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UN warns of growing chasm between climate costs and adaptation funding

‘There really is a political imperative that emerged from this report to make decisions and take action now.’

A woman is walking towards a house that is seen almost damaged after a heavy storm in Kalabogi at Khulna, Bangladesh on October 10, 2022. Not too long ago Kalabogi, a coastal village in Bangladesh, was full of cultivable land until the rising sea levels began to swallow the area all the way up to the Bay of Bengal. Kazi Salahuddin Razu/NurPhoto
A house in Kalabogi in southern Bangladesh that was left damaged by a heavy storm in October 2022. Not long ago, this coastal area on the Bay of Bengal was full of cultivable land – until sea levels rose.

The gap between what it costs and what’s available to adapt to the impacts of climate change has never been wider, a new UN report warns.

Climate adaptation costs are much greater than previously estimated, according to the UN Environment Programme’s annual Adaptation Gap report, released today.

The new estimates project developing countries will need between $215 billion and $387 billion every year this decade. Only $21 billion in public adaptation finance was available in 2021, according to the report. And even this total is moving in the wrong direction: $25 billion was recorded a year earlier.

“What that means is our estimates of the cost of adaptation are increasing, and at the same time the finance is at least plateauing or even decreasing,” Paul Watkiss, who wrote the report’s finance chapter, told a launch event in Geneva.

This was despite a global agreement in 2021 to double adaptation finance to $40 billion by 2025 – still far from the scale of need.

Planning and implementation of adaptation projects is also flatlining, according to the UNEP report, which said climate disasters in the last 20 years have already cost the 55 most climate-vulnerable countries $500 billion.

Adaptation finance needs have increased because scientists have predicted more severe climate impacts to happen faster, and because the accuracy of the estimates UNEP has received from governments have improved, Watkiss added.

For the first time, UNEP’s flagship Adaptation Gap report featured a chapter on loss and damage – the term describing the destructive impacts of climate change, which has proven to be a wedge issue over years of climate treaty negotiations.

It’s a sign that loss and damage is shifting from an issue solely championed by climate rights advocates and less powerful nations to one increasingly being considered a key third pillar of global climate policy, alongside mitigation and adaptation.

“There is a very clear connection between adaptation and loss and damage,” Henry Neufeldt, chief scientific editor of the report, told The New Humanitarian. “Because the absence of preparation leads to more losses and damages down the road, and the costs of responding reactively are much higher than acting in preparation of climate impacts that... will happen in the future.”

After years of tough negotiations, countries agreed to create a dedicated fund for loss and damage at last year’s COP27 summit. But negotiations on how to get the financing up and running have hit the buffers since, with emergency talks set to begin on 3 November.

In a written statement marking the launch of the report, UN Secretary-General António Guterres said the world is an “adaptation emergency”, adding: “We must act like it. And take steps to close the adaptation gap, now.”

High-level emphasis on loss and damage

“It’s important loss and damage has its own standing and doesn’t come at expense of adaptation,” said Neufeldt, warning of the likelihood that “funding needed for adaptation could be diverted for loss and damage, and vice versa”.

Loretta Hieber Girardet, chief of risk knowledge, monitoring, and capacity development at the United Nations Office for Disaster Risk Reduction (UNDRR), said the report highlighted “the need to see clear and direct action” on loss and damage.

“I think there really is a political imperative that emerged from this report to make decisions and take action now,” Girardet told The New Humanitarian, referring to the loss and damage fund negotiations and the slow progress on the Santiago Network, a technical support mechanism.

Unlike loss and damage, which has historically been politically contentious, the need for climate adaptation finance has broadly enjoyed consensus among governments.

However, the money has long lagged behind funding for mitigation, which covers efforts to reduce climate change rather than adapt to its dangers. Experts say this is largely because it is harder to measure adaptation and for the related programmes to attract private investment, unlike mitigation projects such as renewable energy.

With public finance for adaptation lagging, the UNEP report also made several suggestions for alternative funding sources, from attracting more private finance to targeting remittances – just as loss and damage advocates have called for “innovative finance” to help capitalise the loss and damage fund.

UNDRR’s Girardet said the report also highlighted the need for more disaster risk reduction funding, which has also been lacking, particularly for early warning systems. These are “extremely cost effective”, she said. “Countries with early warning systems are less likely to experience loss and damage events.”

The adaptation finance gap mirrors a broader problem with climate finance and shrinking official development assistance flows: Developing countries are still awaiting the fulfilment of a 2009 promise by high-income countries to deliver $100 billion a year for climate finance, though needs are now much higher.

And there are persistent concerns among experts over the lack of money and the ability of developing countries and affected communities to access funding for projects. For example, the Green Climate Fund – the world’s main body overseeing and distributing global climate finance – raised just $9.3 billion during its recent replenishment, less than it did when it opened in 2014, leaving it still massively underfunded.

Edited by Irwin Loy.

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