The UN Environment Programme’s latest Adaptation Gap Report, 2023, underscores the pressing requirement for developing countries to receive a minimum of USD 215 billion annually throughout this decade for meaningful adaptation efforts. In 2021, only around USD 21 billion was directed to developing countries for adaptation projects, marking a 15% decrease from previous years. The report primarily centers on the crucial aspect of adaptation finance, addressing the availability of funding required for adaptation projects.
GS III: Environment and Ecology
Dimensions of the Article:
- Key Highlights of the Adaptation Gap Report, 2023
- Climate Financing: Funding Climate Change Mitigation and Adaptation
- Climate Financing Concerns for Developing Countries
Key Highlights of the Adaptation Gap Report, 2023
Growing Adaptation Finance Gap:
- The adaptation finance gap, which represents the disparity between estimated adaptation financing needs and costs and the actual financial flows, has increased in recent years.
Significant Discrepancy in Adaptation Funding:
- The current adaptation gap is estimated to be 10-18 times larger than existing international adaptation finance flows, surpassing previous range estimates by at least 50%.
- The estimated annual adaptation finance gap now stands at USD 194-366 billion.
Gender-Responsive Finance Assessment:
- Of international public finance for adaptation that prioritizes gender equality as a primary objective, only 2% is evaluated as gender-responsive, while an additional 24% is considered gender-specific or integrative.
Ways to Boost Financing
- Domestic expenditure and private finance are potential sources of adaptation funding, with domestic budgets likely to contribute significantly in many developing countries, ranging from 0.2% to over 5% of government budgets.
- Evidence of increased private-sector adaptation initiatives can be found in various sectors such as water, food and agriculture, transport and infrastructure, and tourism.
- Large companies’ “Internal Investments,” financial institutions’ provision of finance for adaptation-related activities, and companies offering adaptation goods and services are in high demand.
Corporate Social Responsibility (CSR):
- Exploring CSR options in India can aid in achieving climate financing and adaptation goals.
Reform of Global Financial Architecture:
- The report calls for a reform of the global financial system to ensure more accessible and substantial finance for climate-related purposes from multilateral agencies like the World Bank or the International Monetary Fund (IMF).
- Current levels of international financial flows for climate change mitigation are deemed highly inadequate.
Climate Financing: Funding Climate Change Mitigation and Adaptation
- Climate financing encompasses financial support at local, national, or transnational levels, sourced from public, private, and alternative channels, with the primary goal of aiding mitigation and adaptation actions that combat climate change.
- It focuses on providing the necessary funding to support initiatives addressing climate change through both mitigation and adaptation strategies.
Common but Differentiated Responsibility and Respective Capabilities (CBDR):
- International agreements such as the UNFCCC, Kyoto Protocol, and the Paris Agreement emphasize the obligation of developed countries, which possess more financial resources, to offer financial assistance to developing countries that are less affluent and more susceptible to the impacts of climate change.
- This principle aligns with the concept of Common but Differentiated Responsibility and Respective Capabilities (CBDR).
Conference of Parties-26 (COP 26):
- COP26 of the UNFCCC witnessed new financial commitments made by developed countries to support developing nations in their efforts to meet global climate change adaptation targets.
- Additionally, COP26 established new regulations for international carbon trading mechanisms, which are expected to contribute to adaptation funding.
Intergovernmental Panel on Climate Change (IPCC), 2018:
- Climate finance plays a pivotal role in addressing the challenges posed by climate change and achieving the objective of limiting the Earth’s average temperature increase to below 2 degrees Celsius above pre-industrial levels, as projected in the 2018 IPCC report.
Climate Financing Concerns for Developing Countries
Developing countries face significant challenges related to climate financing, primarily in the context of adaptation efforts. Here are the key concerns:
Urgent Need for Adaptation:
- Adaptation measures are crucial for protecting lives, livelihoods, and ecosystems, particularly in developing and vulnerable countries with limited resilience.
- Halting the ongoing effects of climate change is not an immediate solution, making adaptation vital.
Specific Adaptation Measures:
- Developing countries implement various adaptation measures tailored to their unique needs.
- These measures encompass strengthening coastlines, constructing seawalls, developing heat-resistant crops, building climate-resilient infrastructure, securing water sources, and similar initiatives to enhance local resilience.
- Implementing these adaptive measures places financial burdens beyond the budgetary capacities of many governments, making external financial support necessary.
Developed Countries’ Commitments:
- Developed countries, according to international climate agreements, have commitments to provide financial support and technology transfer to aid developing countries in their climate adaptation efforts.
Shortfalls in Climate Finance:
- Despite numerous conventions and treaties, developed countries have not fulfilled their obligations in terms of channeling the required funds for adaptation.
Efforts by Developed Countries:
Developed countries have initiated several efforts to address climate financing concerns:
Target of USD 100 Billion:
- Developed nations pledged in 2009 to mobilize a minimum of USD 100 billion annually in climate finance from 2020. However, even three years after the deadline, this goal has not been met.
- Efforts are underway to increase climate finance flows for various climate needs, including adaptation, through the United Nations Framework Convention on Climate Change (UNFCCC).
Glasgow Climate Conference:
- At the 2021 Glasgow climate conference, developed countries committed to doubling funding for adaptation. Additionally, there is an agreement to establish a new climate financing goal, surpassing USD 100 billion annually, by 2025.
New Collective Quantified Goal:
- The doubling of adaptation finance by 2025 and the formulation of a new collective quantified goal for 2030, currently under discussion, aim to bridge the climate finance gap, with the involvement of developing countries.
-Source: Indian Express