The UN Environment Programme (UNEP) recently released its Adaptation Gap Report 2023, which revealed that the world is not prepared to manage the consequences of climate change. It warned that instead of accelerating, progress on adapting to climate change is slowing down. This slowdown extends to finance, planning and implementation, with extensive implications for loss and damage, especially for the most vulnerable.
“The report shows that the adaptation finance gap is the highest it has ever been. We must take action to bridge the adaptation gap and ensure climate justice,” said UN Secretary-General António Guterres in response to the report’s findings.
The updated adaptation costs for developing countries are estimated to be between $215 billion to $387 billion annually this decade, which is higher than previous estimates and is likely to increase significantly by 2050. The needs of developing countries are 10-18 times greater than the flow of public financing, which is over 50% higher than the previous estimated range.
Although there were pledges at COP26 in Glasgow to double adaptation finance support to around $40 billion per year by 2025, public multilateral and bilateral adaptation finance flows to developing countries decreased by 15% to around $21 billion in 2021. The adaptation finance gap is now estimated to be $194-366 billion per year.
The report cites a study which found that the 55 most climate-vulnerable economies have already experienced loss and damage worth more than $500 billion in the last two decades. These costs are expected to increase drastically in the coming decades if there is no forceful mitigation and adaptation.
The new loss and damage fund is an important tool to mobilize resources, but there are still issues as the fund will need to move towards more innovative financing mechanisms to reach the necessary level of investment. The UN chief believes that one source of funding could come from taxing the “windfall profits of the fossil fuel industry” and devoting some of these funds to countries suffering loss and damage.
“Fossil fuel barons and their enablers have helped create this mess; they must support those suffering as a result,” he said in his message.
The UNEP report proposes ways to increase financing, such as domestic expenditure, international and private sector finance, remittances, and shifting finance flows towards low-carbon and climate resilient development pathways. Additionally, the authors of the report advocate for an ambitious adaptation, as it can enhance resilience, especially for low-income countries and disadvantaged groups, including women.
For example, every $1 billion invested in adaptation against coastal flooding leads to a US $14 billion reduction in economic damages, while $16 billion per year invested in agriculture could help an astonishing 78 million people avoid starvation or chronic hunger due to climate impacts.
“We need bold action to respond to escalating loss and damage that results from climate extremes,” said the UN chief. “All parties must operationalize the Loss and Damage Fund at COP28 this year. And we need new and early pledges to get the fund started on a strong footing.”
“We are in an adaptation emergency. We must act like it. And take steps to close the adaptation gap, now,” the UN Secretary-General concluded.