Private finance for adaptation in LDCs? Spelling out the options

The briefing argues that a compelling business case for large-scale adaptation investment in LDCs has not yet been established because most adaptation needs function as public goods with little financial return for investors. It introduces a framework analyzing the interaction between enabling environments, mobilization, and delivery, noting that even when private finance is mobilized, it may not reach priority sectors or could lead to maladaptation. The author concludes that private sector contributions to adaptation finance are likely to be limited and suggests exploring alternative pathways such as domestic SME incentives, improved tax collection, microfinance, and reduced remittance costs.

• Private finance for climate activities is heavily skewed toward mitigation and developed countries; in 2014, US$243 billion flowed into mitigation, but only 8% of that was invested outside the country of origin, with even lower levels reaching LDCs.
• Large-scale private investment in adaptation is hindered by the fact that most LDC adaptation needs provide broad community benefits without financial returns, giving them the characteristics of public goods.
• The mobilization of private finance for adaptation involves four potential enabling environment scenarios: incentives from developed countries, targeted measures by developing countries, general private-sector development in developing countries, or requirements set by the private sector itself (e.g., insurers).
• Private investments intended for adaptation may fail to meet objectives if they are not directed to priority locations or if they cause maladaptation, such as flood barriers that increase risk in other areas.
• To count toward the US$100 billion climate finance commitment, private investments must satisfy both monitoring, reporting and verification (MRV) criteria and 'political' criteria, including being new, additional to official development assistance, and transparent.

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} }