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 December 21, 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, Economic sectors, Environment, Financial Sector

Keywords: Adaptation finance, Climate adaptation, Climate change, Climate finance, Climate finance architecture, Climate policy, Climate resilience, Emerging markets and developing countries, Financial sector, Global, IMF resilience, IMF Resilience and Sustainability Trust., IMF staff climate note, IMF staff climate Note 2024/007, Private finance mobilization, Sustainability

Publication Details

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