Released ahead of the COP28 climate talks taking place in Dubai, the Adaptation Gap Report 2023: Underfinanced. Underprepared finds that the adaptation finance needs of developing countries are 10-18 times as big as international public finance flows and over 50 per cent higher than the previous range estimate.

After a major update over previous years, the report now finds that the funds required for adaptation in developing countries are estimated to be in a plausible central range of $215 billion to $387bn per year this decade.

Despite these needs, public multilateral and bilateral adaptation finance flows to developing countries declined by 15 per cent to $21bn in 2021. This dip comes despite pledges made at COP26 in Glasgow to deliver around $40bn per year in adaptation finance support by 2025.

The report identifies seven ways to increasing financing, including through domestic expenditure and international and private sector finance. Additional avenues include remittances, increasing and tailoring finance to small and medium enterprises, implementation of Article 2.1(c) of the Paris Agreement on shifting finance flows towards low-carbon and climate resilient development pathways, and a reform of the global financial architecture, as proposed by the Bridgetown Initiative.

Agreement on the new loss and damage fund at the Fifth Meeting of the United Nations Framework Convention on Climate Change (UNFCCC) Transitional Committee on Loss and Damage, to be taken forward at COP28, will be an important instrument to mobilise resources, but issues still remain. The fund will need to move towards more innovative financing mechanisms to reach the necessary scale of investment.

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