Mobilising (European) Development Finance for Climate Adaptation and Resilience

CASCADES Research Paper (September 2023)

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.

International and European financial institutions for development have the power to lead in closing the adaptation financing gap. However, they encounter challenges related to low, unclear, and missing adaptation finance objectives, limited synergies in the adaptation financing space, and a lack of bankable projects. The European Union (EU), its member states and their financial and technical institutions for development, including the European Investment Bank (EIB), European Bank for Reconstruction and Development (EBRD), the European Development Finance Institutions (EDFI), the public development banks (PDBs) regrouped under the Joint European Financiers for International Cooperation (JEFIC), and the technical and implementing agencies in the Practitioners’ Network for European Development Cooperation (PN), can address these challenges to mobilise the level of adaptation finance that is necessary for building global resilience.