2023 Adaptation Gap Report

November 4, 2023

According to the 2023 Adaptation Gap Report, climate adaptation finance from public multilateral and bilateral sources, such as the World Bank, declined by 15 percent in 2021, reaching approximately $21 billion.

Unmet Pledges from COP26

Despite promises made at the 26th Conference of Parties (COP26) to the United Nations Framework Convention on Climate Change in Glasgow to double adaptation finance support to around $40 billion per year by 2025, the United Nations Environment Programme (UNEP) reveals a concerning dip in funding.

Domestic Budgets Take Center Stage

The UNEP report underscores that domestic budgets have become the primary source of funding for adaptation in many developing countries. These nations allocate between 0.2 percent to over 5 percent of their government budgets to adaptation efforts.

Adaptation Finance Gaps Persist

Authors of the report note that neither domestic nor private funding sources have been able to bridge the adaptation finance gaps, particularly in low-income countries, including Least Developing Countries and Small Island Developing Nations.

National-Level Adaptation Planning on the Rise

Encouragingly, the report finds that 85 percent of countries now have at least one national-level adaptation planning instrument, such as a policy, strategy, or plan, in place to address the challenges of climate change.

A Growing Global Finance Gap

The Adaptation Gap Report estimates that the current global adaptation finance gap, representing the difference between needs and actual financial flows, ranges from $194 billion to $366 billion annually.

Disparity Between Finance Needs and Support

Developing countries now face adaptation finance needs that are 10-18 times larger than international public finance flows, revealing a significant disparity in support.

Neglect and Fossil Fuel Investments

Harjeet Singh, head of global political strategy at Climate Action Network International, laments the widening adaptation finance gap as a stark indicator of years of neglect. He points out that affluent nations exacerbate the climate crisis with persistent investments in fossil fuels rather than providing support to developing countries.

Cost of Adaptation for Developing Nations

The total cost of adaptation for developing countries amounts to $215 billion per year, covering planning, preparation, facilitation, and implementation of measures to mitigate climate change’s harmful effects or harness beneficial opportunities.

Regional Differences in Adaptation Costs

Certain adaptation measures, such as river flood protection, infrastructure development, and coastal protection, demand the highest adaptation costs in regions like East Asia and the Pacific, as well as Latin America and the Caribbean.

Disproportionate Burden on Low-Income Countries

Although the absolute adaptation costs are significantly higher in upper and lower-middle-income countries, low-income nations bear a greater burden when costs are expressed as a percentage of Gross Domestic Product (GDP). Low-income countries allocate 3.5 percent of GDP to adaptation, compared to 0.7 percent for lower-middle-income countries and 0.5 percent for upper-middle-income countries.

Costs for Least Developing Countries and Small Island Nations

Least Developing Countries face annual estimated adaptation costs of $25 billion (2 percent of GDP), while Small Island Developed nations incur costs of $4.7 billion per year (0.7 percent of GDP).

Urgent Need for Adaptation Financing

In a world increasingly battered by extreme weather events, adaptation financing is urgently needed. Studies reveal that every billion dollars invested in adaptation against coastal flooding can lead to a $14 billion reduction in economic damages. Similarly, an annual investment of $16 billion in agriculture can save 78 million people from starvation or chronic hunger due to climate impacts.

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