Bearing The Brunt Of Climate Change: Private Sector Should Scale Up Aid To Bridge The Adaptation Gap

However, there is an urgent need for the developed countries to double adaptation finance to at least $40 billion a year by 2025. This was stated by UN Secretary General Antonio Guterres

The Adaptation Gap Report 2024 released by the UN Environment Programme on November 7 has a caption that reads ‘Come hell and high water’ as fires and floods hit the poor hardest. It calls for the world to step up adaptation actions.

It is a fact that in spite of agreeing to substantially bring down greenhouse gas emissions and take effective adaptation measures to combat climate change, we find that things are not going according to projections. There is slowness in adaptation measures as most of developing countries or low income or less developed countries are finding gaps in adaptation finance to close the enormous gap between the needs and flows. Moreover in view of the substantial debt burden that was burdened further during Covid-19, some countries are not able to find resources to combat damages arising out of climate change. It is therefore imperative that for sufficient climate adaptation plans to be properly implemented by such vulnerable nations, enough climate finance and aid should flow from developed nations.

The other aspect of Climate Loss and Damage Fund earlier decided at COP 28 had initial commitments of around $700 million. But, this fund size has to go up substantially looking at the loss and damage already suffered or likely to be suffered. The Loss and Damage Fund (LDF) currently has a total of $ 661 million in commitments with over $240 million coming from the developed countries. However, there are different estimates ranging from $100 billion to $200-400 billion annually for loss and damage as vulnerable countries could face up to $580 billion in climate related damages by 2030. In view of the uncertainties and unpredictable nature of climate change impacts, these figures are hazy.

If greater efforts and plans are not envisaged in the revised nationally determined contributions to be submitted by early 2025 and implemented to bridge the adaptation gap, further incidence of such climate related incidents will continue to harm vulnerable nations. In the absence of enough funds they will be major sufferers, enhanced a liberal support from the Loss and Damage Fund is the need of the hour.

According to the ‘Adaptation Gap Report 2024’, international public adaptation finance flows to developing countries increased from $22 billion in 2021 to $28 billion in 2022. However, there is an urgent need for the developed countries to double adaptation finance to at least $40 billion a year by 2025. This was stated by UN Secretary General Antonio Guterres given that climate catastrophe is hammering health, widening inequalities, harming sustainable development and rocking the foundation of peace. The findings of this report are very important for COP 29 participants. They need to significantly scale up adaptation this decade so as to address rising impacts.

The current international public finance that is available will only be sufficient for adaptation finance gap as decided by Glasgow Climate Pact goal of $187-359 billion per year by approximately by 5 per cent.

According to Inger Anderson, Executive Director of UNEP, " Climate change is already devastating communities across the world, particularly the most poor and vulnerable. Raging storms and flattening homes, wildfires are wiping out forests and land degradation and drought are degrading landscapes. People, their livelihoods and the nature upon which they depend are in real danger from the consequences of climate change."

He therefore advocates urgent action as without any adaptation measures the future will be ominous due to climate impacts.

It is for this reason that the ‘Adaptation Gap Report 2024’ calls for nations to step up ambitions by adapting a vibrant collective quantified goal on climate finance at COP 29.

According to the report, there is slowness in planning and implementation of National Adaptation Plans( NAP) and different countries are at different stages of planning and implementation and there is urgent need to scale up them in line with the need to achieve the target on planning as envisaged in the UAE Framework for Global Climate Resilience Target on planning to be achieved by 2030.

Adaptation actions are on a general upward trend but it is not sufficient and not in commensurate with the challenge. Hence, the scale and speed at which adaptation is happening is inadequate in the light of mounting risks. More adaptation efforts are needed to meet the target of UAE Framework for Global Climate Resilience.

Another important factor is that the question of who ultimately pays for adaptation is not being adequately addressed in the current discussion on adaptation financing. Along with developed countries, international development finance institutions, private sector, high net worth individuals and the likes should back the adaptation finance.

Other than international grants, all other models ultimately lead to LDC( Low developed countries) bearing much of the costs. According to the report, while such additional funding helps close the adaptation finance gap, it is not in line with the principle of common but differentiated responsibilities and respective capabilities - an underlying principle of UNFCCC. The report also adds that it is also important to note that adaptation finance needs to consider gender equality and social inclusion much more strongly to avoid perpetuating existing inequalities.

It is found that only around one third of adaptation finance gap is in areas typically financed by the private sector but there is larger opportunity for the private sector to participate. Around two thirds of estimated costs/finance needs are in areas that are typically financed by the public sector through domestic and international sources. To supplement efforts of governments, the private sector should take up higher investment in bridging adaptation finance. There is therefore need to de-risk private sector financing and investment using public (blended) finance and supporting enablers. It is therefore necessary that there is a need to use the available international public concessionary finance much more strategically.

In addition to climate finance, the report also calls for greater need for capacity building and technology transfer to improve the effectiveness of adaptation plans and participation in developing countries, there is an uncertainty regarding their effectiveness. The developing countries need more capacity and technology help across all aspects of adaptation planning and implementation with a focus on water, food and agriculture.

(The author is former Chairman & Managing Director of Indian Overseas Bank)