Bridging the Adaptation Finance Gap in Asia
Asia, home to more than half of the world’s population, is one of the most vulnerable regions to climate change. Extreme weather events in Asia cause tens of billions of dollars in losses and disrupt the lives of millions; this, along with lack of adaptive infrastructure, is undoing years of social and economic development. This underscores the urgent need for large-scale investment in resilience. Yet investment in adaptation finance remains far below what is required in Asia
This brief identifies the barriers that keep adaptation finance in Asia inadequate, fragmented, and inequitable. These include:
- Access to capital markets and significant climate funds due to complex procedures and capacity constraints.
- Capacity and institutional constraints, including weak coordination, limited monitoring, and incomplete financing plans in NAPs and NDCs.
- Disbursement failures and implementation barriers – only about half of the allocated adaptation finance reaches South Asia compared to global averages.
- Quality of adaptation finance, with 85% of flows in 2023 as loans, despite adaptation’s limited revenue-generating potential.
- Lack of integration of local and indigenous knowledge, making adaptation projects top-down and less effective.
- Lack of local finance undermines locally led adaptation, with only 17% of international public flows having a local focus.
For bridging the adaptation finance gap in Asia, the brief recommends a transformative, whole-of-government and whole-of-society approach. Drawing on successful case studies from Bangladesh, Nepal, and Least Developed Countries, the brief highlights how integrated planning platforms, fiscal innovation, and devolved finance models can accelerate action. It also points to innovative solutions such as callable capital and performance-based resilience grants to de-risk investments and channel resources effectively to the local level.
