (LDCs).
• Private sector investment in adaptation is hindered by the fact that most adaptation needs in LDCs do not meet private investment criteria. Because these needs often focus on reducing vulnerability for entire communities, they function as public goods with broad benefits but limited financial returns for investors.
• The brief proposes an analytical framework for private adaptation finance based on the interaction of enabling environments, mobilization, and delivery. Enabling environments can be created by developed countries, developing countries (through targeted adaptation measures or general private-sector development), or the private sector itself.
• Even when private finance is mobilized, it may fail to contribute to adaptation if funds are not directed to priority sectors or locations, or if the investments cause maladaptation. To count toward the US$100 billion climate finance commitment, investments must also meet specific 'political' criteria (such as being new, additional, and transparent) and monitoring, reporting, and verification (MRV) criteria.
• Due to the misalignment between private financial flows and adaptation needs, the brief suggests exploring alternative pathways for LDCs, including incentivizing domestic small and mid-sized enterprises, improving tax collection for public revenue, scaling up rural and microfinance (especially for women), and reducing transaction costs for remittances.

APA

Dzebo, A., & Pauw, P. (2015). Private finance for adaptation in LDCs? Spelling out the options. Stockholm Environment Institute. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-DB-2015-Private-adaptation-finance-LDCs-options.pdf

Chicago

Dzebo, Adis, and Pieter Pauw. Private finance for adaptation in LDCs? Spelling out the options. Stockholm Environment Institute, 2015. https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-DB-2015-Private-adaptation-finance-LDCs-options.pdf.

Wikipedia

{{cite report |last1=Dzebo |first1=Adis |last2=Pauw |first2=Pieter |title=Private finance for adaptation in LDCs? Spelling out the options |publisher=Stockholm Environment Institute |date=2015 |url=https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-DB-2015-Private-adaptation-finance-LDCs-options.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{dzebo2015private, author = {Dzebo, Adis and Pauw, Pieter}, title = {{Private finance for adaptation in LDCs? Spelling out the options}}, institution = {Stockholm Environment Institute}, year = {2015}, url = {https://www.sei.org/mediamanager/documents/Publications/Climate/SEI-DB-2015-Private-adaptation-finance-LDCs-options.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }