Staff Climate Notes

Unlocking Adaptation Finance in Emerging Market and Developing Economies

By Deepali Gautam, Ekaterina Gratcheva, Fabio M Natalucci, Ananthakrishnan Prasad

November 19, 2024

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Format: Chicago

Deepali Gautam, Ekaterina Gratcheva, Fabio M Natalucci, and Ananthakrishnan Prasad. "Unlocking Adaptation Finance in Emerging Market and Developing Economies", Staff Climate Notes 2024, 007 (2024), accessed November 19, 2024, https://doi.org/10.5089/9798400293290.066

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Summary

Mitigation and decarbonization efforts are falling short of the 1.5°C goal, making adaptation critical. Developing economies are affected the most, despite having contributed the least to the problem. Nearly 98 percent of adaptation finance comes from public actors, with highly fragmented flows from the private sector. As financing needs increase, bringing private sector finance becomes critical and requires reframing adaptation investments from being seen not just as a risk exposure but also as an investment opportunity. This requires addressing real and perceived investment barriers, public-private collaboration and risk sharing, as well as financial incentives and innovation to unlock scalable, inclusive solutions. Adaptation is more complex than mitigation, with challenges in defining, evaluating, pricing, and scaling investments. Progress on adaptation requires policy reforms, incentives, and partnerships between governments, businesses, and communities and public-private risk sharing.

Subject: Climate change, Climate finance, Climate policy, Emerging and frontier financial markets, Environment, Financial markets, Natural disasters

Keywords: Adaptation finance, Climate adaptation, Climate change, Climate finance, Climate finance, Climate finance architecture, Climate policy, Climate resilience, Emerging and frontier financial markets, Emerging markets and developing countries, Global, IMF Resilience and Sustainability Trust., Natural disasters, Private finance mobilization, Sustainability

Publication Details

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