The Role of Domestic Budgets in Financing Climate Change Adaptation

The document argues that domestic budgets are often the largest source of adaptation finance in developing countries but are systematically under-utilised due to technical, institutional, and political barriers. It introduces 'climate budgeting' as a set of interventions across the budget cycle—from preparation and approval to execution and oversight—to prioritise adaptation. Through case studies in the Philippines, Afghanistan, India, and Bangladesh, the paper demonstrates how tools like climate budget tagging and climate change impact appraisal (CCIA) can increase the volume and quality of adaptation spending. It concludes with recommendations for governments to mainstream adaptation into routine public financial management and for international funders to use domestic budgets as a delivery modality for climate finance.

• Domestic budgets are frequently the primary source of adaptation funding in developing countries, often exceeding international sources, yet they still fall short of projected needs.
• Preventative investments in climate adaptation are linked to higher GDP growth rates compared to taking no action or relying on remedial responses.
• Technical barriers to adaptation financing include definitional ambiguity regarding what constitutes adaptation and the difficulty of quantifying the economic returns of such investments.
• Institutional barriers include the perception of climate change as solely an environmental ministry issue, which leads to insufficient engagement from the ministries of finance and planning that control resources.
• Political counter-incentives exist because adaptation returns often occur in future election cycles, and politicians may gain more political capital from disaster response than from prevention.
• Climate budgeting can be integrated at various stages of the budget cycle, including public investment appraisal (CCIA), macroeconomic forecasting, budget guidelines, and expenditure tracking via tagging systems.
• The Philippines has successfully used 'Programme Convergence Budgeting' to coordinate multiple agencies under a single 'Climate Change Adaptation and Risk Resilience Program', contributing to a 22% compound annual growth rate in national adaptation appropriations from 2016 to 2019.
• In India, the states of Odisha and Chhattisgarh have used Climate Change Impact Appraisal (CCIA) to identify vulnerable investments and redesign programmes to enhance adaptation benefits.
• Afghanistan's Ministry of Finance implemented national climate budgeting guidelines, focusing on a few key ministries to efficiently identify investments that support resilience or are vulnerable to climate risks.
• In Bangladesh, civil society coalitions have used the government's Climate Budget Report to pressure the state for a 5% increase in climate-relevant budget shares and better reporting on the quality of spending.
• Effective climate budgeting requires anchoring reforms in existing public financial management (PFM) processes rather than creating parallel systems, and requires leadership from central bodies like ministries of finance.
• International climate finance should increasingly use domestic budgets as a delivery modality, including through budget support and 'top-ups' to government-financed development expenditure.

APA

Allan, S., Bahadur, A. V., Venkatramani, S., & Soundarajan, V. (2019). The Role of Domestic Budgets in Financing Climate Change Adaptation. World Resources Institute. https://files.wri.org/s3fs-public/uploads/Role_of_Domestic_Budgets_in_Financing_Paper_-_Global_Commission_on_Adaptation.pdf

Chicago

Allan, Stephanie, Aditya V. Bahadur, Shivaranjani Venkatramani, and Vidya Soundarajan. The Role of Domestic Budgets in Financing Climate Change Adaptation. World Resources Institute, 2019. https://files.wri.org/s3fs-public/uploads/Role_of_Domestic_Budgets_in_Financing_Paper_-_Global_Commission_on_Adaptation.pdf.

Wikipedia

{{cite report |last1=Allan |first1=Stephanie |last2=Bahadur |first2=Aditya V. |last3=Venkatramani |first3=Shivaranjani |last4=Soundarajan |first4=Vidya |title=The Role of Domestic Budgets in Financing Climate Change Adaptation |publisher=World Resources Institute |date=2 December 2019 |url=https://files.wri.org/s3fs-public/uploads/Role_of_Domestic_Budgets_in_Financing_Paper_-_Global_Commission_on_Adaptation.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{allan2019role, author = {Allan, Stephanie and Bahadur, Aditya V. and Venkatramani, Shivaranjani and Soundarajan, Vidya}, title = {{The Role of Domestic Budgets in Financing Climate Change Adaptation}}, institution = {World Resources Institute}, year = {2019}, month = dec, url = {https://files.wri.org/s3fs-public/uploads/Role_of_Domestic_Budgets_in_Financing_Paper_-_Global_Commission_on_Adaptation.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }