Finance gap for climate adaptation at highest level despite accelerating impacts of climate change

By Nuran Erkul

LONDON (AA) - The gap in climate adaptation finance is at the highest level ever and at least 50% higher than previously thought as climate change impacts and risks grow, according to a new report by the United Nations Environment Programme (UNEP) on Thursday.

The Adaptation Gap Report 2023: Underfinanced Underprepared: Inadequate Investment and Planning on Climate Adaptation Leaves World Exposed revealed that developing countries' access to international finance for climate adaptation is dramatically low.

The adaptation finance needs of developing countries are 10–18 times as big as international public finance flows and also over 50% higher than the previous range estimate.

Despite the increasing risks and intensifying impacts of climate change, public multilateral and bilateral adaptation finance flows to developing countries declined by 15% to US$21 billion in 2021.

However, the funds required for adaptation in those countries are estimated to be in the range of $215 billion to $387 billion per year this decade, meaning that the current adaptation finance gap is now estimated to be $194–366 billion per year.

"As needs rise, action is stalling. Today's report shows the gap in adaptation funding is the highest ever," Antonio Guterres, the United Nations secretary-general, said in a statement on the report.

"The world must take action to close the adaptation gap and deliver climate justice."

- Failure to mitigate risks leads to greater adaptation costs

The costs of adaptation and the finance needs have increased, and costs are higher than previous estimates as countries recognize that they need more adaptation finance, according to Paul Watkiss, the lead author of the report and director of Paul Watkiss Associates, a UK-based climate change consultancy, who told Anadolu in an interview.

"We have a big finance gap, and it is growing," he noted.

Watkiss advocated for dramatic improvements in both mitigation and adaptation.

"If you do not mitigate effectively and do not scale up the adaptation finance, those residual damages or losses will increase. It is all connected. If we are not increasing and stepping up adaptation, then we are going to see those economic impacts from things such as extreme events increasing as well. Thus, it makes sense to invest in adaptation to prevent those really big shocks," he said, warning that the costs of adaptation are higher under higher warming scenarios.

The global average temperature has already exceeded 1.1°C above pre-industrial levels, and current plans reflected in the nationally determined contributions are putting the world on a path towards 2.4°C–2.6°C by the end of the century, UNEP warned in the report.

"Fossil fuel barons and their enablers have helped create this mess," Guterres said, urging those responsible to support those suffering as a result.

"I call on governments to tax the windfall profits of the fossil fuel industry and devote some of those funds to countries suffering loss and damage from the climate crisis. We are in an adaptation emergency. We must act like it. And take steps to close the adaptation gap, now," he warned.

- Dip in adaptation finance comes following COP26, setting worrying precedent

As the adaptation finance flows decreased following the UN Climate Summit, COP26, which took place in 2021 in Glasgow, Scotland, Watkiss attributed the drop somewhat to COVID-10, which was a very big priority at the time.

Regardless, UNEP said the dip in adaptation finance came despite pledges made at COP26 to deliver around $40 billion per year in adaptation finance support by 2025, which Watkiss said "sets a worrying precedent".

"We do not know what has happened in 2022. There are some indications that the data is a bit more positive for 2022, but one of the things we do not know yet is whether there will be any implications from Ukraine for 2022 adaptation finance flows," he underlined.

Watkiss said that the global economic outlook might have also influenced the developed countries and their ability to scale up their adaptation finance.

The developed markets have seen very high and sticky inflation in the last two years, due to the impacts of COVID-19 and the war in Ukraine, and major central banks have tightened monetary policy by bringing interest rates to the highest levels seen in the last two decades to tackle inflation.

"It is probably easier to scale up adaptation finance in a situation where everything is going really well, but it is more difficult when there are greater economic and fiscal pressures," Watkiss said.

- Call for policymakers to make COP28 moment for committing to scale up adaptation fund

Released ahead of COP28 climate talks taking place in Dubai, in the United Arab Emirates, this year, the UNEP report finds that adaptation planning and implementation are also appearing to be plateauing. The failure to adapt has massive implications for losses and damages, particularly for the most vulnerable countries, against the impacts of climate change.

Georgia Savvidou, one of the report's authors and research associates at the Stockholm Environment Institute, said that a loss and damage fund is definitely one of the key topics on the agenda of COP28.

"It is important that we focus on mitigation action to avoid higher costs of adaptation. Similarly, we need to be focusing this decade on ambitious adaptation action to avoid greater losses and damages," she underlined.

The establishment of a loss and damage fund was one of the highlights of the COP27 climate talks last year. The fund aims to provide financial assistance to the most vulnerable nations that are impacted by the effects of climate change.

"Even if the international community were to stop emitting all greenhouse gases today, climate disruption would take decades to dissipate. So, I urge policymakers to take heed of the Adaptation Gap Report, step up finance, and make COP28 the moment that the world committed fully to insulating low-income countries and disadvantaged groups from damaging climate impacts," Inger Andersen, executive director of UNEP, was quoted as saying in the report.

Taking into account the intensifying impacts of climate change, she said that the world is neither cutting emissions nor increasing adaptation efforts to protect vulnerable populations.

UNEP's report points to a study indicating that the 55 most climate-vulnerable economies have alone experienced losses and damages of more than $500 billion in the last two decades, and these costs are expected to rise dramatically without forceful mitigation and adaptation.