The European Capital Markets Institute has published a new policy brief, discussing the challenges and opportunities of scaling up climate adaptation finance. Emphasising a growing and urgent need to do so, in the face of growing public debt, inflation, and environmental disasters.
Adaptation finance relates to investments made to adapt to physical climate risks, while mitigation finance is the investments made to reduce greenhouse gas emissions and slow down climate change. The document mentions that adaptation finance is still lagging behind mitigation finance globally across all markets. Investment in adaptation finance appears to face greater barriers to uptake than mitigation owing to high upfront costs, risks, and the long-time horizons of infrastructure projects. The brief identifies the following solutions; better physical climate risk assessments, increase the role of public and private finance, and developing climate-aligned debt restructuring. It also highlights the need for tailored place-based, contextual approaches. To better mobalise adaptation finance instruments, particularly in climate-vulnerable countries who often face a cycle of debt and climate crises, with each exacerbating the other.
Read the policy brief from the European Capital Markets Institute