BAKU, Azerbaijan, November 15. The adaptation financing gap is estimated at $87 billion annually by 2030, UK's Financial Secretary to the Treasury Lord Livermore said in a panel discussion on “Mobilization for Climate Action: countries, multilateral financial institutions, and the private sector implementing the Paris Agreement,” Trend reports.
“Finance certainly plays an important and catalyzing role, but it can never fully meet the needs. While adaptation finance flows total $63 billion in 2022, this is only 5 percent of total climate finance. The greatest needs are for resilient infrastructure, including disaster protection, and agriculture for developing economies,” he said.
As Livermore points out, the lion's share of adaptation funding is pulled from public coffers, primarily taking shape as sovereign debt. When it comes to Africa, the pie is pretty small, with a mere 3 percent of adaptation funding trickling in from institutional investors. As a result, it’s high time to roll up our sleeves and take further steps to get private investment on board for adaptation in these situations.
“The evidence that making investments resilient to climate change makes economic sense is clear, and in most cases the upfront costs, even for more capital-intensive assets such as infrastructure, are negligible. A more consistent assessment of climate and natural risks can help incentivize more resilient investments. In turn, more resilient investments can yield assets with more predictable cash flows and more competitive lifecycle returns. The evidence for the profitability of investing in new technologies and services for adaptation is also growing,” he noted.
Lord Livermore emphasized that investment in supply chains can also bring significant opportunities to develop both local adaptation and international resilience, while inaction brings risks. For example, the UK's third assessment report on climate change risks found that risks associated with international trade routes could cost the UK billions of pounds a year by the end of this century.
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