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COP28: How the "Financial Gap" is Hindering Adaptation to Climate Change
Countries are mobilizing to adapt to climate change, but those most affected are least equipped to cope. Current climate financing falls short of urgent needs tied to adaptation, mitigation and compensation for loss and damages. Half-way through the COP28 summit in Dubai, we look at the gap between a climate emergency and the resources being allocated to tackle it.
According to UN estimates, the Earth's average temperature will increase by close to 3°C by the end of the century, despite commitments made under previous COP summits and the Paris Agreement to reduce Greenhouse Gas (GHG) emissions.
This year’s Intergovernmental Panel on Climate Change (IPCC) report estimates that close to three and a half billion people live in areas with high vulnerability to climate change.
The World Bank’s estimate is even higher. According to its November, 2023 Policy Research Paper, 4.5 billion people are being exposed to extreme weather events, such as floods, droughts, cyclones, or heatwaves. For them, as for all countries of the world, adaptation is not a choice but an emergency.
Adaptation to climate change has a cost
A series of steps are being taken to help low-income nations cope with climate change, notably via mitigation and adaptation financing. But the United Nations Environment Programme (UNEP) notes that wealthy nations haven't come close to fulfilling their commitment of $100 billion per year. Its 2023 Adaptation Gap Report, entitled “Underfinanced, Underprepared” found that the adaptation finance needs of developing countries are 10-18 times larger than existing international public finance flows.
“The adaptation finance needed to implement domestic adaptation priorities is estimated at US$387 billion per year,” states the report. “Despite these needs, public multilateral and bilateral adaptation finance flows to developing countries declined by 15 per cent to US$21 billion in 2021.” As a result, the adaptation finance gap has widened to between $194 billion and $366 BN per year.
Cumulative loss and damage
In addition to current mitigation shortfalls, developing countries have endured decades of irreversible damage wrought by climate change.
COP28 opened last week with an agreement to compensate developing countries for "loss and damages," with fresh funding announced by a number of countries, including Germany, France and host United Arab Emirates each contributing €100 million.
It's a drop in the ocean however, compared to the estimated hundreds of billions of euros in cumulative damages wrought by climate change considered largely the responsibility of high-income nations. According to one estimate, loss and damage in developing countries already amounts to more than US$400 billion per year, and is expected to grow.
Read more: Senegal, Vietnam, Costa Rica: how three vulnerable countries are adapting to climate change
The V20 Group of Finance Ministers, representing 55 of the world’s most climate-vulnerable countries recently published a report estimating that the loss and damages to low-income economies amount to 20% of their collective GDP, over the last 20 years. “Meaning the GDP of the V20 as a whole would have been 20% higher today had it not been for climate change.”
For some of the world’s poorest countries the picture is even starker. The authors add that for “the most at-risk V20 members…losses add up to an estimated average of 51 percent of the GDP over the twenty year period, or more than half of their economic potential since the year 2000.”
AFD actions in Vietnam and beyond
However, effective pioneering practices are already helping some countries cope with climate change, from the maintenance of drainage networks to the setting up of early warning systems for extreme climate episodes, and increased diversification of the energy mix. AFD advocates for such adaptation efforts to be urgently mainstreamed.
With its more than 3,200 km of coastline, Vietnam is among the countries most vulnerable to the consequences of climate change. If the scenario of a one-meter rise in sea level becomes reality, 5% of the country's land could disappear, particularly in the Mekong River Delta. This is a threat to Vietnam's food, economic security and its people.
The Vietnamese government adopted a national program for climate change as early as 2008, and is now incorporating climate change in its development policies, especially for agriculture.
AFD supports this adaptation strategy in multiple ways.
Multi-annual budget support totaling €200 million was first granted in the form of a loan through the SP-RCC program, from 2010 to 2020. During that same period, AFD funded studies to assess the impacts of climate change on the country and solutions to deal with it (e.g., via the Gemmes Vietnam program) as well as more targeted research projects (e.g., to better understand flooding and the drop in flow of the Mekong).
AFD Group also supported a project to enhance civil servants' knowledge about resilience to climate change in several vulnerable cities.
Still greater investments can be made in dykes and dams. Infrastructure, from buildings and roads to transport networks, will have to be reinforced, and energy and telecommunications systems will have to be improved. Development in general must now respond to the exigencies of climate change, which will require unprecedented amounts of funding. For that, the climate finance gap will have to close.