Mobilising (European) development finance for climate adaptation and resilience

This paper looks at the potential of European development financial institutions in supporting climate adaptation and resilience in developing countries. While global adaptation finance has more than doubled since 2016, from USD 10.1 billion to USD 28.6 billion in 2020, it is still too low to meet estimated adaptation costs, which vary between USD 160 billion to USD 340 billion by 2030 (UNEP 2022). Broadly, adaptation finance accounts for only a small share - generally below 10% - of climate finance.

This paper discusses specific challenges associated with advancing adaptation finance and corresponding recommendations for European development finance institutions and public development banks. By adopting more innovative comprehensive approaches to mobilise development finance for climate adaptation and resilience, the paper tackles how the EU can contribute to reducing some of the negative cascading cross-border risks that global warming affecting developing countries can have on Europe, including in terms of knock-on effects between continents escalating through security relations, international trade, financial markets, food insecurity, social unrests and displacement of people.