Adaptation finance and the private sector: opportunities and challenges for developing countries

The study objectives are to assess how the private sector can help bridge the adaptation gap in developing countries in relation to these priorities. The private sector has different roles to play in bridging this gap, which involve different types of institutions, from both developed and developing countries.

Some of the insights that emerge from this analysis:

• It is important to differentiate between the financing and funding of adaptation, especially in the context of developing countries and in relation to CBDR-RC. Most of the discussion to date has not made this distinction and it needs to be brought out more transparently in discussions.
• The study finds that there is potential for the private sector to help bridge the funding gap in certain sectors (especially agriculture), where there is revenue generation and cost saving potential. However, its overall potential for the publicly identified adaptation priorities will be much more limited than many assume. Its potential will also vary by income status: private sector opportunities are likely to be greater in MICs.
• Increasing the levels of private sector funding for adaptation in developing countries - from the current low levels to around 15% - will require concerted policy action and public finance. This means that private sector investment is not a direct substitute for international public finance.