Context: Responding to the UNEP Adaptation Gap Report 2023 published today, WWF warns that slow progress and insufficient finance for efforts to increase resilience to the climate crisis leaves everyone, and particularly the most vulnerable, in a desperate situation. 

About the Adaptation Gap Report

• It has been published annually by the United Nations Environment Programme (UNEP) since its first edition was released in 2014.

• The aim of the reports is to inform national and international efforts to advance adaptation.

• It provides an update on the global status and progress of the adaptation process across three elements: planning, financing, and implementation.

• It complements the Emissions Gap Report series and explores the implications of failing to close the emissions gap.

• It is co-produced by the UNEP Copenhagen Climate Centre (UNEP-CCC) and the World Adaptation Science Programme (WASP).

Other Major Report of UNEP: Emissions Gap Report, Global Environment Outlook

Key findings of the report

• Gap between Need and Action: There is a growing divide between need and action when it comes to protecting people from climate extremes.

• In 2023, temperature records toppled, while storms, floods, droughts and heatwaves caused devastation.

• However, progress on adaptation is slowing across all three areas assessed: finance, planning and implementation.

• Adaptation finance needs of developing countries are 10-18 times as big as international public finance flows. This is over 50 percent higher than the previous range estimate.

• The adaptation finance gap is the difference between the estimated costs of adapting to climate change in developing countries and the amount of finance available to meet these costs.

• Climate adaptation finance flows from public multilateral (like the World Bank) and bilateral sources (from a developed to a developing nation) declined by 15 percent.

• Domestic budgets seem to be the largest source of funding for adaptation in many developing countries.

• Neither domestic nor private funding sources could help bridge the adaptation finance gaps, especially in low-income countries.

• Estimated adaptation costs and needs for developing countries are significantly higher than previous estimates, with a plausible central range of US$215 billion to US$387 billion per year this decade.

• Five out of six Parties to the United Nations Framework Convention on Climate Change (UNFCCC) have established at least one national adaptation plan, strategy or policy, and just under half of them have two or more national instruments, that serve to replace or update the initial ones.

• A recent study indicates that the 55 most climate-vulnerable economies alone have experienced losses and damages of more than US$500 billion in the last two decades.

Suggestions as per Report

• The world countries must urgently cut greenhouse gas emissions and increase adaptation efforts to protect vulnerable populations. 

• In 2021, funding from developed countries to developing countries for adaptation projects was 15% lower than in previous years.

• Every billion invested in adaptation against coastal flooding leads to a USD 14 billion reduction in economic damages. 

• Meanwhile, USD 16 billion per year invested in agriculture would prevent approximately 78 million people from starving or chronic hunger because of climate impacts.

• The report identifies seven ways to increase finance, including through domestic expenditure, international finance, and the private sector.

The core continues to be dominated by 

• International Public Adaptation Finance: LDCs rely most heavily on international support, particularly grants – and bridging the adaptation finance gap requires attention to both quantitative and qualitative aspects such as access to finance and equity.

• Domestic Expenditure on Adaptation:  Increase and improve budget tagging and tracking. It can, therefore, help to spend government funds more consciously and to integrate climate risks more effectively.

• Private-sector Finance for Adaptation: Concessional finance can help encourage or de-risk private-sector investment and to reduce the cost of capital, with the potential to also include technical assistance funds (grants) to help strengthen financial viability or provide support on key issues.

Additional avenues include remittances, increasing and tailoring finance to small and medium enterprises, and a reform of the global financial architecture. Four additional potential approaches to bridge the finance gap are identified:

• Remittances By Migrants: These are a potential supplementary source of finance for bridging the adaptation gap at the local level.

• Increasing Finance Tailored To Small And Medium-Sized Enterprises: SMEs hold considerable potential in unlocking climate adaptation solutions. Since SMEs constitute the bulk of the economy for many developing (and developed) countries, financing mechanisms should support their potential to offer adaptation-relevant products and services. 

• Reform Of The Global Financial Architecture: The adaptation finance gap has become evident that this system is no longer fit to address today’s global challenges.

• This architecture, together with other financing institutions such as MDBs, holds a large and unused potential for helping developing countries to tackle 21st-century problems, including adaptation

• Implementing Article 2.1 (C) Of The Paris Agreement: Article 2.1(c) calls on governments to ‘make financial flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development’. This is a pre-condition for achieving the Agreement’s adaptation and mitigation goals, including limiting global warming to 1.5°C above pre-industrial levels

Conclusion

• Policymakers, multilateral banks, investors and the private sector must make COP28 (2023) the moment that the world committed fully to insulating low-income countries and disadvantaged groups, such as women and Indigenous Peoples, from climate impacts.