Mobilizing Development Finance for Strategic and Scaled-up Investment in Climate Adaptation

Addressing the substantial gap between current levels of financing for adaptation and what developing countries require to increase their resilience to climate change is critical to achieving the Paris Agreement’s adaptation goal.

Multilateral development banks (MDBs) have pledged to help address this gap by scaling up their provision of climate finance and by better integrating climate change adaptation considerations into their development finance portfolios. Mainstreaming adaptation considerations into MDB investments would increase the financing available to build resilience to climate change. At the same time, there is a need to ensure that these investments are supporting adaptation actions prioritized by developing country governments.

The “Mobilizing Development Finance for Adaptation” aims to generate the knowledge needed to advance the mainstreaming of adaptation in development finance strategies. This will help MDBs scale up investments in actions that are strongly aligned with country-defined adaptation priorities. It seeks to identify barriers—both within MDBs and developing countries—that limit the use of development financing to address national adaptation priorities and opportunities to overcome these constraints.

Through case study research in Kenya, Nepal and Peru, the research project is examining three key questions:

• What approaches are MDBs taking to mainstream adaptation in their development finance portfolios and overcome encountered challenges?
• How can developing countries better attract MDB development finance that addresses and is aligned with the adaptation priorities arising from their National Adaptation Plan and/or Nationally Determined Contribution processes?
• What is the potential to use innovative finance instruments to scale up financing for adaptation?

IISD is undertaking this research project in collaboration with the African Centre for Technology Studies based in Kenya, the Prakriti Resources Centre based in Nepal, and Libélula based in Peru.