Global progress on financing for adaptation

This chapter identifies the global progress on financing of adaptation. Key messages:
-International public adaptation finance is slowly increasing. There is not enough data to identify such a trend in domestic public or private finance flows. There is insufficient evidence, however, that this increase over time is narrowing the distance to meet the increasing adaptation costs.
-A closer look at international public adaptation finance flows shows that multilateral support for adaptation increased significantly between 2013 and 2017 to 14.6 per cent of overall multilateral development finance. In contrast, over the same period, bilateral adaptation support as a share of overall bilateral
development finance has only increased slowly, from 4.6 per cent to 6.1 per cent (see Organisation for Economic Co-operation and Development [OECD] 2019a).
-Efforts are being made to expand the instruments, actors and approaches through which adaptation finance is delivered. The role of public adaptation finance in catalysing private adaptation finance is increasingly being tested as it takes on the upfront risks of investments. New solutions and financial
instruments such as insurance and results-based finance are being tested.
-New impetus for adaptation may be provided by the increasing momentum to ensure a sustainable financial system. This momentum is underpinned by growing recognition that both material physical risks and the risks introduced as we shift to a climate-resilient economy impact company returns, asset values and, ultimately, financial stability. New tools should be used to identify and factor in these risks in investment decision-making and financial stability monitoring.