UN report finds adaptation finance gap at least 50% larger than thought

The UNEP Adaptation Gap Report 2023 found developing countries' adaptation finance needs are 10-18 times larger than international public finance flows, putting the annual gap at US$194-366 billion, over 50% higher than prior estimates. The findings underscore the financing shortfall facing climate-vulnerable economies, including India, as adaptation planning stagnates.

A UN Environment Programme report, the Adaptation Gap Report 2023: Underfinanced. Underprepared, found that adaptation progress is slowing when it should be accelerating against rising climate impacts. Developing countries' adaptation finance needs are 10-18 times as big as international public finance flows, over 50 per cent higher than the previous range estimate. This creates an adaptation finance gap now estimated at between US$194-366 billion per year. Efforts to plan and implement adaptation measures appear to be stagnating, with dire consequences for the most vulnerable populations.

The findings affect developing countries, low-income nations, and disadvantaged groups most exposed to extreme climate events and facing a widening gap between adaptation needs and available finance. UN Secretary-General Antonio Guterres emphasised the growing gap between the urgent need for action and the actual efforts to protect people. Governments, multilateral institutions, and the private sector are affected, as the report calls for innovative financing mechanisms to address growing adaptation needs, protect vulnerable populations, and reduce losses and damages across the most climate-exposed regions.

The report outlines seven ways to increase adaptation financing, including utilising domestic expenditure, leveraging international and private sector finance, considering remittances, tailoring finance for small and medium enterprises, implementing Article 2.1(c) of the Paris Agreement, and reforming the global financial architecture as proposed by the Bridgetown Initiative. Policymakers should monitor the new loss and damage fund as a crucial instrument to mobilise resources, while recognising the report's finding that more innovative financing mechanisms are still needed to reach required investment levels.

Key figure — Annual adaptation finance gap: US$194-366 billion