Changing climate finance for more effective adaptation actions Blog

15 December, 2023

Author: Mark Redwood, Senior Associate, Climate Change and Environment

Climate change is the most pressing challenge of our era, demanding urgent and collective action. While solutions vary, one pivotal aspect is ensuring access to climate finance — a powerful tool that drives investments towards climate-resilient initiatives and sustainable development. The limits of climate finance are now well known: not enough finance has been allocated for adaptation compared to mitigation projects; funders shy away from conflict affected states where adaptation needs tend to be the greatest; and the architecture of climate finance, including the regulatory requirements, are often difficult for many states and project developers to comply with.

The recent Adaptation Gap report (UNEP, 2023) notes that “Adaptation finance needs are 10–18 times as great as current international public adaptation finance flows – at least 50 per cent higher than previously estimated”. This reality brings to the forefront the importance of ensuring an optimal use of existing resources in the design and delivery of climate projects to improve identification and targeting of key needs, build long-term resilience and support the institutional capacity of governments and climate actors to use funds effectively.

The development and delivery of climate adaptation projects should factor in new ways of thinking. On the one hand, understanding how adaptive capacity and the ability to cope with new climate stressors can be built, and on the other, recognizing the climate additionality in development projects. The latter means forming a better risk assessment early in a project as well as understanding climate scenarios that will impact programme delivery. These “new” ideas should build on what we have learned from the last 60 years of investment in good water management, reduced waste, and conservation. Critically, any actions and project design must consider longer term climate trends in their design and implementation. Before arguing for more money, it is important to strengthen the accountability and evaluation mechanisms to ensure that current allocations are effective.

Three Blind Spots

I have learned that there are three major blind spots that all development practitioners need to consider. First, how to convey new ideas around adaptation into the existing practices of service providers such as water utilities. Second, ensuring that gender equity considerations and transformative action are effectively integrated into project delivery. Finally, how to make sure climate finance can reach those most in need, including those living in conflict affected areas, which tend to be the most vulnerable.

Three examples relevant to each of the above points are instructive:

In Indonesia, we work with five water utilities on their climate and disaster risk management plans. Water utilities are uniquely positioned to understand climate risks. On a day-to-day basis they deal with significant flood risks that damage infrastructure. Longer term trends based on downscaled climate models developed by the national climate change information service (BMKG) suggests declining aggregate water amounts, with storm intensity increasing increasing flash flood risks. Many utilities are focused on water supply, equitable access, pollution management and other related considerations. They do not necessarily link their work with “climate adaptation” per se as their operational timelines are more immediate. For this reason, climate finance for water utilities can be very important. Aligning the objectives of utilities with climate change needs can provide badly required resources to water providers that are on the frontline of managing climate risks. Resources are required, for example, to upgrade canals, pipelines to be more flood resilient, and to invest in new water sources to expand their coverage. Investments in water utilities will help pivot the focus from meeting short-term needs to addressing longer term resilience. The work we are doing under the Australia-Indonesia Partnership for Infrastructure (known by its Indonesian acronym KIAT) shows that the effort to improve water utility performance over the long term is, at its core, adaptation in action.

Effective adaptation needs to be inclusive and respond to equity considerations. Without a proper consideration of gender and inclusivity, adaptation action has a greater likelihood of failure (UNDP, 2023). Under the DFAT-funded KONEKSI programme, 38 projects tackling equity, climate resilience and livelihoods are being implemented across Indonesia by joint Australia-Indonesia teams of researchers. These projects place social equity and gender at their core. For example, KONEKSI is working with women in Papua who are traditional stewards of mangrove areas – a critical ecosystem buffer to many climate change impacts. Women are disproportionately affected by climate change, and yet often are highly resilient (Lambrou and  Piana, FAO, 2006) but we are still learning how equity can effectively be matched with programming in the water, infrastructure, or agricultural sector.

The third blind spot relates to delivering climate finance in a conflict-affected setting. In resource constrained and conflict affected countries, adaptation functions at a different level. Basic needs, such as food and water, must be met for survival and these are under progressive stress due to climate change. In Somalia, for example, the sequence of failed rains between 2020 and early 2023 led to the deaths of an estimated 43,000 people and over 2 million livestock. The region is also bedevilled by protracted conflict and weak governance in rural areas. Climate finance in this context is not about building renewable energy projects but is about securing basic needs. An analysis by the Supporting Pastoralism and Agriculture in Recurrent and Protracted Crises (SPARC) Programme concluded that Somalia’s absorption of climate finance is greatly impeded by a lack of coordination amongst stakeholders and limits in the capacity to manage climate funds. This is a common challenge across many LDCs globally and one suggesting a revision of the architecture of how climate finance is delivered).

The way forward

Several conclusions stand out. First, we need to simplify and streamline access to climate finance. Current regulatory structures are overly complex, and importantly, out of sync with the capacities of many states that are deeply in need of finance. Second, the risk tolerance of funders needs to be increased to make climate adaptation finance available in the world’s most vulnerable environments. Third, we need to continually build the evidence base for action, through research, transparent learning and exchange; the focus should be on good quality sustainable development projects that build on what we have learned about success and failure in the past 60 years. Fourth, continued investments in capacity building will be important, especially in the design of effective adaptation projects with strong institutional ownership and building the capacity of public financial management actors to absorb, manage and deliver finance locally. These capacities will be critical to justify increased financial flows into developing countries.

References Cited

Inter-governmental Panel on Climate Change (IPCC), 2023. Assessment Report 6, Synthesis Report for Policy Makers. Cited on December 8th, 2023 at

Lambrou and Pianna. 2006. Gender: The Missing Component of the Response to Climate Change. Food and Agriculture Organisation (FAO).

UNDP, 2023. Impact Gender. Cited on December 15th, 2023 at

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