Despite clear signs of accelerating climate risks and impacts worldwide, the adaptation finance gap is widening and now stands at between USD 194 billion and USD 366 billion per year, according to a new report by the United Nations.
Released ahead of the annual UN climate talks in Dubai, UAE, the “Adaptation Gap Report 2023: Underfinanced. Underprepared – Inadequate investment and planning on climate adaptation leaves the world exposed” finds that the adaptation finance needs of developing countries are 10-18 times as big as international public finance flows over 50 per cent 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.
“Today’s Adaptation Gap Report shows a growing divide between need and action when it comes to protecting people from climate extremes. Action to protect people and nature is more pressing than ever,” UN Secretary-General Antonio Guterres said in his message on the report.
“Lives and livelihoods are being lost and destroyed, with the vulnerable suffering the most. We are in an adaptation emergency. We must act like it. And take steps to close the adaptation gap, now,” he added.
“In 2023, climate change yet again became more disruptive and deadly: temperature records toppled, while storms, floods, heatwaves, and wildfires caused devastation. These intensifying impacts tell us that the world must urgently cut greenhouse gas emissions and increase adaptation efforts to protect vulnerable populations. Neither is happening,” said Inger Andersen, Executive Director of the United Nations Environment Programme (UNEP).
According to the report, public multilateral and bilateral adaptation finance flows to developing countries declined by 15 percent to around USD 21 billion in 2021 despite the pledges made at the UN climate talks in Glasgow in 2021 to double 2019 adaptation finance support to around USD 40 billion per year by 2025.
“Finding new ways to deliver finance for adaptation action is essential,” Anderson said.
“Neither the goal of doubling 2019 international finance flows to developing countries by 2025 nor a possible New Collective Quantified Goal for 2030 will significantly close the adaptation finance gap on their own,” she added.
The report points to a study indicating that the 55 most climate-vulnerable economies alone have experienced losses and damages of more than USD 500 billion in the last two decades. These costs will rise steeply in the coming decades, particularly in the absence of forceful mitigation and adaptation.
Studies indicate that 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.
Additional avenues include remittances, increasing and tailoring finance to small and medium enterprises, and a reform of the global financial architecture, as proposed by the Bridgetown Initiative an action plan set forth by Barbadian Prime Minister Mia Mottley.
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